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
Cargo ship had engine maintenance in port before Baltimore bridge collapse, officials say
The cargo ship that lost power and crashed into a bridge in Baltimore underwent 'routine engine maintenance' in port beforehand, the U.S. Coast Guard said Wednesday.
A Nigerian woman reviewed some tomato puree online. Now she faces jail
A Nigerian woman who wrote an online review of a can of tomato puree is facing imprisonment after its manufacturer accused her of making a “malicious allegation” that damaged its business.
Far North police 'dispatch' polar bear stalking schoolyard
Police and local hunters in an Ontario Far North First Nation community have “dispatched” a polar that was showing abnormal behaviour and treating the area as a hunting ground.
Donald Trump assails judge and his daughter after gag order in N.Y. hush-money criminal case
Donald Trump lashed out Wednesday at the New York judge who put him under a gag order that bars him from commenting publicly about witnesses, prosecutors, court staff and jurors in his upcoming hush-money criminal trial.
Families shocked after Niagara Falls hotel cancels bookings made year in advance of solar eclipse
After having the foresight to book their Niagara Falls hotel rooms more than a year in advance, several families planning to take in the solar eclipse next month were shocked to find out their reservations had been cancelled.
B.C. rescuers face 'high likelihood' of failure to reunite orphaned orca with pod
The race to reunite an orphaned orca calf that’s stuck in a shallow lagoon with a neighbouring pod has entered its fifth day, and a marine scientist says the clock is ticking.
Video shows police interrupting auto theft in progress outside Toronto home
New video footage obtained by CP24 shows the attempted theft of a vehicle in a North York driveway earlier this month that was ultimately interrupted by police.
Majority of Canadians believe in life after death: Angus Reid survey
A new survey from the Angus Reid Institute has found that a majority of Canadians believe in some form of life after death, a proportion that has held steady for decades.
MyPillow, owned by U.S. election denier Mike Lindell, formally evicted from Minnesota warehouse
A court ordered the eviction Wednesday of MyPillow from a suburban Minneapolis warehouse that it formerly used.