Employee Ordered to Repay all Damages Awarded in Settlement

Written on behalf of Peter McSherry

When an employment-related dispute arises, a wronged employee has a number of ways of seeking justice, including pursuing a complaint before the Ontario Human Rights Tribunal (“HRTO”) when the injustice involves allegations of discrimination on one of the grounds enumerated in the Human Rights Code, for example, creed, religion, ethnicity, sex, or sexual orientation. When a complaint is made to the OHRT, the parties are offered the opportunity to participate in mediation in an attempt to resolve the dispute without a hearing. When mediation is successful, a settlement agreement will be prepared for the parties. between the parties. But what happens when one of the parties later breaches the settlement agreement? A recent decision from the Ontario Human Rights Tribunal recently provided additional guidance on this issue.

The Parties Settle a Complaint of Sex Discrimination in Employment

The case of L.C.C. v. M.M. involved a complaint of discrimination in the workplace, made by the complainant/respondent, “MM”, against both her employer, the corporation “LCC” and an individual named “LC” who also worked for LCC. In the complaint, MM alleged that she had been discriminated against in her employment on the basis of sex. The parties, all of whom were represented by counsel, engaged in mediation in the summer of 2019 and were able to come to mutually satisfactory terms of resolution. Minutes of Settlement were drafted to reflect the terms, and on June 7, 2019, the parties all signed the agreement.

The terms of the settlement dictated that MM would be paid a certain sum of money in exchange for a full and final release of all liability on the part of LC and LCC. The Minutes of Settlement also included several clauses governing confidentiality and non-disparagement which provided that MM could disclose the terms of the Minutes of Settlement to immediate family and professional advisors on the condition that they maintain strict confidentiality, and further, neither party would make any “oral, written or electronic communications about the other which were defamatory, untrue, disparaging or would otherwise damage the party’s reputation. The Minutes of Settlement provided that if MM breached such agreement, she would be required to repay the settlement payment as liquidated damages, and would be responsible for any additional damages incurred by LLC.

The Complainant Posts About the Settlement on Social Media

About 15 months after signing the Minutes of Settlement, in September of 2020, LCC discovered a posting on MM’s LinkedIn page. The statement, which appeared in the first sentence of the publicly available “About” section of MM’s profile, read: “To all those inquiring, I have come to a resolution in my Human Rights Complaint against [the applicant corporation] and [the individual applicant] for sex discrimination.”

Once LCC discovered the post, it contacted MM to request that she remove it. While they received no response from MM, the posting on her LinkedIn page was changed about a month later to read: “To all those inquiring, all matters have been resolved in my Human Rights Complaint against [the applicant corporation] and [the individual applicant] for sex discrimination.”

Approximately one month after those revisions, LCC and LC filed their application with the OHRT alleging that MM had breached the terms of the settlement in that she had violated both the confidentiality and the non-disparagement terms of the agreement. Approximately one month after that filing, MM removed all mention of the matter from her LinkedIn profile.

A Memorandum of Settlement is a Contract

The HRTO began by first noting that since the Minutes of Settlement constituted a contract, the principles of contract law are applicable for determining whether there had been any breach. As such, the adjudicator must consider all of the facts and surrounding circumstances, including the intentions of the parties when they entered into the contract, in evaluating whether there has been a breach of an agreement. Further, such analysis requires consideration of the parties’ good faith.

Turning to consider the Minutes of Settlement, the HRTO noted that there were two exceptions to the confidentiality provisions therein, in that MM was permitted to disclose the terms of the settlement to her close family and financial and legal advisors, so long as any such parties also agreed to maintain strict confidentiality, and that MM was also permitted “upon inquiry by any person” to “simply state that all matters have been resolved”.

Considering the contract, the two live issues in this case were: whether MM’s LinkedIn posting violated the non-disparagement provisions of the Minutes of Settlement, and whether MM’s LinkedIn post breached the confidentiality provisions of the Minutes of Settlement.

Was the Confidentiality Provision of the MOS Breached by the LinkedIn Post?

In assessing whether confidentiality had been breached, the HRTO considered the specific language of the confidentiality provision contained in the Minutes of Settlement, and noted that it had been devised as a “good faith attempt by the parties to address the possibility that the respondent might need to respond to direct inquiries, such as in the course of applying for employment or when speaking to a friend or former colleague with pre-existing knowledge of the case.”

The HRTO specifically rejected MM’s argument that she was free to say anything she liked about the case so long as she did not specifically discuss any money damages or other remedies she may have received in the settlement. Instead, the HRTO was satisfied that the plain language of the provision supported the reasonable conclusion that the confidentiality provisions of the Minutes of Settlement only entitled MM to respond to inquiries by providing the bland statement included in the provision, that “the matter is resolved.” Since MM had gone considerably further in her statement, including naming LC and LCC and indicating that her complaint was one of sex discrimination, she had breached the Minutes of Settlement.

Was the Non-Disparagement Clause Breached by the LinkedIn Posting?

Turning to whether the non-disparagement clause had also been breached, the HRTO was equally convinced that the plain meaning of the words contained in that clause clearly communicated a desire on the part of all parties to avoid reputational damage. By posting the specifics of her complaint (sex discrimination), the name of an individual (LC), and the entity at which both LC and MM were employed (LCC) on her posting, MM had not acted in good faith.

As a result, the HRTO was satisfied that MM had breached both the confidentiality and the non-disparagement provisions of the Minutes of Settlement. As such, LC and LCC were entitled to damages for the breach.

Assessing the Appropriate Remedy for Breach of a Settlement Agreement

The HRTO noted at the outset that evaluating damages for a breach of confidentiality is more difficult than assessing damages for breach of a monetary contractual provision, as the damages are intangible when caused by disclosure of confidential information.

In this case, the Minutes of Settlement in question spoke to the potential of a breach of contract by including a “liquidated damages” provision which dictated the penalty to be paid by any party who violated the agreement. The HRTO carefully considered the language included in the liquidated damages clause in order to evaluate “whether the clause is a disguised penalty clause and therefore punitive or otherwise unenforceable”, and concluded that in fact the liquidated damages provision of the Minutes of Settlement did not have any of the hallmarks of a penalty clause. Further, the amount of liquidated damages noted in that clause was equivalent to the amount of money paid to MM to resolve the dispute in the first place. As such, to have MM repay that amount of money “would simply put the applicants back in the position that they occupied before paying the amount to the respondent.” Therefore, the liquidated damages clause of the Minutes of Settlement was enforceable, and the HRTO thus ordered liquidated damages as the remedy in this case.

Ultimately, MM was ordered to repay to LC and LCC all of the monies that she had received under the terms of the Minutes of Settlement.

Contact Guelph Employment Lawyer Peter A. McSherry to Discuss Your Human Rights Claim

If you believe that your rights under the Human Rights Code have been violated, then you may have a claim for damages you have suffered. It is important to speak with a trusted employment law, like Peter A. McSherry, to ensure that your rights are protected and that you recover any compensation to which you may be entitled. Peter A. McSherry and his team understand how overwhelming it can be to experience discrimination, which is why we regularly advise and represent clients in matters before the Ontario Human Rights Tribunal and Canadian Human Rights Tribunal. We take human rights violations, including discrimination, extremely seriously, and have extensive experience and knowledge in handing claims of harassment, discrimination, and other human rights violations. To learn more about how we can help you, please contact us online or call us at 519-821-5465.