Mar 1, 2016

Ontario Court of Appeal ruling: employee who signed a waiver can still sue employer

Fleming v. Massey, 2016 ONCA 70 (CanLII)

On January 26, 2016, the Ontario Court of Appeal released its decision in Fleming v Massey. The case involves an employee who has sued his employer and others for damages after he was injured volunteering at a go-kart event. The decision addresses important questions regarding when employees can sue their employers for damages arising from workplace injuries.

The WSIA Regime

Pursuant to the Workplace Safety and Insurance Act (“WSIA), most employers in Ontario (i.e. “covered” employers) are insulated against lawsuits from their employees claiming damages arising from a workplace injury. In exchange for this insulation, covered employers must contribute to a statutory insurance fund created by the WSIA and administered by the Ontario Workplace Safety and Insurance Board (“WSIB”) and, in some cases, employers are liable to pay benefits under the insurance plan. Likewise, in exchange for foregoing their rights to sue their employers, employees employed by covered employers who sustain damages as a result of a workplace injury are able to claim benefits from the WSIB. This arrangement is known as the “historic tradeoff”.

However, there are some employers that are not covered by the WSIA (i.e. “non-covered” employers). These non-covered employers neither contribute to the insurance fund nor are liable to pay benefits, unless they have applied for optional coverage. Likewise, the employees of non-covered employers are not able to claim benefits from the WSIB unless their employer has applied for optional coverage. Rather than leave employees of non-covered employers with no recourse following a workplace accident, Part X of the WSIA (and, in particular, section 114) provides those workers with statutory rights of action against their employers to recover damages arising from a workplace injury.

The Fleming Decision

Derek Fleming was acting as “race director” at a go-kart event. Prior to accepting his responsibilities as “race director”, Mr. Fleming had signed a waiver releasing the event organizers, the track owner and event participants from liability for all damages associated with participation in the event due to any cause, including negligence.

Unfortunately, Mr. Fleming was injured when a go-kart crashed into hay bales lining a corner of the go-cart track.

Go-kart tracks are not covered by the WSIA, and the go-kart track had not applied for optional coverage under the WSIA. Accordingly, Mr. Fleming sought to sue the event organizers, the track owner and the operator of the go-kart that crashed (collectively, the “Defendants”) for damages arising from his injuries.

In response, the Defendants sought to rely upon the waiver that Mr. Fleming had signed, and brought a motion to dismiss Mr. Fleming’s action on account of the waiver. The motion judge in the Ontario Superior Court agreed with the Defendants, finding that the waiver signed by Mr. Fleming was enforceable and barred Mr. Fleming from recovering damages from the Defendants.

As part of the motion judge’s decision, the motion judge concluded that Mr. Fleming:

  1. was not an employee but rather a volunteer who received a stipend, and
  2. had signed the waiver knowing generally what signing the waiver meant and that the wording in the waiver was broad and would cover almost all eventualities.

Mr. Fleming appealed, arguing that he was an employee and that, for public policy reasons, the waiver he had signed should not be enforced.

The Ontario Court of Appeal unanimously agreed with Mr. Fleming, concluding that he was an employee and that the waiver “should be declared void given the importance of the public policy in favour of workers’ compensation”. In reaching that conclusion, the court stated:

“[…] the courts should exercise extreme caution in interfering with the freedom to contract on the grounds of public policy. Considering the sweeping overriding of the common law made by workers’ compensation legislation and the broad protection it is designed to provide to workers in the public interest, it would be contrary to public policy to allow employers and workers to contract out of its regime, absent some contrary legislative indication.”

The court was not able to find any legislative intent to the contrary. Instead, the court considered the objective of the WSIA as a whole – “to ensure that injured workers have access to compensation.” To that end, the court concluded that “it would be contrary to public policy to allow individuals to contract out of the provisions of Part X of the WSIA.”

Therefore, the Court of Appeal set aside the motion judge’s order granting summary judgment, and the court allowed Mr. Fleming’s action against the Defendants to proceed to trial.

The court ruled that where the employer:

  1. is classified as “non-covered” by the WSIB; and
  2. has not applied for optional coverage under the WSIA

an employee of that employer cannot waive, or contract out of, his/her right to sue that employer for a workplace accident.

Takeaways for employers

Following this Ontario Court of Appeal decision, employers should be mindful of the following:

  • Ontario courts will not give weight to an employee’s waiver of the right to sue his or her employer for a workplace accident.
  • Employers that do not have insurance coverage for injuries sustained by their employees may be directly liable to their employees for damages sustained as a result of a workplace injury.
  • Employers that are not covered by WSIA insurance may want to consider:
    1. applying for optional coverage from the WSIA; or
    2. obtaining private insurance (e.g. short-term disability, long-term disability, general liability, etc.) to cover damages sustained by employees as a result of workplace injuries.
  • Employers may be held liable for damages sustained by individuals who are not viewed as employees (e.g. volunteers, contractors, etc.), and should ensure that appropriate measures are implemented to mitigate against risks of liability related to those individuals.