You Can't Always (Do) What You Want: Judge Finds Failure To Mitigate For Choosing New Career

Since the Supreme Court of Canada ruled in Evans v. Teamsters, much has been made about the issue of mitigation. That decision, a positive one for employers, established a new standard in wrongful dismissal cases for when employees would be deemed to have failed to mitigate: essentially saying that except in extreme cases of a breakdown in the employment relationship, if an employee refused an alternative-employment offer from his or her employer then he or she has failed to mitigate.

In another positive development for employers, a recent case out of British Columbia may offer a new wrinkle: where an employee takes him- or herself out of the job market to switch careers, he or she may have failed to mitigate.

In Steinebach v. Clean Energy Compression Corp., 2015 BCSC 460, the 49-year-old plaintiff had worked his way up from service technician to Vice President Business Development Canada during his 19.5 years with the company. When a new President came on board in 2014 the company restructured, and Steinebach was offered a new position that removed his title of Vice-President and made him a Senior Regional Sales Manager, at the same time adding a new layer of supervision above him – Steinebach argued that this was, effectively, a demotion. In addition, he argued that the new position reduced his potential earnings and changed other significant terms with respect to termination and non-competition.

For its part, the company took the position that the plaintiff's duties remained the same and that the new compensation package, while different, would provide the plaintiff with a better incentive to "take a more proactive approach to sales".

Justice Cohen of the Supreme Court of British Columbia sided with the plaintiff and assessed reasonable notice at 16 months. However, the most interesting part of the decision was the issue of mitigation.

It is well-established that employees have a legal obligation to reduce their damages upon termination of employment by attempting to obtain comparable alternative employment. Generally, when alleging that an employee has "failed to mitigate", an employer will have a fairly significant burden to meet, as the onus is on the employer to prove this failure to mitigate. In order to do so it must be shown that:

  1. The employee failed to make reasonable efforts to find new employment; and
  2. If reasonable efforts had been exerted, other employment would have been successfully secured.

Current case law says that employees are permitted a period of adjustment before being required to begin their mitigation efforts – in other words, they will not be penalized for a reasonable delay in beginning their job searches. Steinebach began looking for work approximately 1.5 months after his termination date, a time period which Justice Cohen deemed reasonable in the circumstances.

Where Steinebach failed in his duty to mitigate was in his lack of diligence in pursuing opportunities within his field, before summarily deciding he was not going to work and he would begin a new career in the financial industry. In finding that the plaintiff failed to mitigate, Justice Cohen relied on the fact that Steinebach gave only cursory attention to trying to obtain a job in his field before abandoning it for a new career, stating at paragraph 82 of his decision:

...I am of the view that the plaintiff's criteria were too narrow, that it would have been reasonable for him to make greater efforts to find new employment, and that if he had done more he would likely have achieved greater success in finding employment in the industry that he had spent the major part of his working life. In my further view, the plaintiff failed to pursue available opportunities that fell within his skill and experience, conducted too limited a job search, and placed a greater emphasis on his personal preferences and career objectives than was reasonable in all of the circumstances.

It should be noted, though, that instead of dismissing the plaintiff's claim for failure to mitigate, Justice Cohen merely reduced the notice period by 3 months. While this may not be a "home run" for employers in the same vein as Evans, it is another tool in reducing exposure at, or before, trial in wrongful dismissal cases.

Note: This a reprint of an article by Kelsey Orth of CCPartners.