COURT ORDERS WAL-MART TO PAY EMPLOYEE $750,000 FOR ITS DEPLORABLE, MEAN CONDUCT!
In a trial that needed 29 days of hearing, which took place over a span of one year, an Ontario judge ordered Wal-Mart to pay an employee $1,665,987.46 for breach of contract to pay severance pay, punitive, and aggravated damages: Galea v. Wal-Mart Canada Corp., 2017 ONSC 245
Facts:
In 2002, the employee began working for Wal-Mart as a District Manager-in-Training. She excelled in her role. Wal-Mart promoted her more than six times over the next six years. The employee's contract provided upon a termination without cause, the employee would receive two years severance pay.
She eventually made it to Vice-President of General Merchandising. Wal-Mart began grooming her for Chief Merchandising Officer, and she expected that the job would be hers.
However, in January 2010, Wal-Mart removed the employee from her Vice-President role, and informed her that she would receive a new role, and that she was valued. Wal-Mart eventually assigned her a new position. However, it was a demotion and she initially did not have any assigned duties. Later in 2010, Wal-Mart reduced her performance rating, which disqualified her from a promotion.
On November 1, 2010, after taking an eight week program at Harvard, she returned to the office where she found all her personal belongings had been removed and her phone disconnected. One week later, Wal-Mart presented the employee with another demotion or accept a severance package. The employee accepted the severance package which paid her ongoing salary.
Almost one year later, the salary payments stopped early without explanation.
Decision:
The employee was successful on her claims for failure to pay severance under the employment contract, punitive, and aggravated damages.
For her severance pay, the Court awarded the employee the remaining year of base salary, benefits, and the incentive/bonus payments that she would have gotten had she worked the severance period.
For punitive damages, the court awarded $500,000. Punitive damages are awarded against an employer for malicious, oppressive and highhanded misconduct that offends the courts' sense of decency. The court described Wal-Mart's actions as "deplorable" and "mean." Wal-Mart built the employee up and let her down.
For aggravated or moral damages, the court awarded $250,000. Aggravated/moral damages are available when an employee has suffered mental distress that has been caused by the bad faith manner by which they were dismissed by their employer. Courts will take into account bad faith conduct before, during, and after termination. In awarding aggravated/moral damages, the court noted that Wal-Mart made the employee suffer repeated humiliation, put her in a non-promotable category, mislead her about her career, stopped paying her severance without explanation, and used delayed tactics during the court process.
For Employees:
Dismissed employees should know that in some cases, severance packages should include more than just their base salary. Benefits, bonuses, and incentives may also be required to be paid in a severance package. Further, employees may be entitled to much more money if an employer has treated them in bad faith.
For Employers:
It's important to understand the obligations employers have regarding not only during termination, but throughout employment. Employers should not deliberately mislead employees, as this can attract significant liability.