Canadian Employment Law Today

September 8, 2021

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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Canadian HR Reporter, 2021 Canadian Employment Law Today Canadian Employment Law Today | | 7 More Cases More Cases The treasurer requested financial state- ments in advance of board meetings to pre- pare monthly reports, but Goruk wouldn't provide them until the day before a meeting and they often didn't contain all the infor- mation the treasurer needed. The treasurer received approval from the chamber's presi- dent allowing the bookkeeper to share the financial statements, but Goruk continued to try to block her, requiring the treasurer to pick up hard copies at the chamber office in - stead of emailing them. Financial irregularities The treasurer became concerned with irregu- larities in the chamber's finances in the fall of 2013. The board of directors approved an investigation and the treasurer scheduled an investigative meeting with Goruk and the bookkeeper for Feb. 27, 2014. On Feb. 18, a chamber member — and former president — wrote a memorandum about concerns he had to proposed amend - ments to the chamber's constitution, which were to be voted on the following month. He dropped the memorandum off at the chamber office and a staff member gave it to Goruk, expressing concern that it wasn't an appropriate message to circulate through the e-broadcast system. However, Goruk autho - rized the message to be sent. The memorandum sent shockwaves through the membership, and the board of directors called an emergency meeting for the next day, Feb. 19. The board discussed the in - vestigation of the financial irregularities and the inappropriate e-broadcast and decided to place Goruk on paid suspension until a fo- rensic audit of the financial irregularities was completed. On April 1, the chamber sent Goruk an email with questions relating to items turned up in the investigation, including: • Vacation pay taken in lieu of six weeks' vacation time without authorization • An unauthorized three-per-cent salary increase in November 2013 from a book - keeping mistake • Hiring Goruk's son's company for snow removal every year since 2003 and not disclosing it • Payments and fees for personal credit cards charged to the chamber • Putting only her signature on a bank transfer, contrary to policy Altering the amount of money on a bank transfer from one chamber account to an - other after it was executed by two signatories, when Goruk determined some of the money was already in the second account. When Goruk returned the answers, the chamber wasn't satisfied. It terminated her employment on April 28. Fiduciary duty The court found that Goruk's position as a key employee in a senior role who was re - sponsible for making executive decisions put her in a fiduciary position. As a result, she owed the chamber "duties of loyalty, honesty, good faith and a strict avoidance of conflicts of interest," the court said, adding that it was implied that she would act in the best inter - ests of the chamber. This was particularly im- portant because the chamber was governed by "a constantly changing board of directors" that relied on the executive director for day- to-day management. The court found that altering the bank transfer without telling anyone created a false document that was "perilously close to forgery and dishonest misconduct," even if it didn't deprive anyone of value. However, the correction on the transfer was in the cham - ber's interest and the bookkeeper, who also knew of the alteration, wasn't disciplined. This indicated that the board didn't view this incident in isolation as very serious, said the court. The court also found that Goruk's decision to take vacation pay for unused vacation time was poor judgement, particularly since she had never before been paid vacation pay in lieu of holiday time. In addition, the amount she took was "a significant boost to her salary and a significant expense to the chamber." However, as with the bank transfer alteration, it didn't on its own justify termination, the court said. As for the unauthorized raise, the court noted that it was because of a bookkeeping error and not her fault. However, Goruk did nothing to correct it for three months until the investigation discovered it. Allowing the unauthorized raise to continue was a misap - propriation of chamber funds that was "anti- thetical" to the fiduciary relationship. Once again, however, it wasn't enough on its own to justify termination, the court said. The court found that the use of Goruk's son's company for snow removal was not misconduct. Although contracts over $1,000 normally required executive committee approval, the evidence indicated that the chamber knew who was doing the snow re - moval over the 10-year period — four past presidents testified that they were aware of it — but nothing was ever done. As a result, the chamber condoned the hiring of the com - pany, the court said. The evidence also revealed that the credit cards were issued in Goruk's name because the company wouldn't issue one to a not- for-profit organization. The documents indi - cated that it was used for chamber expenses and only a small amount for personal expen- ditures, which the chamber could have easily told her to stop doing. In addition, the an- nual fee was "a trivial item" and the card was "a minor issue," the court said. The court took a more serious view of Goruk's blocking of the treasurer's access to financial records. There was no explana - tion as to why she did this and, while there may have been a personality conflict, Goruk showed poor judgment in how she handled it. "The fact is, the chamber was not Ms. Goruk's private enterprise," said the court. "It was a not-for-profit corporation governed by a board of directors. Ms. Goruk reported to that board." The court also found that Goruk's decision to send the memo that the board of directors would not have approved in an e-broadcast was another example of poor judgment. She may have agreed with the former president's views, but she breached her loyalty to the board of directors in allowing it, the court said. The court determined that the multiple is - sues over a few months in 2013 when consid- ered together raised serious questions about Goruk's judgment and the board's ability to trust her. The board of directors couldn't watch over her all of the time, so honesty and judgment were paramount in the role of ex - ecutive director. "I find that the board was justified in reach- ing the conclusion that Ms. Goruk had not acted with complete honesty in the discharge of her duties as executive director," said the board. "That absence of integrity and the demonstrated exercise of poor judgment on significant issues justified her immediate ter - mination." For more information, see: • Goruk v. Greater Barrie Chamber of Com- merce, 2021 ONSC 5005 (Ont. S.C.J.). « from EXECUTIVE DIRECTOR on page 1 Employee's senior role and responsibility put her in fiduciary position The Chamber of Commerce was governed by a 'constantly changing board of directors' who relied on the executive director for day-to-day operations.

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