September 1, 2015 By: Andrew Reinholdt
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During the 2015 off-season, the Los Angeles Kings took steps to terminate Mike Richards’ 12-year, $69 million contract. The union that represents the players, the NHL Players Association (NHLPA), has grieved this decision, and an arbitration is likely in the early fall. Despite involving one of the NHL’s highest paid players, this case highlights labour law issues that are common to many unionized workplaces.

The Facts

In December 2007, the Philadelphia Flyers signed Richards to a twelve-year contract worth $69 million. A few years later, the Flyers traded Richards to the Kings, where he went on to win two Stanley Cups. Along the way, Richards’ point production dropped, and his expensive contract became a liability for the Kings because of the NHL’s salary cap, which imposes a limit on how much money a team can spend on payroll for its players.

The Kings looked for ways to reduce the impact of Richards’ salary (his “salary cap hit”). The Kings sent him to their minor league affiliate for part of the 2015 season, and considered buying out his contract entirely (both options would reduce his salary cap hit). The Kings also looked to trade Richards to another team, but other teams were reluctant to take on his expensive contract.

On June 17, 2015, at the NHL Entry Draft, the Kings were purportedly engaged in trade discussions involving Richards when they received word that he had been stopped at the Canada-US border. Allegedly, the RCMP detained him after finding a small amount of OxyContin in his car (the details of this story are yet to be confirmed by Richards, the NHLPA, the Kings or the RCMP). The Kings immediately stopped trade discussions and took steps to terminate Richards’ contract.

Standard NHL player contracts allow a team to terminate a player’s contract, at any time, should the player:

fail, refuse, or neglect to obey the Club's rules governing training and conduct of Players, if such failure, refusal or neglect should constitute a material breach of this SPC…

Citing this provision, the Kings terminated Richards’ contract for a material breach, stating that he failed to obey the Club’s rules governing the conduct of players. This action provided immediate salary cap relief for the Kings. The NHLPA has since grieved the termination, and the dispute will soon go to arbitration. On August 27, 2015, Richards was charged with illegal possession of a controlled substance, and is set to make his first court appearance in September.

Labour Issues

From a labour law perspective, Richards’ situation raises issues found in many unionized workplaces. Specifically, the arbitrator will have to consider three common labour law issues:

  1. Off-Duty Conduct;
  2. Accommodating Employees with Substance Abuse Problems; and
  3. Fairness in the Workplace.

(For the purpose of this article, I will assume that the Kings terminated Richards’ contract for the alleged border incident.)

1) Off-Duty Conduct

A difficult issue often faced by labour arbitrators is determining the appropriate punishment for off-duty conduct. Generally, arbitrators have drawn a line between employees’ personal and working lives, and have found that an employer has no jurisdiction or authority over what employees do outside of working hours. The exception to this is when the employer can show that a legitimate business interest is affected in some way.

One legitimate business interest arbitrators have found may warrant discipline is where the employee’s off-duty conduct affects the employer’s reputation or renders the employee unable to properly perform his or her employment obligations. In this case, the Kings are likely to argue that substance abuse will prevent Richards from performing his duties as an elite athlete. Additionally, the Kings will likely also argue that as an NHL player with many young fans, Richards’ actions affect the team’s reputation.

The Kings will have a difficult time defending their decision to terminate his contract, because most arbitrators require the employer to undertake a meaningful investigation to determine how seriously the employee’s off-duty conduct affected the employer’s interests. Here, the Kings terminated Richards’ contract just a few days after he was allegedly stopped at the border, which begs the question of how thorough an investigation could have been conducted in such a short time. There is no indication that any investigation was completed, though it is possible this investigation was conducted behind closed doors.

2) Accommodating Employees with Substance Abuse Problems

Another factor the arbitrator must consider is whether Richards has a substance addiction condition that needs to be addressed. In Canada, human rights legislation requires an employer to accommodate an employee with a disability to the point of undue hardship, and a substance addiction is a medical condition that is classified as a disability. In cases involving addiction, the duty to accommodate could include an obligation to assist the employee in obtaining treatment for his or her addiction prior to the employer being allowed to terminate the employee.

In a labour context, employees should also remember to review their collective agreements, as it is possible that there are provisions that would cover this type of situation. As reported by sports lawyer Eric Macramalla, the NHL’s collective agreement contains provisions setting out the league’s substance abuse policy, which provides for a drug treatment protocol that NHL teams must follow. This program is meant to be rehabilitative, not punitive, and dictates that upon arrest a player is required to submit to a substance abuse evaluation and treatment program. It is silent as to whether a team may terminate the player’s contract.

3) Fairness in the Workplace

A fundamental principle of labour law is that similar cases must receive similar treatment. An employer cannot treat two employees who commit the same offence in a different manner. If one employee can prove that another employee received lighter sanctions for similar conduct, arbitrators will generally ensure that the sanctions imposed on both employees are comparable, to prevent arbitrary differential treatment for similar cases. Any differences in sanctions on the employees should be attributable to differences in the circumstances of each case, and not be arbitrary or indicate any preferential treatment.

Richards is not the first Kings player to have faced discipline for off-ice conduct. In July 2014, Slava Voynov pled no contest to assaulting his wife after a Halloween party. In November, following Voynov’s arrest, the Kings took no steps to terminate his contract. The NHL, however, suspended Voynov indefinitely, and penalized the Kings for allowing Voynov to continue practicing with the team.

Moreover, Richards is by no means the first NHL player to be found in possession of an illegal substance, yet he appears to be the only player whose contract has been terminated as a result of that possession. An arbitrator will compare Richards’ situation to Voynov’s, as well as to other NHL players who have been found with illegal substances, to determine whether he was treated fairly.

Based on labour principles, the Kings are in for an uphill battle if they try to defend their decision to terminate Richards’ contract. This decision will be particularly difficult to defend in light of the Kings’ repeated and public attempts to rid themselves of Richards’ expensive contract after the decline in his performance. Moreover, in light of the Kings’ treatment of Voynov, that the incident likely should have triggered the NHL’s substance abuse program, and that the Kings seemingly did not investigate whether the off-ice conduct impacted Richards’ performance or would harm the Kings’ reputation, there is a good chance we will see Richards back in a Kings uniform at some point this season.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2017 Nelligan O’Brien Payne LLP.

Service: Labour Law