Proactive Investors - Shopify (TSX:SHOP), the Canadian retail tech giant, is facing a $130 million class-action lawsuit for allegedly breaching severance pay contracts with laid-off employees.
The lawsuit, filed earlier this week with the Ontario Superior Court, focuses on the most recent layoffs in May, where Shopify cut 20% of its global workforce and sold its logistics business to Flexport.
According to Samfiru Tumarkin LLP, the law firm leading the case, Shopify initially offered severance to approximately 2,000 employees, costing around $150 million. However, the lawsuit alleges that after employees accepted the offers, Shopify reduced the severance amounts by "tens of thousands of dollars," a breach of contract.
Similar cases have been filed against Twitter, with over 1,300 arbitration cases claiming breach of severance-pay contracts.
The legal battles come amidst a tech sector downturn, with companies facing scrutiny for their handling of layoffs.
US-listed shares of Shopify were trading around US$57.94 in New York on Friday morning, up 1.1%, while its Canadian-listed shares were flat at around $77.88 at the open in Toronto after losing around 4.2% since the beginning of the week.