Firm launches $130M class action against Shopify for breach of contract

Samfiru Tumarkin LLP, Canada’s largest employee-focused employment law firm, has initiated a $130-million class action lawsuit against global e-commerce giant Shopify, following allegations of the company’s illegal attempt to slash severance packages after a nationwide mass layoff.

On May 4, Shopify CEO Tobi Lutke announced a significant reduction in the workforce, resulting in the termination of 23% of its employees. Shopify initially assured the affected employees of generous severance packages, which many accepted. However, to the shock and disappointment of those impacted, Shopify advised employees that, despite accepting a severance package, the company would not honour the agreed-upon terms. The company then presented outgoing staff with a second severance offer, substantially reducing the agreed-upon severance amounts, often by tens of thousands of dollars.

Lior Samfiru, employment lawyer and national co-managing partner at Samfiru Tumarkin LLP, expressed his disbelief at Shopify’s actions, stating, “In my over two decades as an employment lawyer, I have never witnessed an employer renege on accepted severance agreements in this manner, particularly during times of economic uncertainty. Shopify’s conduct not only breaches the contracts it established with its employees, but it also demonstrates a disregard for fairness.”

Iain Russell, the lead plaintiff in the class action, who dedicated over seven years to Shopify, was one of the 2,000 employees unexpectedly impacted by the company’s downsizing. After accepting an initial severance package that appeared to meet Shopify’s legal obligations, Russell was later informed that the company would not abide by the terms he accepted. Instead, he was instructed to agree to a second offer with a potential reduction of more than $50,000.

“Shopify made severance offers to these employees, threatened them with a short and arbitrary acceptance deadline, and when the employees accepted the offers, they were advised that they had no choice but to accept a significantly lower amount,” said Samfiru.

“It appears that Shopify took deliberate action to minimize its financial liability, resulting in considerable losses for potentially thousands of people.”

For further information: Ryan Bonnar, Samfiru Tumarkin LLP, 416-216-5893