Canadian HR Reporter

CANADIAN HR REPORTER July 11, 2016 16 NEWS THE CAREFUL WORKPLACE: FROM VISION TO REALITY REGISTER ONLINE: www.HRReporter.com/CPDCentre For more Live and On-demand Webinars, visit us online. HIGHLIGHTS: • The original purpose of the Standard, the stated vision of which is the achievement of a "Careful Workplace." In such a workplace there must be both a psychologically safe system of work and a psychologically safe culture • The practical implications of the systemic and cultural requirements of the Standard for both HR and OHS roles • Connections with existing and proposed legislation and regulation DATE: JULY 27, 2016 LIVE WEBINAR TIME: 12:00 - 1:00 p.m. ET PRESENTER: Martin Shain, S.J.D. | Neighbour at Work Centre® interview process, said Michael Howcroft, a partner at Blakes in Vancouver. "is probably came as a sur- prise to the employer. Often, the key issues are really around sal- ary, vacation, termination… they aren't always as focused on ben- efits. It's 'We have a benefits pack- age' and, frankly, some employees aren't even always that aware ex- actly what the terms and condi- tions of their benefits are." is kind of situation probably happens quite often but the con- sequences don't usually manifest themselves this way, according to Ryley Mennie, an associate at Mc- Carthy Tétrault in Vancouver. "It's fairly standard that em- ployers would summarize and give some general information about benefits plans, and they probably do it quite unwittingly — they may not be as familiar with all the details as they probably should be but in most cases nothing bad happens. is was a particular case that had the perfect storm with all the variables… so it kind of exemplifies what can happen if those risks materialize." Background The case before the Supreme Court of British Columbia in- volved Cary Feldstein, a 37-year- old man suffering from cystic fi- brosis. In April 2012, he applied for a job at 364 Northern Devel- opment and was involved in inter- views and discussions with CIO Eugen Nizker. Feldstein said he inquired about employee benefits and he also disclosed his condition to Nizker, however, Nizker said they only discussed prospective salary, va- cation, start date and parking. Feldstein was also given a copy of the benefits brochure, which provided for LTD coverage of 66.67 per cent of monthly earn- ings to a maximum of $5,000. For Feldstein, who would earn a sal- ary of $84,000, this translated to a potential benefit of about $4,669 per month. e benefits summary also stat- ed, under "Proof of Good Health," that "(a)pproval is required for coverage in excess of $1,000, and any increase in that coverage of 25 per cent or more of $5,000, whichever is greater." Feldstein said when he asked Nizker about what constituted "Proof of Good Health," Nizker told him it was tied to the three-month proba- tionary period. However, Nizker said nothing about the LTD plan was discussed during that call. Feldstein started working at 364 in April 2012 and in November, his health began to deteriorate as a result of his condition. He missed numerous days of work and then informed 364 he would be assessed for a double lung transplant and this would require an increased number of absences. In October, Feldstein wrote to the owner of 364 asking for assistance when it came to the LTD plan: "I am worried that I somehow majorly messed up or I misunderstood the details of the plan and I'm ineligible for coverage. ere is a clause in the LTD section titled 'Proof of Good Health' but there is no definition of how to provide that or if that has been satisfied by default by working months or 12 months for the company. Given my latest health status, I doubt I'd be able to get that 'proof ' now but may have gotten it when I started with the company. Were we supposed to have a medical exam of some sort or submit some paperwork?" When the owner inquired with Sun Life, it reproduced a clause in the contract that stated: "We do not pay benefits if your disability results directly or indirectly from a condition which existed on or before the date your coverage be- gan. However, this limitation will not apply to you if: 1) you have been covered for long- term disability with your em- ployer for at least 13 weeks dur- ing which you have been actively working continuously (up to 3 days of absence does not count) and you have not been treated by a doctor, or any medical person- nel under the direction of a doc- tor, for the condition, or 2) you became totally disabled more than 12 months after your coverage began." After further discussions, the owner told Feldstein that as a re- sult of the general health of the group, his pre-existing condition would not preclude his access to benefits, so Feldstein applied to Sun Life for LTD benefits. e company terminated Feld- stein's employment in November 2013, effective February 2014, and it was then he learned the benefit he would receive was the "non- evidence maximum" of $1,000 per month. Sun Life said he was not eli- gible for greater coverage because he failed to fill out a health ques- tionnaire when initially enrolling in the program in April 2012. 364's owner said in an email to Sun Life "this is NOT what I have been told all along… I know noth- ing about a medical form that was supposed to be filled out by the employees. To date, I have simply given them the enrolment form which has been filled out and mainly submitted online… I need to get some answers ASAP on what this claim rep is talking about, as if there WAS a form that needed to be filled out by the staff, and we didn't provide it and have them complete it, there could be some serious liability issues arising." In the end, since Feldstein re- ceived $963.44 per month in Can- ada Pension Plan benefits, which were deducted from his LTD cov- erage entitlement, the payments from Sun Life amounted to a little less than $37 per month. Given the differing version of events, the issues of credibility and reliability were a focus during the trial. But Feldstein's knowledge of his illness would have shaped his state of mind and decision- making at the relevant times, said the judge. "Given this, it is not likely that the plaintiff would have accepted employment which did not offer adequate LTD benefits. It is also unlikely that the plaintiff would fail to seek assurances about 364's LTD offerings before taking a job." By contrast, Feldstein would have been one interviewee among a crowd to 364, said the judge. "It seems to me more likely that Mr. Feldstein would accurately recall the details of the interview process because of the significant personal stakes flowing from his health condition. I am of the view that it is less likely that Mr. Nizker would recall those same details." In looking at the requirements for a claim in negligent misrepre- sentation, these include: Whether there is a duty of care based on a "special relationship" between the representor and representee; whether the representation is in- accurate, untrue or misleading; if the representor acted negligently in making that representation; if the representee relied, in a reason- able manner, on that representa- tion; and whether the representee incurred damages as a result of that reliance. In the end, the judge sided with Feldstein. "Mr. Nizker, during pre-em- ployment discussions with Mr. Feldstein, made an erroneous statement about the eligibility requirements for the defendant's LTD plan through Sun Life. In so doing, Mr. Nizker acted neg- ligently as he knew Mr. Feldstein would likely rely on his descrip- tion of 364's benefits plan, but took no steps to verify the accu- racy of that description. "Mr. Feldstein entered into em- ployment with 364 on the strength of Mr. Nizker's statement and, as a result, incurred a loss of LTD ben- efits which he otherwise would have had when his health dete- riorated. is caused the plain- tiff significant mental distress... As a result, I award the plaintiff $83,336.80 as compensation for 40 months of lost LTD benefits, and $10,000 for aggravated dam- ages, for a total of $93,336.80." Reasons behind decision e judge ultimately awarded 40 months, at $3,500 a month — the delta between the minimum pay- ment without good health and the full benefit he would have gotten had he not had a pre-existing con- dition, said Howcroft. "It's a big amount of money but employers and employees don't think about it until it happens because most of us don't have to deal with long-term disability, blessedly," he said. "If there's one area where I al- ways counsel caution is when it comes to long-term disability be- cause the numbers can be really significant if you're looking at a 40-year-old employee who was denied LTD benefits for some rea- son and may be disabled through to age 65." The case really turned on whether or not there was a rea- sonable reliance, said Howcroft. "e judge... believed Mr. Feld- stein with regards to whether or not the representation was made, the representation was inaccurate, and I think the case really turned on whether it was reasonable for him to rely upon it, particularly because you had a statement made by the hiring manager and then also some paperwork, a benefit plan, actual benefit documents. And... whatever documentation he received after the fact didn't al- leviate the employer's liability." The employer basically be- came the insurer for the higher benefit because of that misrep- resentation, according to Louis Zivot, a partner at McMillan in Vancouver. "Effectively, that puts the em- ployer into a self-insured situation as well, so it's an important case for employers to know. If you're starting to get inquires, it might be one thing to say, 'Here's the Great West Life or Manulife's brochure that details what the coverages are, if you have any questions, call them…' but once you start getting into specifics and you're wrong, then you may be on the hook at the end of the day." 364 only became responsible for the payments because it made a promise that the insurer was not bound to keep, said Mennie. And benefit documents are separate agreements between the employee and the actual benefits provider, he said "So the problem is when you misrepresent the details of those policies and agreements, you are starting to venture into a relation- ship that you may not want to. at's why it's better to provide them with the actual document itself because that will be what governs them, and by getting in- volved yourself, you unwittingly sometimes invite liability for those relationships." Lessons for employers In this case, Feldstein was a good candidate so there was some pres- sure to give answers in a shorter time frame, said Mennie. In that kind of situation, it's best to reach out to HR, provide documenta- tion or put the person in touch directly with the benefits provider. "With respect to the employ- ment agreement itself, having an 'entire agreement' clause can be very crucial… essentially, it just says that 'Whatever we discussed leading up to this agreement, ev- erything that we've agreed on is in this agreement,'" he said. "So if you do cross that line and inadvertently make some promis- es that were not entirely accurate during the onboarding process, you can help mitigate against the risks of that by including a clause in your agreement that says any- thing that was stated previously doesn't apply, that 'is is what we're agreeing on, here are the terms now.'" Employers aren't going to invest a lot of time training HR people about the intricacies of an insur- ance policy, said Zivot. "Your average employer, all they know (is) they're sending in a premium or splitting a pre- mium with the employee every month for a benefit provided by a third party." In this case, the hiring man- ager made a statement he as- sumed was correct without actu- ally checking the facts, and that proved to be a costly error, said Howcroft. "If there's lessons to be learned, it's to make sure that the person who's engaging the applicant doesn't guess, knows the answers to the questions. And in this case, if he didn't really understand how the LTD plan worked, he should have gone to human resources to confirm or if there wasn't resourc- es… it would have made sense to double check with the insurer, then there's no question." Improved documentation of the interview process could help, he said. "Obviously, the more paper- work and notes and documents you have, the better you're going to be, but I also recognize you can't create a verbatim transcript of every meeting you have with every prospective employee." 'By getting involved, you invite liability' BENEFITS < pg. 1 "If there's lessons to be learned, it's to make sure that the person who's engaging the applicant doesn't guess, knows the answers to the questions."

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