Shopify faces class action over severance offered to recently laid off staff
A class-action lawsuit alleges Shopify Inc. reneged on a deal it offered some employees who were laid off in a recent round of cuts.
The class action alleges some of the Ottawa software business' employees laid off at the start of May were presented with departure packages outlining hefty severance sums they would be entitled to should they sign the agreement within a few days.
However, once workers signed the agreements and before the deadline passed, Shopify allegedly told departing staff they would instead be given substantially smaller sums than were initially offered.
"The individuals did the reasonable thing, which is to accept, only to be told even though we made you reasonable offers, even though you accepted that reasonable offer, we're just not going to do it and you have to sign a brand new agreement for a much lesser amount," said Lior Samfiru, a lawyer pursuing the case.
"It just doesn't work like that. I review severance packages every day and have 21 years of doing this and I have never seen any employer ever do anything like that."
The class action's plaintiff Iain Russell, who worked for Shopify for seven years, says he was initially offered more than $88,000, which he accepted. Then, Shopify allegedly put forward a roughly $44,000 agreement. If he did not accept the $44,000 offer, he was told he would receive about $36,000.
When their severance offers were revised, Samfiru said workers were sent a "vague statement about miscalculating."
"For many people...the difference is significant," Samfiru said.
"We've seen anywhere from a $10,000 to $50,000 and $60,000 difference between what individuals accepted and what Shopify now says they're not going to get. We are not talking about anything minor here."
Samfiru alleges Shopify's actions constitute a breach of contract and is seeking $80 million in damages and $50 million in punitive, aggravated and exemplary damages.
Those amounts could change based on how many workers were presented with shifting offers, he said.
Shopify did not respond to a request for comment.
The company reduced its head count by 20 per cent at the start of the month and by 10 per cent last year.
The company refused to give the number of staff that would be departing the company during the May cut, but it reported in a regulatory filing that it had 11,600 employees at the end of 2022. Twenty per cent of that amounts to about 2,300 people.
In an open letter announcing the layoff, Shopify founder and chief executive Tobi Lutke promised departing staff at least 16 weeks of severance plus a week for every year of tenure at Shopify. Medical benefits and an employee assistance program will cover departing staff over the same period.
Those leaving will also be able to keep their office furniture and though they'll have turn in their company laptops, Lutke said Shopify promised to help pay for new ones.
He positioned the layoff, which came at the time as Shopify sold its logistics business, as an effort to reduce distracting "side quests" that divert attention away from the company's main goals.
"I recognize the crushing impact this decision has on some of you, and did not make this decision lightly," Lutke wrote.
This report by The Canadian Press was first published May 30, 2023.
CTVNews.ca Top Stories
Cuban government apologizes to Montreal-area family after delivering wrong body
Cuba's foreign affairs minister has apologized to a Montreal-area family after they were sent the wrong body following the death of a loved one.
What is changing about Canada's capital gains tax and how does it impact me?
The federal government's proposed change to capital gains taxation is expected to increase taxes on investments and mainly affect wealthy Canadians and businesses. Here's what you need to know about the move.
Quebec nurse had to clean up after husband's death in Montreal hospital
On a night she should have been mourning, a nurse from Quebec's Laurentians region says she was forced to clean up her husband after he died at a hospital in Montreal.
'Anything to win': Trudeau says as Poilievre defends meeting protesters
Prime Minister Justin Trudeau is accusing Conservative Leader Pierre Poilievre of welcoming 'the support of conspiracy theorists and extremists,' after the Conservative leader was photographed meeting with protesters, which his office has defended.
Fair in Ontario, flurries in Labrador: Weather systems make for an erratic spring
"It's a bit of a complicated pattern; we've got a lot going on," said Jennifer Smith of the Meteorological Service of Canada in an interview with CTVNews.ca on Wednesday. "[As is] typical with weather, all of these things are related."
Boeing's financial woes continue, while families of crash victims urge U.S. to prosecute the company
Boeing said Wednesday that it lost US$355 million on falling revenue in the first quarter, another sign of the crisis gripping the aircraft manufacturer as it faces increasing scrutiny over the safety of its planes and accusations of shoddy work from a growing number of whistleblowers.
Police tangle with students in Texas and California as wave of campus protest against Gaza war grows
Police tangled with student demonstrators in Texas and California while new encampments sprouted Wednesday at Harvard and other colleges as school leaders sought ways to defuse a growing wave of pro-Palestinian protests.
Bank of Canada officials split on when to start cutting interest rates
Members of the Bank of Canada's governing council were split on how long the central bank should wait before it starts cutting interest rates when they met earlier this month.
Northern Ont. lawyer who abandoned clients in child protection cases disbarred
A North Bay, Ont., lawyer who abandoned 15 clients – many of them child protection cases – has lost his licence to practise law.