No duty of care to employees in internal workplace investigations

Workplace investigations have become fairly commonplace for many as workforces in all industries have become more empowered to raise complaints about their workplace, colleagues, managers and the environment. While many employees might expect an investigation to be fair, they may be surprised to know the limits of their employer's obligation to “protect” them during and after an internal investigation.

The courts have established that workplace investigations should be procedurally fair for all parties. Investigation findings can have implications in regulatory and civil proceedings, such that the process followed and conclusions drawn can be scrutinized. In the worst cases, if a poorly conducted investigation ultimately informs a decision to discipline or terminate an employee, the employees might believe that their employer owes a "duty of care" and is liable for the improper investigation, but their assumption is wrong.  

Duty of care is defined as the standard of care expected of an ordinary, reasonable, and practical person in the same circumstances. Courts often consider whether a duty of care is owed and, if so, whether a violation of this duty induces subsequent individual or corporate liability for damages. The duty of care one holds to another largely depends on the relationship between the two parties. A recent decision from the Supreme Court of British Columbia (BCSC) clarifies that employers do not owe employees a duty of care for internal investigations into employee conduct. However, individual decision-makers who commit an independent tort during or based on the findings of an investigation can be held liable. Here’s why:  

Salina v. Investors Group

In Salina v. Investors Group, 2023 BCSC 86, Sergio Salina worked as an investment advisor for the Investors Group Financial Services Inc. based on a 2002 consulting agreement, as an independent contractor and not an employee. Salina and the Investors Group were regulated members of the Mutual Fund Dealers Association of Canada (MFDA). They were subject to the MFDA regulations, practice standards, rules and bylaws, including the British Columbia Securities Act.   

In December 2016, the MFDA investigated Salina for violations of MFDA investment rules and regulations, including high-risk investment transactions of his elderly clients. The MFDA also investigated the Investors Group's oversight of Salina's work. The Investors Group provided the MFDA with information as part of the regulatory investigation and in keeping with its reporting obligations as an MFDA member. The information provided included information from its internal investigation.  

The Investors Group terminated Salina for cause in May 2018 while the MFDA investigation was ongoing. Salina filed a civil suit for wrongful termination and argued that, contrary to his 2002 consulting agreement, he was not an independent contractor but an employee. Further, Salina argued that as an employee, he was owed a duty of care in his employment with the Investors Group, and it breached its duty in two ways. First, it conducted a negligent internal investigation into his work and second, it reported inaccurate information to the MFDA.   

Notably, the court in this decision did not make findings of fact about the Investors Group’s internal investigation or its reporting to the MFDA, but rather decided whether Salina had a legitimate cause of action that the court should allow.  

The law briefly summarized 

In 2008, the Ontario Court of Appeal affirmed that no civil (tort) liability exists for a negligent internal investigation into employee conduct (see Correia v. Canac Kitchens, 2008 ONCA 506).

However, Salina argued that the Investors Group’s workplace investigation supported the MFDA's quasi-judicial hearing into his conduct, and because the MFDA's mission as, at least in part, to regulate in the public interest, he was owed a similar duty of care against negligence as police officers owe to suspects in their investigations (see Hill v. Hamilton-Wentworth Regional Police Services Board, 2007 SCC 41). The distinguishing element is that the MFDA's investigation had a quasi-judicial function tied to the public interest. Therefore, the Investors Group investigation and subsequent information provided to the MFDA was not the run-of-the-mill workplace investigation or consequences.  

The court struck down two of Salina's allegations as possible causes of action: 

• the allegedly negligent internal workplace investigation  
• the allegedly negligent information provided to MFDA. 

The court allowed Salina's wrongful dismissal suit and allegations of bad faith and unlawful interference with economic relations.  

No duty of care owed to employees in internal investigations 

The court stated that no duty of care is owed to an employee by an employer who conducts a negligent internal investigation. Of primary consideration were policy reasons like the importance of reporting wrongdoing (i.e., whistleblowing, etc.) even where the reporting may be mistaken and cause the employee to face discipline or other financial consequences.   

The court also clarified that individual decision-makers who commit independent torts during investigations or based on the findings of an investigation can be held personally liable.

Protection of absolute privilege over communications to a regulatory body 

The court explained that absolute privilege protects the communication of information from a regulated body or member to its regulator. However, malice is not protected, and if the information about an employee is maliciously provided to a regulator, there may be reason to find that the employee was wrongfully dismissed. 

Takeaways for employers

• Employers should investigate all complaints without bias, delay and in good faith.  
• External investigators and individual internal decision-makers can be held liable if they commit independent torts during and based on an investigation. 
• Whistleblowers, or those who provide information to regulatory bodies in compliance with their obligations, will be protected by absolute privilege.  
• Implementing risk mitigation strategies for internal and external investigations with clear policies and procedural direction can help employers maintain happier and healthier workplaces.

Cereise Ross is a lawyer at Turnpenney Milne in Toronto, focusing on employment law and workplace investigations.