Shopify Faces Lawsuit Over Severances From Recent Layoffs

Liz Morton
Liz Morton


Ex-Shopify employees are joining together in a class action lawsuit alleging the company backed out on promised severance arrangements after most recent round of layoffs

Shopify faces class action over severance offered to recently laid off staff
Shopify allegedly told departing staff they would instead be given substantially smaller sums than were initially offered.

The class action alleges some of the Ottawa software business’ employees laid off at the start of May were presented with departure packages outlining hefty severance sums they would be entitled to should they sign the agreement within a few days.

However, once workers signed the agreements and before the deadline passed, Shopify allegedly told departing staff they would instead be given substantially smaller sums than were initially offered.

“The individuals did the reasonable thing, which is to accept, only to be told even though we made you reasonable offers, even though you accepted that reasonable offer, we’re just not going to do it and you have to sign a brand new agreement for a much lesser amount,” said Lior Samfiru, a lawyer pursuing the case.

“It just doesn’t work like that. I review severance packages every day and have 21 years of doing this and I have never seen any employer ever do anything like that.”

The class action’s plaintiff Iain Russell, who worked for Shopify for seven years, says he was initially offered more than $88,000, which he accepted. Then, Shopify allegedly put forward a roughly $44,000 agreement. If he did not accept the $44,000 offer, he was told he would receive about $36,000.

Samfiru Tumarkin LLP is leading the charge, issuing the following statement and additional information for potential class members.

Samfiru Tumarkin LLP has initiated a $130-million class action lawsuit against e-commerce giant Shopify, following the company’s illegal attempt to slash severance packages after a nationwide mass layoff.

What Shopify did: Shopify breached its original severance pay agreements with employees involved in the May 4, 2023 layoff that affected approximately 23% of the company’s workforce.

  • Shopify offered severance to 2,000 employees, threatening them with short and arbitrary deadlines.
  • After employees agreed to the offers, Shopify told them that they had to accept a significantly lower amount.
  • Severance amounts were ultimately reduced by tens of thousands of dollars

What the firm says: Lior Samfiru, National co-managing partner at Samfiru Tumarkin LLP, was stunned by Shopify’s conduct.

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

Who is included in this class action?
You will automatically be a member of this class action if all of the following factors apply:

  • You worked for Shopify anywhere in Canada.
  • You lost your job as part of the mass layoff on May 4, 2023 that affected 23% of the company’s staff.
  • You signed back, or tried to sign back, an initial severance package from Shopify.
  • You were requested to accept a second severance package for a lesser amount.

The May round of layoffs was the second mass workforce cut Shopify has undertaken in the last year and came along with news they were also selling off their logistics operations to Flexport as well.

Shopify Announces More Layoffs, Flexport To Buy Shopify Logistics
Shopify announces another round of layoffs, Shopify Logistics sold off to Flexport - cutting ~20% of workforce.

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Liz Morton is a seasoned ecommerce pro with 17 years of experience in online sales & marketplaces, providing expert commentary, analysis & news about eBay, Amazon, Etsy & more at Value Added Resource!