Small Business: Time's up for Ignoring Harassment. Consequences of a Policy-less Workplace

Consequences of no Sexual Harassment Policy

A recent Human Rights case involving a small family-owned business and a complainant who was awarded $15,000, illustrates the consequences of not having a sexual harassment policy in the workplace. 

Time is up for employers who fail to investigate allegations of harassment and particularly those who look the other way and plead ignorance after sexual misconduct has been reported.  The recent case also illustrates that a lack of sexual harassment policy or training weigh heavily as factors when a decision is ultimately rendered. 

Milligan v. Maczak Holdings Ltd.

On September 29, 2023, the Human Rights Commission of Prince Edward Island (“PE HRC”) rendered its decision in the matter of Milligan v, Maczak Holdings Ltd.1a case involving sexual harassment of a restaurant worker at Smitty’s Family Restaurant (“Smitty’s”) in Charlottetown, PEI. 

The Facts

  • The Complainant's testimony alleged that:
    •  From October 2017 to January 2018, she was subjected to various forms of sexual harassment by male employees, management and customers:
      • Sexual harassment included sexual joking and innuendo, the use of derogatory language, and sexual touching.
      • A regular customer frequently asked her and other servers for hugs. She felt uncomfortable and the hugs were unwelcome, but she felt pressure to comply with his requests and to socialize with him.
    • She informed management on multiple occasions of incidents of sexual harassment involving other staff, including a serious allegation of sexual assault that occurred off-site between coworkers – one of whom was her stepdaughter.
    • Management was unresponsive and continued to schedule these employees to work some of the same shifts, but “not alone".
    • She experienced ongoing mental health issues for which she required a medical leave.
  • Smitty’s:
    • Lacked any harassment policy, training, or procedures.
    • Provided various reasons for failing to act, including that:
      • These situations were a “he said-she said” with no witnesses to corroborate what occurred.
      • The Complainant was free to leave the restaurant if she wanted; and that there was nothing Smitty's could do.
      • Management denied being told of some of the incidents.
      • Management indicated it was up to “the girls” whether to decline the customer's hugs if they so wished, and that they were free to say “no” if they were uncomfortable.
      • Since sexual assault was alleged to have occurred outside of work, management did not believe there was anything they could do to protect  staff, and that off-site incidents outside of work between employees “were not the business of the employer.” 

The Human Rights Commission


Interestingly, the Panel's decision focused strongly on Smitty's lack of harassment training and policies. 

The Panel found that: 

  • Smitty’s defense demonstrated “a lack of awareness of an employer’s responsibility to their employees” and a display of their “collective lack of experience, knowledge and ability to deal with harassing behaviour.” It stated that allowing a customer to seek hugs from a server was a clear form of sexual harassment which contributed to an unsafe work environment for staff, and that this behaviour in the workplace was essentially condoned by Smitty’s.
  • (At best), Smitty’s management may not have seen the incidences or understood how to address them, but were still responsible for the behaviours and their lack of response, and that “combined with having no policy or training allowed sexual harassment to be normalized and become part of the work culture.”
  • Smitty's did not have a sexual harassment policy in place, no training and no procedures to deal with a harassment complaint. Concerns raised by their staff were minimized and not responded to in a timely or appropriate way. 

  • On a balance of probabilities, the Complainant experienced sexual harassment at Smitty’s which cultivated a work environment that was unsafe for staff,  ripe for exploitation, and an unhealthy place for the Complainant that led, in part, to her ongoing mental health issues that required a medical leave.


The Panel awarded the Complainant $15,000 in general damages, ordered Smitty’s to provide the Commission with a copy of its new Harassment Policy, and to ensure its staff received sexual harassment training within four months of the date of Order, repeated on an annual basis for three consecutive years (mandatory).

Take aways for Employers

This case illustrates that: 

  • Employers are required to implement harassment policies. It's the law! And it demonstrates to employees that you take your obligations for ensuring their safe work environment seriously. 
  • You take seriously and investigate every complaint. A straightforward way to start is with a Harassment Complaint Form which is essentially an  investigation guide for both employer and complainant. It ensures that management is accountable and prepared to properly document, investigate, and address problematic behaviour in a timely manner.
  • Pleading ignorance is not a defense. Employers are fundamentally responsible for ensuring their workers are safe and the workplace is non-discriminatory. 
  • Employers may not set out to create a toxic environment. However, they can both by accident and design, create an environment where sexual harassment can occur, and can even be seen to encourage it when bad behaviour is permitted without consequence. 
  • This case illustrates the consequences of the classic and misguided mentality of putting the onus on a female server, to turn down a male patron for hugs. There is an imbalance of power, a male-female dynamic, a server-patron dynamic which is in the control of the employer. And at the core of this case is a female server who is dependent on her job and her wage to make a living.
  • Small family-run businesses are not immune and can especially feel the cost consequences of not taking sexual harassment seriously. $15k is not a large award when compared to some Canadian harassment awards that resulted in upwards of $200,000. 

Now you know. 

Ariane Laird Vancouver

Ariane Laird is CEO & Founder of ConnectsUs HR, a company that provides tools & resources to quickly set up a Human Resources department.  
You can contact her directly from the Inquiry Type drop down menu.