Just Cause: Employment Termination for a Policy Violation
What are employers required to prove for terminating an employee for breaching a corporate policy? When is a duty to accommodate required? Will a claim in this context fall under the Federal Courts Act[i] or the Limitations Act[ii]? These questions are answered by the Ontario Superior Court in McCarthy v. Bison Transport Inc., a case that considered an employee’s alleged wrongful termination, violations of workplace safety policies, the employer’s duty to accommodate, and the applicable statutes for limitations periods in issuing claims.[iii]
McCarthy v. Bison Transport Inc.
The Plaintiff, John McCarthy, commenced a wrongful dismissal action against his former employer, Bison Transport Inc., alleging, inter alia, that he had been wrongfully terminated.[iv] Mr. McCarthy was employed by Bison Transport as a long-haul truck driver from October 2013 until his dismissal in November 2017.[v] His employment contract required him to comply with the company’s Employee Manual, Driver Reference Guide, and Drug and Alcohol Policy.[vi] During orientation, he received training on these policies and signed acknowledgements confirming that he understood violations could result in discipline up to and including termination.[vii]
In November 2014, Mr. McCarthy failed a mandatory random drug test after testing positive for cannabis. Bison Transport referred him to a substance abuse professional, who concluded that he did not have a substance abuse or addiction problem. After completing the required education program and passing a return-to-work test, he resumed work and received a written warning advising that any future violation of the Drug and Alcohol Policy could result in immediate termination.[viii]
Approximately three years later, Mr. McCarthy failed a second random drug test. During a meeting with management, he admitted that he had used marijuana recreationally but denied having any addiction or dependency. After considering his prior warning, his repeated policy breach, the safety-sensitive nature of his position, and the absence of any evidence of addiction requiring accommodation, Bison Transport terminated his employment.[ix]
1.What is the test for termination for breach of corporate policies? Did Bison Transport meet these requirements?
The first issue before the court was whether Mr. McCarthy had been terminated for just cause, which means a legitimate reason.[x] Relying on Hampton Securities Limited v. Dean,[xi] the court confirmed that an employer seeking to terminate an employee for breaching a corporate policy must establish that:
- the policy was well known to the employee;
- the policy was consistently enforced; and
- the consequences imposed were proportionate to the seriousness of the breach.
The court decided that each of these requirements had been satisfied. Bison Transport had clearly communicated its Drug and Alcohol Policy during orientation, required employees to sign acknowledgements confirming their understanding, and expressly warned Mr. McCarthy after his first failed drug test that a second violation could result in termination.[xii]
The court also accepted that the policy was consistently enforced. Employees who failed a first drug test were permitted to return to work only after completing rehabilitation requirements and were warned that a second breach could result in dismissal. Where there was no evidence of addiction or dependency following a second failed test, Bison Transport’s consistent practice was to terminate employment because of the significant public safety risks posed by impaired commercial drivers.[xiii]
Given the Plaintiff’s safety-sensitive role, his knowledge of the policy, his prior warning, and the absence of any disability requiring accommodation, the court concluded that termination for cause was proportionate and consistent with the employer’s policy. Accordingly, the dismissal was lawful.[xiv]
2.Did Bison Transport have a duty to accommodate? When is such a duty required?
Although employers may implement random drug and alcohol testing in safety-sensitive workplaces, they remain obligated to accommodate employees who suffer from a drug or alcohol dependency amounting to a disability, up to the point of undue hardship, which means that it is very difficult or almost impossible to accommodate them.[xv] The court emphasized, however, that the duty to accommodate arises only where the employee has, or is perceived to have, a disability. In the absence of a disability, there is no obligation to accommodate.[xvi]
The evidence established that following Mr. McCarthy’s first failed drug test, an independent substance abuse professional concluded that he did not suffer from substance abuse or addiction. Likewise, following his second positive test, Mr. McCarthy described himself as only a casual recreational marijuana user and never suggested that he suffered from an addiction or dependency. During litigation, he also removed his allegation that he had a disability and confirmed that no professional had ever diagnosed him with a substance abuse disorder.[xvii]
The court therefore held that Mr. McCarthy neither had nor was perceived to have a drug-related disability. As a result, Bison Transport had no duty to accommodate before terminating his employment.[xviii]
3.What damages would have been awarded?
Although the court concluded that the dismissal was for cause, it considered what damages would have been awarded had the termination been wrongful. The court decided that Mr. McCarthy would have been entitled to four months’ reasonable notice. However, because he secured comparable employment within approximately one month of his dismissal, he substantially mitigated his losses. The court therefore, would have awarded approximately $17,500 for wrongful dismissal.[xix]
Additionally, the court declined to award any damages for breach of the Canadian Human Rights Act[xx] because there was no evidence that Mr. McCarthy had a disability or had been discriminated against on that basis.[xxi] The court also rejected the Plaintiff’s claims for aggravated and punitive damages, finding that Bison Transport had acted honestly, reasonably, transparently, and in good faith throughout the dismissal process.[xxii]
Key Takeaways
The court’s decision in McCarthy v. Bison Transport Inc. bears important information for employees and employers alike. Key takeaways include:
- Employers seeking to terminate for breach of a workplace policy must prove that the policy was clearly communicated, consistently enforced, and that the disciplinary consequence was proportionate to the breach.[xxiii]
- In safety-sensitive workplaces, employers may implement and enforce random drug and alcohol testing policies, provided they accommodate employees who have a drug or alcohol dependency amounting to a disability.[xxiv]
- The duty to accommodate arises only where there is evidence that the employee has, or is perceived to have, a disability. Recreational drug use, without more, does not trigger that duty.[xxv]
- For employment claims brought in Ontario courts, the Limitations Act, 2002 governs limitation periods, even where the employer is federally regulated.[xxvi]
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[i] Federal Courts Act (R.S.C., 1985, c. F-7).
[ii] Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.
[iii] McCarthy v. Bison Transport Inc., 2026 ONSC 3729 [hereinafter McCarthy].
[iv] McCarthy at para 1.
[v] McCarthy at paras 2 and 5.
[vi] McCarthy at paras 6-12.
[vii] Ibid.
[viii] McCarthy at paras 13-19.
[ix] McCarthy at paras 20-27.
[x] McCarthy at para 28.
[xi] Hampton Securities Limited v. Dean, 2018 ONSC 101 at para 92.
[xii] McCarthy at paras 7-19 and 33.
[xiii] McCarthy at paras 34-35.
[xiv] McCarthy at paras 44-45.
[xv] McCarthy at paras 31-36.
[xvi] McCarthy at para 36.
[xvii] McCarthy at paras 37-42.
[xviii] McCarthy at para 43.
[xix] McCarthy at paras 46-52.
[xx] Canadian Human Rights Act (R.S.C., 1985, c. H-6).
[xxi] McCarthy at paras 53-54.
[xxii] McCarthy at paras 55-64.
[xxiii] McCarthy at para 30.
[xxiv] McCarthy at paras 31-36.
[xxv] McCarthy at paras 36-43.
[xxvi] McCarthy at paras 74-75.
Tags: Employment Litigation Law, Civil Litigation Law, Commercial Litigation Law, and Contract Disputes.