Shopify (SHOP) has been hit with a $130 million class-action lawsuit that alleges the Ottawa-based e-commerce company reneged on severance packages offered to employees who were laid off.
The suit alleges that Shopify effectively pulled a bait-and-switch on departing employees, presenting them with large severance payments they would be entitled to should they sign an agreement and leave the company.
However, once people signed the agreements, Shopify then told the fired workers that they would instead be given substantially smaller sums of money than initially offered.
The class action's main plaintiff, Iain Russell, who worked for Shopify for seven years, says he was initially offered $88,000, which he accepted. Then, Shopify changed the offer to $44,000 and said that if he didn’t accept the $44,000, he would receive only $36,000.
The lawsuit says that when departing staff complained about the revised severance payments, they were sent a statement saying that the company had made a miscalculation.
The class action lawsuit claims that Shopify's actions in dealing with staff who were let go constitutes a breach of contract.
The suit is seeking $80 million in damages and $50 million in punitive, aggravated, and exemplary damages.
Shopify has cut its workforce by 30% since last year when it had about 11,500 employees.
When announcing the layoffs, Shopify promised departing staff at least 16 weeks of severance pay, plus a week for every year they had been with the company.
Shopify’s stock is currently trading at $79.14 a share, which is 63% lower than the all-time high reached in November 2021 during the Covid-19 pandemic.
