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Tribunal Finds Former Costco Employee Who Swore at Customer Was Appropriately Dismissed for Cause

After a legal battle that has lasted almost two years, the British Columbia Employment Standards Tribunal has found that Costco was justified in the just cause dismissal of an employee who swore at a customer in front of her children. The employee will not receive any compensation for his termination.

What Happened?

The employee in question was terminated for just cause after he was involved in an altercation with a customer during which he twice told her (in front of her children) to “fuck off” and “go fuck yourself”. In a subsequent meeting with his managers, the employee described the customer as “a bitch”.

The employee acknowledged that he had interacted with the customer but denied his use of profanities, instead arguing that it had been the customer who had caused conflict. He did admit to calling the customer a bitch in the subsequent meeting.

Costco argued that the employee’s altercation with the customer, as well as his subsequent comments constituted just cause, and that the company was therefore not obligated to pay the employee any amounts that otherwise would have been owed under British Columbia’s Employment Standards Act.

The employee filed a complaint with the Employment Standards Branch.

The Initial Determination

In a decision issued in February 2017, the Employment Standards Branch found that the employee had failed to provide the level of courtesy required under Costco’s employee policies, but was not persuaded that termination had been the appropriate outcome.

Costco was ordered to pay the employee more than $8,800 in damages that had included length of service, accrued vacation pay, and interest.

The Appeal

Costco challenged the initial decision, relying on a Supreme Court of Canada decision that stipulates that in situations where misconduct forms the basis for a “just cause” dismissal, an “assessment of the context of the alleged misconduct” must take place.

Costco also relied on a decision of the B.C Employment Standards Tribunal which confirmed that repeated infractions of workplace rules or incidents of unsatisfactory conduct can amount to just cause if:

  • Reasonable performance standards have been set and communicated to an employee;
  • The employee know that termination can result if those standards are not met; and
  • The employee is given time to meet, but fails to meet, those standards.

The Tribunal noted that, based on Costco’s written employee policies, it is “a condition of employment for every Costco employee to treat [customers] with respect”, and that the employee was “well aware” of the need to be courteous and helpful when dealing with customers. During his interaction with the relevant customer he failed to provide her with the appropriate level of courtesy required by Costco policies, and therefore failed to meet the standards expected of a Costco employee.

Costco had argued that the employee knew that failure to meet these standards could result in his dismissal. The company noted that the employee had previously been involved in a customer altercation that has resulted in a three-day suspension, a formal written warning, retraining regarding the relevant workplace policy, and clear notice that a repeat occurrence could result in termination.

The Tribunal recognized that the employer was entitled to rely on past misconduct as part of the overall context in which the most recent misconduct occurred, noting, based on a B.C Court of Appeal decision, that:

While the prior matters in themselves may not have justified termination, [the employer] was entitled to consider her past misconduct in determining whether it had just cause for dismissal.

The Tribunal noted that the initial determination had discounted the 2011 event and did not acknowledge that at the time of the most recent customer altercation, the employee had been on a “short leash”.

The Tribunal also noted that:

  • The employee appears to have demonstrated, since 2011, a “relatively regular pattern of discourteous or contemptuous behaviour, or insubordination, in his dealings with other people”;
  • Some such incidents resulted in written warnings or verbal reprimands;
  • There is evidence about the employee’s periodic poor treatment of fellow staff as well as other specific incidents in which he told others to “fuck off”;
  • Each of the written warnings received by the employee was labeled a “counselling notice” and included a warning that further violations could result in additional disciplinary action, including termination.

In the Tribunal’s view, the initial decision-maker had erred by failing to fully consider these incidents.

The Tribunal concluded that the altercation with the customer related to a standard set by Costco and communicated to the employee, which the employee had failed to meet (despite having a reasonable opportunity to do so and despite knowing that such a failure would or could result in termination).

The Tribunal also concluded that this altercation was ultimately prejudicial to Costco’s interests in establishing and maintaining a specific standard of customer service.

The Tribunal ultimately found that the just cause dismissal had been justified within the broader context of the employee’s repeat misconduct.

Lessons Learned for Employers and Employees

A just-cause termination occurs when an employer believes that an employee’s conduct was serious enough that the employer can avoid their legal obligation to provide the employee with notice or pay in lieu of notice for the termination. Where just cause is alleged, the employee’s employment ends immediately, and the employee is not given any termination package or severance package

For a termination to be considered a just cause termination, the employee’s misconduct must affect the basis of the employment relationship in such a way that the underlying confidence between the parties is destroyed and cannot be fixed. Examples of such misconduct include:

  • Theft or fraud;
  • Dishonesty;
  • Neglect of duties (including consistent absenteeism or lateness);
  • Workplace sexual harassment or workplace violence; and/or
  • Certain off-duty conduct that affects the employer’s reputation.

For employers, just cause terminations can be difficult to carry out, even when an employee’s behaviour is egregious. More often than not, a just cause termination leads to a wrongful dismissal action which can be lengthy and expensive. Employers wishing to terminate someone for cause should not do so without first consulting an employment lawyer.

At Sultan Lawyers, our employment lawyers provide exceptional legal advice to both employers and employees on a wide variety of workplace matters, including just cause terminations. We can help you understand your options, create a plan for moving forward, and represent you in any disputes that may arise. Contact us at 416.214.5111 or by here for a consultation.

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