On November 29, 2019, Bill Peters resigned as head coach of the NHL’s Calgary Flames. This came four days after Nigerian-born Akim Aliu alleged that Peters used racial slurs towards him 10 years ago when Peters coached him on the AHL’s Rockford IceHogs. Subsequently, allegations of physical abuse were made by other players formerly coached by Peters. Given that NHL head coaches are often terminated suddenly when their teams underperform, many wondered why it took four days for his tenure with the Flames to come to an end. The likely answers to many peoples’ questions offer a good review of some important employment law issues.
Why Did Allegations of racism and physical abuse not result in Peters’ Immediate Termination?
There are two likely reasons. The first is legal – the Flames likely would have wanted to terminate him with just cause, and to do so without risking increased liability, they had to conduct an investigation. The second is a business reason – it is possible they wanted to keep him on if the allegations were untrue.
The legal threshold for terminating someone for just cause is high. However, when done successfully, the employee loses any entitlements he or she would have otherwise had upon dismissal. With fixed-term contracts, the employees’ entitlements upon termination are usually the remainder of what they would have received under the contract. Bill Peters was making $2,000,000 a year on a fixed-term contract with over two years remaining. If the Flames had terminated him without cause, they likely would have been on the hook for over $4,000,000.
Although the Flames did not have a direct duty to investigate in this case as the allegations did not involve conduct during Peters’ employment with the Flames, the club had to investigate if it wanted to terminate Peters for just cause without risking greater liability. If the Flames terminated Peters with cause without an investigation and the allegations were untrue, there is a good chance they would have been liable not only for the amount owed under the remainder of the contract, but for aggravated damages for their improper investigation. Aggravated damages may be awarded for bad faith conduct in the manner of termination that results in mental distress. A public termination based on uninvestigated and false allegations of racist and abusive behaviour would likely meet those requirements.
As for the business aspect, the club probably wanted to investigate. Despite the Flames’ disappointing performance to start the season, the club’s GM had said less than a week before the allegations were made that they did not intend on making any coaching changes. They possibly thought that Peters was legitimately their best coaching option. If they could disprove the allegations, they could keep him.
Could he have been terminated for a pre-employment incident that happened 10 years ago?
Barring termination because he sought to enforce his rights under employment and/or human rights legislation, or for discriminatory reasons, Peters could have been terminated for any reason so long as he was compensated according to the terms of his contract. The real question is whether he could have been terminated with cause. This is where Peters having been the head coach of an NHL team makes this situation different from many employment situations (that, and the amount of money involved).
Termination for just cause requires the employee to have repudiated the employment contract or one of its essential conditions through his or her conduct. Courts have recognized many categories of conduct that may result in such a repudiation when sufficiently severe, including conduct that brings the employer’s business into disrepute. This occurs when an employee’s conduct – whether on or off the job – results in the business being held in sufficiently low esteem by the public.
Generally, conduct that occurred 10 years before the person began their employment is not capable of having such an impact, and pre-employment conduct rarely grounds just cause. However, this ground for cause is arguably more likely to be made out in the entertainment industry, where many employees are public figures whose conduct has a greater impact on their employers’ reputations. The Flames’ business is entertainment, and Bill Peters is a very public figure who was on TV multiple times a week. It is possible that his conduct could have been grounds for cause.
Another consideration is a clause commonly found in entertainment industry employment contracts – the morals clause. These clauses are prevalent in the hockey world. They generally require employees to conduct themselves with high standards of behaviour in all circumstances, regardless of whether they are on the job. For example, the NHL’s Standard Player Contract includes the following morals clause:
- The Player further agrees,
…
(e) to conduct himself on and off the rink according to the highest standards of honesty, morality, fair play and sportsmanship, and to refrain from conduct detrimental to the best interest of the Club, the League or professional hockey generally.
Basically, it makes proper conduct a fundamental term of the contract, meaning that improper off-work conduct can result in a breach of contract, grounding cause regardless of whether it brought the employer’s business into disrepute. NHL Coach’s often have such clauses in their contracts as well.
As far as we know, no NHL coach has been terminated for breaching a morals clause. Further, it is unlikely that the Flames would have been able to in this case, because any morals clause in Bill Peters’ contract probably did not capture conduct prior to the contract’s existence. It is very likely that in Bill Peters’ case, the Flames would have had to rely solely on the common law if they had wanted to terminate him for cause, rather than on the written terms of the contract.
Peters was not terminated – he resigned. His resignation could have been by his own volition, with him wanting to put the situation behind him or get out of the spotlight after admitting the allegations of using racial slurs in a public apology letter to the Flames’ GM. However, it is also possible that following the Flames’ investigation, they were confident that they could terminate him with cause and allowed him to resign instead, as employees also have no entitlements upon resignation. Another possibility is that the parties came to a deal to avoid prolonging the matter and possibly litigating the dispute.
Takeaways
Bill Peters’ resignation brought certain employment law issues into the public eye. Despite the uniqueness of his position and employer, his termination would have been governed by the same legal principals as other employees. The Flames’ response to the allegations demonstrates how employers should handle such situations – by conducting proper investigations and not making rash decisions. Further, the situation presents an interesting and rare example of conduct that occurred years prior to employment that may have been grounds for termination with cause.