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Blood from a stone

When employers suffer losses due to employee actions, they usually just have to absorb it

By Jeffrey R. Smith

Regardless of the industry or level of job, employers must put a certain amount of trust in an employee to do her job correctly. While the employer usually has the balance of power in the employment relationship, in the short term the employee has a certain level of control over how she performs her duties – and by extension how the employer’s business moves along. But when an employee does something that costs the employer money – such as damaging equipment or theft – can the employer do anything to recompense the cost?

Though many employers might like to think if an employee directly causes financial loss, they should be able to try to get it back, this may not be the case. If an employee steals a large amount of money, it could be considered fraud and the employer can probably sue to get the money back. But if something happens during the course of employment that isn’t due to fraud, the employer may be out of luck.

A Saskatchewan trucking company discovered one of its employees had been smoking in one of its trucks, which was a definite no-no. The company had a strict no-smoking policy in its trucks because the trucks were expensive and used by multiple drivers. Having trucks that smelled like smoke made it harder to recruit good drivers who weren’t smokers, and sometimes clients and members of the public rode in the trucks. The company communicated its policy to all of its employees, including the driver in question.

The company told the driver since he deliberately violated its policy and essentially damaged the truck, it would be charging him for the cost of getting the truck detailed. The employee didn’t like the idea but didn’t dispute it.

The cost of the detailing was more than $500, and the company deducted the amount from the driver’s next paycheque. The driver later resigned and, a few months after his resignation, he filed a complaint against the company for making an authorized deduction from his pay.

A Canada Labour Code investigator and an adjudicator both agreed with the driver, finding that the code didn’t allow for deductions that didn’t have written authorization from the employee, with the exception of statutory and regulatory deductions. The driver did not provide written authorization, so the deduction for the cost of truck detailing was not allowed. The code also specifically prohibits deductions for damage to or loss of money or property: see Moellenbeck Transport Ltd. and D’Amour, Re, 2015 CarswellNat 1481 (Can. Lab. Code Adj.).

A British Columbia employer also got itself into trouble when it told an employee in writing it would be seeking to reimburse itself the cost of equipment damage caused by the employee while working. Though the employer didn’t follow through, the note was enough to change the employment contract. A court found that in addition to being illegal, the employer’s intention constituted constructive dismissal: see Rothberger v. Concord Excavating & Contracting Ltd., 2015 CarswellBC 1191 (B.C. S.C.).

Basically, what the two above cases demonstrate is that employers are not allowed to make any deductions outside of statutory and regulatory deductions from employee pay without written consent of the employee. It doesn’t matter if the employee directly caused loss – either deliberately or accidentally – such incidents are considered the cost of doing business. If the employer isn’t happy with the employee’s actions that caused the financial loss, it can discipline or dismiss the employee without cause – or try to prove just cause for dismissal. But it’s not going to get any reimbursement from the employee unless the employee agrees in writing.

Should employees have some liability when they cause damage or financial loss to their employer? Should it be considered the cost of doing business when the loss is caused by deliberate misconduct, such as the smoking employee in the first case above?

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Jeffrey R. Smith

Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a business perspective.
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