By Graeme McFarlane

So you think that those accidental phone calls are amusing and harmless, right? You may want to think again.

A Fool Falls Afoul of a Phone
Misfortune (although probably deserved) fell upon an IBM employee working in Alberta. Two accidental outgoing calls were placed by the employee’s phone. These calls allowed the receiver to hear a discussion that occurred while the calls were connected. In the discussions, the employee was heard soliciting work for a private business while he was supposed to be working for IBM. When it learned about what the employee was doing, IBM terminated him for cause.

The employee worked as a salesperson and earned $140,000 plus commissions. He had previously disclosed a personal business (“Compartment Inc.”) to IBM, but committed to transfer operational responsibility of that business to his wife who was Compartment’s co-owner.

Clear and Present Knowledge
The employee was bound by IBM’s employment policies. One of these policies dealt with conflicts of interest as follows:

Your private life is very much your own. You are, however, an IBMer both on and off the job and a conflict of interest may arise if you engage in any activities or advance any person interests at the expense of IBM’s interests. It’s up to you to avoid situations in which your loyalty may become divided. Each individual’s situation is different, and in evaluating your own, you will have to consider many factors. The most common type of conflicts are addressed here to help you make informed decisions.

Another dealt with restrictions on outside activities while on company time:

You may not perform non-IBM work or solicit such business on IBM premises or while working on IBM time, including time you are given with pay to handle personal matters. Also, you are not permitted to use IBM assets, including equipment, telephones, materials, resources or proprietary information for any outside work.

The employee had full knowledge of these policies and also knew that if he had any questions he was to consult his manager or even in house counsel. He knew that the violation of company policies could result in his termination. No inquiries were made regarding his outside business activities.

Compartmentalized Employee Efforts
On the day in question, the employee was supposed to participate in a weekly telephone conference with his manager. The employee did not call in to the conference, and he claimed that he was double-booked. Later that day, the impugned took place and ultimately his manager heard a conversation between the employee and a subcontractor taking place at one of Compartment’s customers. In addition, the employee made a long distance call on his IBM cell phone for Compartment related purposes.

When questioned about the calls, the employee admitted that had been performing work for Compartment during IBM’s business hours for a lengthy period of time. He had been doing this work for approximately three hours per week. Ultimately, IBM terminated the employee for cause.

The matter went to trial for wrongful dismissal and the court decided that the summary termination was justified: Ross v. IBM Canada Limited, 2015 ABQB 563. The Court analyzed the employee’s work pattern and held:

IBM’s, and Mr. Ross’, work was not of the bohemian variety where people might even be expected to keep idiosyncratic hours. A minimum work day from 8 to 5 or 9 to 5, five days a week, is a reasonable expectation for a person earning in the $140,000.00–$$200,000.00 a year range.

The Court further held that “spending three hours a week on one’s own business when one is in full-time employment with an employer who expects, and has a right to, full-time commitment, is a significant breach of the employment relationship.”

The Court also addressed the employee’s long distance phone call, but found this to be a minor breach that would not have justified a summary termination.

Reasonable to Expect Responsibility
In reaching its conclusion, the Court also discussed the circumstances related to an employee who works at home without supervision. It held that employees in such circumstances must demonstrate continuing trustworthiness:

Viewed objectively by a reasonable employer, Mr. Ross’ misconduct evidenced a breakdown in the employment relationship: insofar as the nature of the workplace is concerned, as a mobile employee, Mr.Ross was working in an honour system. The employer, who has no effective means, and no wish, to micromanage the employee, must be able to rely on the assumption that the employee is devoting his full-time efforts to IBM’s interests. This was no longer reasonably possible for IBM.

The Court found that the employee had irrevocably breached the employment relationship and that the trust foundation had been destroyed.

This case is useful to employers because it provides assistance with respect to the amount of fidelity it can expect of employees. One important feature was the employers policies with respect to conflict of interest.

If an employer wants to ensure that it is getting the wage bargain it thinks is appropriate, clear policies regarding outside work during business hours should be implemented.

If you are one of those employees who may be moonlighting on the job—watch out for the pocket dial!

Graeme McFarlane is a partner at Roper Greyell LLP, a firm focused on partnering with companies to find solutions to workplace issues.

(PeopleTalk Winter 2015)