When Employers Bend the Law can Employees Refuse to Work?

For refusing to participate in a plan they thought was illegal, Diane Roden and Karen Mottram were fired by the Toronto Humane Society.

Roden and Mottram, who both worked in supervisory capacities, believed the Society had lost its legal authority to take in stray animals after a contract with the City of Toronto was not renewed in April 2001.

After failing to renew the contract with the City, the Humane Society struggled for a year with dwindling resources that resulted in staff layoffs. But, on May 23, 2002 the Society announced that it would again be taking in stray animals—this time from outside the Toronto area.

Roden and Mottram were adamant that this was against the law and refused to process the adoption of stray animals. They maintained their positions even after staff meetings were held in which portions of the Society’s supportive legal opinion were read out loud.

“The plaintiffs had no basis upon which to be concerned that the taking in of stray animals by the Society was illegal,” wrote Justice Blenus Wright in a decision released July 4, 2003. “No consequence could flow to the plaintiffs by following the instructions of senior management.”

The women, said Justice Wright, were properly dismissed for cause. Refusing to follow the instructions of the Society was tantamount to serious misconduct and a repudiation of their employment contracts. Because the women had refused a reasonable settlement offer from the Humane Society, the court ordered both to pay a portion of the Society’s legal costs in defending the action.

How does an employee know if an act is illegal?

It is trite law that an employee can refuse to perform an illegal act. But, how can an employee be certain that an act is illegal? The decision of Justice Wright—which provided almost no analysis to determine if the Humane Society was operating legally—suggests that as long as no harm can flow to an employee for performing an act ordered by senior management, then there is no grounds for refusing to perform the act.

But—in a case where the employer’s actions were clearly illegal—Ryan Houston was asked by Advantage Car and Truck Rentals Ltd. to sign an acknowledgment that stated cash shortages would be deducted from Houston’s pay. A few days later, Houston told his boss he could not accept the agreement and would not work under those circumstances. Mr. Thomas, his superior, replied, “Fine I accept your resignation.” Houston’s employment was at an end.

Houston sued and lost at trial, but was vindicated on appeal. In a decision released on November 18, 2003, Chief Justice McMurtry on behalf of a unanimous Ontario Court of Appeal ruled that Advantage had violated a regulation under the Employment Standards Act by requesting Houston make up for cash shortages when other employees had access to the cash register.

By treating Houston as having resigned, Advantage effectively fired him without just cause, said the Chief Justice of Ontario. Advantage could not treat Houston’s refusal to work as a resignation, wrote McMurtry. Houston’s refusal was justified in law. Houston was awarded damages for lost wages of $1,750.00.

Employees are subject to a Catch-22. Employees can only refuse to work when the order is unlawful. But, to know for certain whether an employer’s conduct is unlawful, an employee needs the ruling of a judge. In other words, the employee must quit or be fired and then sue. Employees who follow their consciences are gambling on whether their refusal will be upheld at trial.

Paul Weisenberger sold insurance. He sold so much of it after being hired in 1983 that he was promoted to Vice President of the Winnipeg branch of Johnson and Higgins in 1991. But, for years Mr. Weisenberger was encouraged by his branch president to engage in a deceptive practice of inflating insurance quotes obtained from head office in Toronto, and passing on the increased cost to his customers.

After the Superintendent of Insurance for Manitoba came calling in April of 1992, the fraud unraveled. The years of issuing dummy invoices cost the firm $705,000 in forensic accounting fees and over three-million dollars in reparations to customers.

Weisenberger’s accomplices had either retired or moved on to other jobs. For violating Manitoba’s Insurance Act, Weisenberger was fired by the Canadian head office of the insurance company on May 25, 1992.

Bringing suit for wrongful dismissal, Weisenberger claimed that he did not know what he was doing was wrong. And if it was wrong, then it was done at the orders of his superiors. Furthermore, said Weisenberger, he had been unfairly made a scapegoat by his employer in an attempt to avoid penalties.

It defied belief that Weisenberger did not know what he was doing wrong, said Justice Hanssen of Manitoba’s Queen Bench in a decision released on January 15, 2004. He had taken great pains to hide his actions from the head office in Toronto.

That Weisenberger was following the orders of his boss was no defence, ruled Justice Hanssen. Weisenberger, wrote Justice Hanssen, was an “active and eager participant in the dishonest scheme.”

In dismissing Weisenberger’s suit, Justice Hanssen clearly indicates that employees that break the law at the behest of their supervisors will find no protection from the courts.

Employees are explicitly empowered to refuse to perform work in one instance where they believe a law is being violated by their employer. Where employees suspect their health is endangered, or where they believe the employer has violated the provincial Occupational Health and Safety Act, they are permitted by statute to refuse to work. Such a refusal must be investigated internally and, if necessary, by a government inspector.

It is no surprise, then, that unions and employees have attempted to use occupational health laws to assert a right to refuse to work in a hostile or harassing environment. In one recent case, a labour arbitrator decided that he had the power to order an employer to discipline a manager for creating a hostile work environment that bordered on a health and safety threat. And, in a recent campaign, the Canadian Union of Public Employees has launched an attack on excessive workplace stress—and its concomitant effects on mental health—as a violation of health and safety laws.

In the modern world, individuals and business are increasingly regulated. When venturing into new business territory, they often confront a maze of regulations and laws imposed by local, provincial, and federal governments.

So what should employers do when treading into new administrative territory? Drawing lessons from the cases reviewed , employers should take the following precautions:

• Obtain legal advice that supports the organizations move into new territory.
•   Communicate the change in direction clearly and repeatedly. Hold staff meetings and allow questions and concerns to be voiced.
•    If necessary read excerpts from the legal opinions to staff.
• Focus staff on following directions. Reinforce this with coaching and progressive discipline.
•    Warn of the consequences of the failure to follow directions.