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Every few years, some major corporate malfeasance will be made public. Some "high-level bad apples" have caused serious damage to the lives of employees. We can recall Enron, WorldCom, Bre-X, Nortel Networks, Bear Stearns, Wells Fargo Bank, and most recently Theranos Inc.

However, the opposite often happens. Rogue employees cause significant damage to the company’s brand, stock price, or bottom line. Through the principle of "substitution liability", the court will pursue the liability of the employer, except in special circumstances. This is the sin of the son on the father, not the other way around.

Simplicity Air Ltd. is one of the employers that has recently learned this painful lesson. The Ontario Court of Appeal upheld its $150,000 punitive damages award, based on facts that included the extremely unprofessional behavior of the two supervisors Gary and Doug.

Daniel Eynon, an employee of Simplicity, was seriously injured in the workplace, and he sued his employer for this. After being challenged by a colleague, he climbed a 14-foot-high chain hoist. As he descended, he caught the crotch of his pants on a hook near the bottom of the chain. Another hook pierced his scrotum. The employee needs to perform the operation on the same day-to be precise, debridement and repair of lacerations.

After the accident, Enon said he screamed in pain and asked to call an ambulance. He allegedly smiled when Supervisor Gary walked into the store. When Eynon tried to show Gary his injury, Eynon claimed that Gary refused to even look. According to Eynon, Gary refused to call an ambulance, and instead drove him to the second store to talk to service manager Doug.

Doug first said that they would arrange for someone to drive Ainon home to Simcoe and help him drive the car home. After insisting on being sent to the hospital, the supervisors finally agreed, but before leaving, they allegedly told Eynon, "This happened at home." When he arrived at the hospital, Gary left Enon at the door and did not accompany him in.

The company and its witnesses provided very different versions of the incident, but the court was dominated by Eynon's version of the incident.

In the appeal, the court found that the jury's conduct in awarding punitive damages was reasonable. The court stated that “the supervisor instructed the injured employee to lie about the injury at home, but there was no more, and punitive damages should be given.”

It is difficult to imagine a business owner or executive who would manage this situation like these two executives, even with a little caution and judgment.

Unfortunately, the court went on to point out that in the absence of Simplicity’s owner, the supervisor was clearly “in charge of the workplace”. The court held that “there is no doubt that the behavior of the regulator is the behavior of its employer.”

For individual employees, attracting personal responsibility to get their employer out of trouble is usually a very high standard. It must be determined that the individual has malicious, fraudulent, malicious behavior, or the behavior involved is clearly beyond the scope of his authority.

Sometimes this high standard is encountered. For example, in the 2007 Benko v. Scott case, a supervisor sent a letter falsely claiming that his subordinate had committed theft. The letter addressed to three people is defamatory. Their mailing was found to be completely beyond the supervisor's authority and responsibilities. The employer neither knows nor authorizes them. The judge pointed out that “sending such letters is very strange, and it is not reasonable to expect employers to prevent such behavior.”

In addition, these letters were handwritten, unsigned, and were not written on the paper identifying the company.

However, the supervisor also slandered the plaintiff, telling other employees that she had stolen the inventory, and the RCMP is investigating her. These comments are completely wrong. The court found that there was "no evidence" that these statements were authorized by the employer. However, the employer was found to be indirectly responsible for the defamation because the supervisor made remarks "while working on behalf of the enterprise" and the employer "allowed her to supervise the plaintiff."

In this case, it seems that the supervisor’s “punctuality” during the misconduct is sufficient to trigger alternative liability.

The potential alternative liability may be an unresolved guillotine, and employers usually don't think about this, let alone protect themselves. Every experienced business owner knows that they cannot be everywhere at the same time. At some point, you must rely on your subordinates. This is why careful recruitment, proper training, and most importantly, drafting a policy that outlines employee expectations is essential.

As the court pointed out in the Simplicity case, the jury found that "there is a culture within the company where employees fail to pay full attention to best safety practices," especially a serious lack of proper safety training and documentation.

If Simplicity possesses these elements, their arguments about the "rogue" of supervisors will have greater weight, and Simplicity's responsibilities will be reduced or eliminated.

Needless to say, it is a good idea to consult an experienced employment consultant to review your practices and policies to ensure that you are prepared to defend the arguments attached to you by rogue employees' mischief. If, as an employer, you have not considered these risks, then you should consider them.

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