HR mistake could have been costly

Alberta HR worker mistakenly told new hire in writing there would be no waiting period for benefits

An HR worker at an Edmonton health-care company is likely breathing a heavy sigh of relief after an Alberta court ruled a mistake she made did not waive a customary two-month waiting period for benefits for a new employee.

The HR worker, who was responsible for administering benefit plans at Capital Care Group Inc., a company that provides continuing care, told a new employee that there would be no waiting period for her benefit eligibility.

Susan Cunningham, a nurse, was hired by Capital Care in a temporary part-time position in February 2003. Prior to that she had worked at the Aspen Regional Health Authority based in Westlock, Alta.

Cunningham continued in the temporary part-time position until May 29, 2003. She was then hired on as a permanent part-time employee effective June 2, 2003. Permanent part-time employees were entitled to disability benefits, whereas temporary part-time employees were not.

It was at this point the critical error by HR occurred. On June 23, the HR person wrote to Cunningham, some three weeks after she had accepted the job, stating that disability coverage would commence on June 2 — the date she was hired as a permanent part-time employee. There was normally a two-month waiting period before an employee is entitled to disability benefits at Capital Care.

At the bottom of the letter, there was the following notation:

“N.B.: due to special circumstances, there is no waiting period for your benefit eligibility. That is why the dates seem to be rather ‘short’ notice! Please meet with me as soon as possible to sign up for the remainder of your benefits.”

The HR person testified at an arbitration board hearing that she believed the time Cunningham had worked as a temporary part-time employee would count towards her waiting period for benefits as a permanent part-time employee. But that was an error.

On July 23, 2003, Cunningham submitted a disability claim. That’s when the error surfaced and she was told of the two-month waiting period. The disability premiums that had been deducted from her paycheque were refunded to her. (Fortunately, the benefits insurer for her old employer — Aspen Regional Health Authority — accepted that the disability was a continuation of a previous disability and it started paying her disability benefits retroactively to the date of disability.)

But the union representing Cunningham, the United Nurses of Alberta, Local 118, pursued the case to establish a principle that that an employer is bound my mistakes of the kind that occurred here.

The arbitrator’s original ruling

The facts before the arbitration board were not in dispute. The employer admitted a mistake had been made and acknowledged there had been a representation to Cunningham that she was covered for disability benefits.

The arbitration board made two key findings of fact:

No waiver of waiting period.

The arbitration board said the HR employee did not intentionally waive the waiting period for benefits, even though a section of the benefits plan administration manual contemplated waiver of the waiting period “for a specific employee if there are special circumstances.”

The board said the HR worker mistakenly thought Cunningham had worked out the waiting period while she was a temporary part-time employee.

No ‘detrimental reliance’ on the mistake

. The board said that even if Cunningham had realized she had no disability coverage for 60 days, she would not have been able to purchase private disability insurance because of her health record.

The board ruled Capital Care had not waived the waiting time called for by the benefits plan, was not stopped from asserting that Cunningham was not entitled to disability benefits and had not entered into a separate contract with her for disability benefits.

The appeal to the court

The union appealed the board’s ruling to the Alberta Court of Queen’s Bench. The court upheld the board’s ruling.

The court said the employer did not waive the waiting period in this case. The HR worker had simply misunderstood the rules around temporary part-time employees.

“(The HR worker) mistakenly believed (Cunningham) had worked out her waiting period while she was a temporary employee,” the court said. “In (the HR worker’s) mind, there was nothing to waive. No other employee at (Capital Care) ever turned their mind to waiving the waiting period, and certainly no decision to that end was ever made.”

The HR worker in this case was simply not waiving the notice period. In her mind, she had no choice to make as she mistakenly believed Cunningham had worked out the waiting period and was entitled to the benefits.

“She never turned her mind to the question, ‘Should I require (Cunningham) to wait two months before her benefits become available?’” the court said. “This lack of knowledge and intent is fatal to the (union’s) argument.”

The court said there was nothing unreasonable about the arbitration board’s decision and it dismissed the appeal.

For more information see:

U.N.A., Local 118 v. Capital Care Group Inc.

, 2006 CarswellAlta 578 (Alta. Q.B.)

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