Unable to recoup cash

Employer not entitled to deduct from employee’s final paycheque money believed stolen

On May 7, 2001 Michael Best commenced his employment as a gas pump attendant with a Lorand Convenience Ltd. franchise. His employment was terminated on June 1, 2001, at which time he was not paid in full all wages owing to him. On June 4, 2001, Mr. Best filed a complaint pursuant to the employment standards act, alleging that Lorand had made unauthorized deductions from wages owing to him.

Section 37 of the New Brunswick Employment Standards Act provides that when an employee ceases to be employed by an employer, the employer must pay to the employee all outstanding pay no later than 21 days after the last day the employee was employed.

An employment standards officer investigated the complaint and recommended that an order be issued in favour of Mr. Best. Based on this recommendation, the director issued an order on July 17, 2001, finding that the employer had not complied with section 37 of the act and ordered Lorand to pay to Mr. Best the amount of $200, representing owed wages.

At the request of the employer, the matter was referred to the labour and employment board on July 18, 2001. The hearing on the matter proceeded on Aug. 9, 2001, even though no representative of the employer attended.

Mr. Best, as a gas bar attendant, did not have primary responsibility for the cash register. He did at times perform tasks inside the store and did occasionally enter cash transactions at the register. As a security measure, a video camera was in place to record happenings at the cash register. Mr. Best was terminated on June 1, 2001. The reason given for the termination was that there had been a shortage in the cash register of $200 and Mr. Best was accused of stealing the money. He was further accused of having turned off the video camera and having permitted an unidentified friend to take gasoline from the pumps and drive off without paying.

Mr. Best denied stealing any money or having any knowledge of theft. There was no evidence that the employer could substantiate the accusations against Mr. Best.

Several days following his termination, Mr. Best returned to the gas bar to return his uniform. Again he was accused of stealing. The company refused to give him any payment of wages owing.

Employees of Lorand were permitted to carry a credit account at the store. Mr. Best acknowledged that at the time of his termination, he owed his employer $89.67 on his credit account. On June 9, Mr. Best again attended at the gas bar to pick up his outstanding wages. This time, he was accompanied by a former teacher. On that occasion, a cheque had been prepared for Mr. Best in the amount of $427.78, representing gross wages owing of $627.90 (less statutory deductions and the amount owing on the credit account). However, the employer refused to release the cheque, insisting that Mr. Best compensate it for the $200 that he had been accused of stealing. Because Mr. Best was in need of the money, he endorsed the cheque and accepted $227.78 in cash.

The main issue at the hearing was whether it was legitimate for the employer to retain the $200 from wages in this case. The board reviewed previous decisions dealing with this issue. These decisions held that deductions may be made from wages if they are authorized by statute, they are authorized in writing, there is a clear understanding between the employer and the employee, or there clearly has been an economic benefit to the employee.

In this case, there was no suggestion that the deduction was authorized by statute. The employer’s unsubstantiated accusation of theft did not satisfy the board that the employee had derived an economic benefit. In previous board decisions, where the circumstances involve more than one person having access to the employer’s cash, there is a heavy onus placed upon an employer who accuses an employee of theft from cash. To justify collection for shortage of funds, the employer must clearly establish not only that the employee agreed to such deduction, but that he was in fact responsible for the loss.

The board found that in this case, Mr. Best’s access to the cash was only incidental and another employee had principal responsibility for it. There was no evidence of theft by Mr. Best.

There was no clear agreement for the deduction by Mr. Best, he endorsed the cheque only because he needed the money to pay his rent. This did not constitute an agreement. The board held that the deductions were in violation of the act and affirmed the order of the director.

For more information:

Best v. Lorand Convenience Ltd., New Brunswick Labour and Employment Board, Docket No. ES-023-01, Aug. 29/01.

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