Keays v Honda Canada: The Scope of the Disability Accommodation Duty in Canadian Employment Law

The rise of human rights obligations and, in particular, the emergence of the duty to accommodate, has become the single most significant workplace legal development over the past twenty years. What was once a one-way street of settled prerogatives belonging largely to the employer has become, after the human rights tipping point in the early 1990s, a two-way boulevard of complex and demanding legal responsibilities in the Canadian workplace.

The Supreme Court of Canada (“SCC”) has decided a series of important rulings on accommodation – Alberta Human Rights Commission v Central Alberta Dairy Pool, [1990] 2 SCR 489,      British Columbia (Public Service Employee Relations Commission) v BCGSEU, [1999] 3 SCR 3, British Columbia (Superintendent of Motor Vehicles) v British Columbia (Council of Human Rights), [1999] 3 SCR 868, Quebec (Commission des droits de la personne et des droits de la jeunesse) v Montréal (City), [2002] 1 SCR 665, and McGill University Health Centre (Montreal General Hospital) v Syndicat des employés de l’Hôpital général de Montréal, [2007] 1 SCR 161, among others — that have appreciably expanded the scope and application of the duty. These cases have all arisen out of rulings made initially by human rights tribunals or labour arbitration boards. Applying this law – passed down from on high – to the daily realities of the workplace, arbitrators and human rights tribunals have issued more than a thousand decisions since the early 1990s that have defined the finer detail of the duty. (In addition, on 22 January 2008, the Supreme Court heard arguments in Hydro-Quebec v Syndicat des employees de techniques professionelles et de bureau d’Hydro-Quebec, [2008] 2 SCR 561, dealing with the accommodation of an employee with a mental illness. This case originally arose out of a labour arbitration award.)

These new accommodation principles established by arbitrators and tribunals are broad and purposive. And while the accommodation duty applies to every human rights ground, disability rights have been the major beneficiary. Employees with disabilities now have the right to have their jobs re-bundled and modified so that they can remain employed and productive in the workplace. Mental illness and substance addiction issues now require employers to demonstrate substantial accommodation efforts. Drug and alcohol testing is subject to rigorous human rights standards. And employers cannot dismiss employees with disabilities for innocent absenteeism without demonstrating that they have turned over every workplace stone in looking for a satisfactory resolution.

Yet an important legal arena has been missing in action. While labour law and human rights law have done much of the heavy lifting in applying the Supreme Court’s directions on accommodation, employment law – the third branch of modern Canadian workplace law – has been a conspicuous laggard. Only a handful of wrongful dismissal judgements issued by the common law courts over the past decade involving a disability case have even considered the accommodation duty, and none have applied the duty in a systematic or consistent fashion. This judicial abstinence has been a splash of cold water on our fundamental commitments to equality and the eradication of workplace discrimination.

The recent decisions by the Court of Appeal (2006) in Keays v Honda Canada Inc, 82 OR (3d) 161, is a partial exception to this trend of judicial abstinence on workplace accommodation issues. The Supreme Court of Canada will hear Honda Canada’s appeal of the Court of Appeal ruling on February 20. In addition to the two parties, nine organizations – including two human rights commissions, the Council of Canadians with Disabilities, the Ontario Network of Injured Workers’ Groups, the Alliance of Manufacturers and Exporters Canada and the Women’s Legal Education and Action Fund (LEAF) – have acquired intervener status in the case.

While best known for the enormous punitive damages awarded to the plaintiff – $500,000 at trial, reduced to $100,000 on appeal – Keays is also an illustration of the possibilities, and limitations, of the common law courts’ approach towards human rights and accommodation issues in employment disability cases.

Keays at the Ontario Superior Court of Justice

Kevin Keays, a salaried employee with 14 years service, was terminated by his employer, Honda Canada, in March 2000. He had been diagnosed with Chronic Fatigue Syndrome, and his employer eventually accommodated Mr. Keays by exempting him from attendance-related progressive discipline. However, after several lengthy disability leaves and an increasingly acrimonious relationship with his employer regarding his treatment and his inability to return to work on a regular full-time basis, the employer ordered Mr. Keays to meet with a company doctor. On the advice of his lawyer, he refused to go to the meeting until Honda clarified the purpose and methodology of this medical assessment. The employer proceeded to terminate him for insubordination, and Mr. Keays sued for wrongful dismissal.

At the Ontario Superior Court, McIsaac J. found that Mr. Keays had been terminated without cause. The court’s reasoning was a curious, and unsatisfactory, mixture of classic wrongful dismissal analyses and the imperatives of the accommodation duty. McIsaac J.’s assessment of Mr. Keays’ termination was conducted solely as a wrongful dismissal issue, focusing on the disproportionality between the termination for insubordination on the one hand, and, on the other, the employee’s dedication, the fact that his disability did not display any “moral turpitude” or “deficiency in his character,” his lack of insolence and disrespect towards his employer, and his legitimate concerns for the violation of his rights under the Ontario Human Rights Code. McIsaac J. awarded Mr. Keays 15 months of salary in lieu of notice, and nine additional months of Wallace damages for the employer’s “egregious bad faith” in its “hardball” manner when terminating him, which led Mr. Keays to experience a serious post-dismissal depression.

At the remedies stage, Mr. Keays argued that the legacy of the Supreme Court’s 1981 ruling in Bhadauria was now exhausted, and that the employer was therefore additionally liable in tort for breaching his accommodation rights under the Code. The Superior Court reluctantly stated that it was without jurisdiction to consider this remedial relief directly, but returned to Honda’s treatment of Mr. Keays’ disability when considering punitive damages. At this stage of the analysis, McIsaac J. found that: “…Honda committed a litany of acts of discrimination and harassment in relation to his attempts to resolve his accommodation difficulties,” despite being “aware of its obligation to accommodate [Mr. Keays’] illness.” Accordingly, the court ruled that Honda’s violations of Mr. Keays’ human rights constituted an independent actionable wrong, and justified a punitive damages award of $500,000. This was by far the largest monetary remedy awarded in Canadian employment law history. In doing so, McIsaac J. said that the maximum monetary remedy allowable under the Human Rights Code – $10,000 – did not “even [come] close to an appropriate deterrence and denunciation for the outrageous and high-handed conduct of this defendant.”

Keays at the Ontario Court of Appeal

Honda appealed the ruling to the Ontario Court of Appeal. In its decision, released in September 2006, a three-judge panel of the appeal court upheld the trial judgement in all aspects, except for the quantum of the punitive damages award. A majority stated that, in light of Honda’s misconduct, punitive damages were justified, but reduced them to $100,000 because, in its view, some of the findings of fact made by the trial judge against Honda were erroneous and lead to unsupported conclusions. In dissent, Goudge J.A. would have maintained the punitive damages award in their entirety. All three judges endorsed the now-gaping hole in the Bhadauria rule.

For the Court of Appeal, Goudge J.A. reviewed the trial judgement’s assessment of the accommodation issues. He accepted the entire framework of the lower court’s approach to the case as a wrongful dismissal action, with the breach of Mr. Keays’ rights under the Human Rights Code as being properly considered at the punitive damages stage. Without mentioning Meiorin or the elements of the prevailing accommodation test, Goudge J.A. stated that:

The need for this large employer, and indeed all employers, to take seriously their responsibilities in accommodating employees with disabilities is very important. This is, if anything, more true for employees whose disabilities may be seen by some as outside the mainstream and therefore not genuine. The accommodation process must be approached in good faith, openly, and sensitively if the dignity and equality of disabled employees is to be respected as required by the law and morality.

There is much to commend in this statement. The employer’s aggressive resistance to its accommodation obligations is properly identified and rebuked. The vulnerability of an employee with a disability, particularly when the disability is invisible, has been emphatically acknowledged by a senior court. And the protection of the inherent dignity and equality of an employee is a timely re-iteration of a core objective of contemporary workplace law. Indeed, this commentary is the most full-blooded observation on accommodation yet offered by a common law court in a wrongful dismissal suit in Canada.

However, the larger problems in the common law approach remained unaddressed by the Court of Appeal. Accommodation is not an ancillary legal factor to be considered only at the remedies stage of an employment action. Rather, when discrimination is raised in an employment claim, the Meiorin test belongs at the forefront of the substantive analysis when determining whether an employee’s termination was lawful. Nor are the rigorous requirements of Meiorin satisfied by referring to only one of the three steps in the test. The Court of Appeal seized, as did the trial judgement below, upon the good faith requirement (step two) of the Meiorin test, and conflated it with the good-faith obligation on employers in a punitive damages analysis. This approach led both courts to improperly defer the accommodation issue until the remedies stage, and then to deal with the duty in an incomplete fashion. Applying Meiorin without the third and most important step of the test – whether it is impossible to accommodate short of undue hardship – is like staging Hamlet without the prince. As well, the Court of Appeal did not disapprove of the trial judgement’s assessment that the pertinent facts in the case included the employee’s dedication to his work, his lack of moral turpitude, and his lack of insolence and disrespect towards his employer. These may be relevant considerations in a classic wrongful dismissal action, but these features have no place in a disability discrimination analysis. Finally, the Court of Appeal accepted the appropriateness of Wallace damages in a disability discrimination case, without assessing whether such a wrongful dismissal remedial tool is a sufficient substitute for applying human rights remedies.

Keays is a distinct improvement on the meagre and muddled efforts by the common law courts over the past ten years to grapple with the arrival of the accommodation duty in Canadian workplace law and the broader range of human rights responsibilities in employment disputes. Both the trial and the appellant courts took the employment and anti-discrimination rights of Mr. Keays seriously, and both expressed considerable judicial pique at the employer’s disregard of its human rights duties. Neither court utilized the frustration of contract doctrine, and unprecedented monetary remedies awarded by both courts – even in their reduced state on appeal – amount to a significant admonition to other employers not to repeat this behaviour. But Keays has failed to get the job done. Most regrettably, it did not make the qualitative leap to the superior and more principled analytical approach that has already been well-tested and creatively applied elsewhere in Canadian workplace law.

Conclusion

Most employment law observers will be watching the eventual Supreme Court of Canada ruling in Keays to see if the enormous punitive and Wallace damages are upheld. This is important, but pales in significance to whether the Supreme Court directs the common law courts to modernize their approach to disability accommodation in wrongful dismissal cases. The Supreme Court has the opportunity in Keays to correct an errant course. The failure to do so will perpetuate the problems of addressing disability discrimination in the workplace through the deficient and inappropriate mechanisms of traditional employment law tools.

Editor’s Note: This commentary is adapted from Prof. Lynk’s recent article: “Disability and Work: The Transformation of the Legal Status of Employees with Disabilities in the Canadian Workplace,” which has just been published in Law Society of Upper Canada 2007 Special Lectures: Employment Law (Toronto: Irwin Law, 2008), and which has been posted on the Social Science Research Network: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1068403