Costco ships out worker who deleted website twice, scolded managers

Intentional destruction of company property wilful and repeated misconduct

Costco ships out worker who deleted website twice, scolded managers

“Notwithstanding the fact that the courts have made it clear that the test for cause under the [Employment Standards Act] is a higher threshold, it is still possible to terminate for cause in Ontario.”

So says Krista Siedlak, an employment lawyer with Turnpenney Milne in Toronto, after the Ontario Superior Court of Justice upheld the termination of a Costco worker for intentional misconduct.

“But, as an employer, you must do your due diligence before proceeding with a termination for cause,” says Siedlak. “You've got to make sure that you've looked at the underlying evidence and carefully weighed whether or not termination is proportionate to what's been done.”

Code of ethics

The 51-year-old worker was hired in 1995 by Costco Wholesale Canada, eventually transferring to Costco’s head office in Ottawa. He became an assistant buyer in 2011.

As an assistant buyer, the worker had security and editing access to several Costco systems, such as the pricing database.

The assistant buyer role was a managerial-level position, so Costco’s standard of ethics for managers and supervisors applied to him – including honesty, integrity, and leading by example. His employment agreement also outlined causes for termination, including wilful damage or destruction of company property, equipment, or merchandise along with insubordination such as “contemptuous behaviour or remarks to a manager.”

In 2012, Costco promoted the worker to “buyer-in-training” in the seasonal and toys department. He worked in that position for five months until he was returned to the assistant buyer role.

In 2014, the worker started reporting to a new acting buyer in the department, who in turn reported to the assistant general merchandise manager and the general merchandise manager. The worker didn’t like either of the higher-level managers, as he felt that they weren’t receptive to his concerns and gave him unnecessary negative feedback.

According to the worker, on one occasion his supervisor made a racist comment, which the supervisor denied. The worker asked for a transfer but was refused.

The worker took a medical leave from Jan. 23 to March 10, 2014, that he attributed to a “verbal consultation” that was added to his employee file along with other frustrations.

It’s generally difficult for an employer to prove just cause, and it can depend on the nature and extent of the misconduct, says an expert.

Built internal website

In late 2014, the worker built a cloud-based website for the toys department that served as an online platform for staff to share files. His supervisor told him that it would be useful for the department and encouraged him to send it to management.

The worker sent a link to the website to management in January 2015, inviting them to test it out. The general manager said they would look into it.

On Feb. 3, 2015, the worker went on a second medical leave. He asked his doctor if she could recommend a transfer to another department, but he returned on Feb. 23 without any medical recommendations. The worker spoke to the director of HR about a possible transfer, and he was advised that Costco would consider it.

On March 16, the worker provided a doctor’s note stating that he would need accommodation to reduce his workplace stress and suggesting that the worker might benefit from a transfer.

Costco decided to move the worker to the lawn and garden department effective April 13.

An Ontario court recently upheld a just-cause dismissal of a long-term employee who defrauded the employer for personal benefit.

Navigating accommodation

Costco did a good job navigating the situation and granting the worker’s transfer request once it had medical information supporting it, says Siedlak.

“[Costco] handled the situation adequately from an accommodation point of view, and there was no evidence to suggest that there was any ongoing request for accommodation beyond that,” she says. “But had [the worker] in fact done that, then they would have ongoing obligation to look at the accommodation measures and verify whether or not they were sufficient.”

On the worker’s first day in the lawn and garden department, the general merchandise manager emailed him asking for access to the file-sharing website and to change the ownership to him and the assistant manager. After seeing the email the next morning, the worker was “furious and thought they were “asking for a revenge tactic or out of spite.”

The worker deleted the website and told the assistant manager that “after a few months of no communication it gives the impression that no one is interested in it.”

The general manager expressed his disappointment, saying the worker didn’t ask for feedback and he should ask his supervisor before removing something from the system that other people could use. The worker replied that no one was interested and that managers should “take some ownership and responsibility” rather than ignoring him.

An Ontario court decision confirmed that the bar for just cause is high, but it’s even higher for wilful misconduct that warrants no statutory termination pay.

Website restored, then deleted again

A short time later, Costco was able to restore the website. However, a couple of hours later, the worker deleted the website a second time.

Costco conducted an investigation with IT professionals and confirmed that the worker deleted the website twice. Upper management reviewed the matter and approved termination of the worker’s employment. On April 22, Costco dismissed the worker for deleting the website.

The worker sued for wrongful dismissal, acknowledging that the deletion of the website was “unquestionably poor judgment” but arguing that it was a “knee-jerk reaction” to the email from a former manager with whom he didn’t get along.

The court found that the general manager requested access to the website because he wanted Costco to use it, and the employment agreement clarified that “all creative work, business ideas and products” designed by employees in their roles were the sole property of Costco.

The court found that the worker committed four acts of misconduct – intentionally deleting the website after receiving the email from management; not being forthright about deleting it in response to the first email; sending additional emails with insubordinate and disrespectful language that undermined management’s authority; and intentionally deleting the website a second time – “deliberate destruction of Costco property and… an act of insubordination,” said the court.

An employee’s refusal to carry out legitimate directions from a superior is insubordination deserving of discipline, say employment lawyers.

Breached code of ethics

The court noted that the worker had nearly 20 years of service with Costco and mostly positive performance reviews, but his managerial-level role required trust and authority. The wilful destruction of company property was identified as cause for termination in the employment agreement and the managerial standard of ethics required honesty and integrity. The seriousness of the misconduct in deleting the website and the insubordinate remarks to management – along with the fact that the worker’s actions were intentional and not an isolated incident – warranted dismissal, said the court in upholding the termination.

“The case really turned on the fact that the judge was persuaded that [the worker’s] actions were intentional, and the evidence suggested that he didn't only delete the website once but then he went back and deleted it a second time,” says Siedlak. “So it was that wilful misconduct, that intentional act, that really passed it over the threshold to solidify the just-cause argument.”

The court also found that Costco’s investigation was sufficient, even though it didn’t interview the worker.

Costco’s IT investigation was thorough and provided solid evidence that the worker deleted the website after he received the email from the general manager and then a second time, but it was still a little risky not to interview the worker before terminating him, according to Siedlak.

“They gathered information to make sure that they had all the facts before proceeding with the termination for cause but, as employer counsel, I would have taken one additional step that they didn't necessarily take in this case,” she says. “I would have offered [the worker] the opportunity to respond to why he had deleted it, walked him through the scenario, and asked why he did what he did so that he would have an opportunity to respond – they would have been in a safer position to proceed with a termination for cause.”

“Interestingly, the judge considered whether or not failing to provide [the worker] with an opportunity to respond was detrimental to the investigation, and found that it wasn't – [Costco] had done enough due diligence to support their decision,” adds Siedlak. “My suggestion comes out of a best practice – the tighter you can get your case pre-termination, the safer you'll be on the tail end of it from an employer perspective.”

See Park v. Costco Wholesale Canada Ltd., 2023 ONSC 1013.

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