Employer awarded $425K for former employee’s theft

A former assistant manager in Manitoba has been ordered to pay more than $425,000 in damages to her former employer after a hidden camera revealed she had been stealing scratch lottery tickets on the job.

On March 31, the Manitoba Court of King’s Bench ordered the former employee to pay $425,755.92 to a gas station that previously employed her as an assistant manager. The employee was terminated with cause in June 2019 after her theft was caught on a surveillance camera.

Lottery tickets activated without payment

The defendant was hired to work at the gas station in 2011 and was quickly given the title of assistant manager – a role that gave her access to a strong box containing scratch lottery tickets.

In early 2019, the gas station realized it was losing money on lottery ticket sales – something that should have been impossible. The gas station only paid for lottery tickets it activated and sold, earning a commission for each sale. However, the gas station’s records showed it had lost hundreds of thousands of dollars on tickets activated at the store.

On June 6, 2019, the gas station installed a hidden camera that recorded the assistant manager removing tickets from the strong box on multiple occasions. She would activate the tickets without paying for them and remove money from the till when she had a winning ticket.

During that one shift, the assistant manager’s theft resulted in a loss of $938 for the gas station. She was terminated for cause shortly after and also charged criminally with theft over $5,000.

Assistant manager had a fiduciary capacity

To recover its losses, the gas station filed a claim against the terminated employee, arguing she acted in a fiduciary capacity as assistant manager of the store. If successful, this argument would ensure any damages owed to the employer would not be absolved through bankruptcy protection.

The Court agreed the terminated employee owed a fiduciary duty to her employer, finding she had a discretionary power to affect the gas station’s interests by the way she handled lottery tickets. Such discretionary power is “fundamental” to a fiduciary obligation, the Court noted.

“Having been entrusted with that kind of power over [the plaintiff’s] lottery tickets, [the defendant] was under a fiduciary obligation not to abuse it,” the ruling stated. “By stealing [the plaintiff’s] lottery tickets, she violated that obligation.”

While the gas station could not provide an exact accounting of its losses, an investigation by the Liquor, Gaming and Cannabis Authority of Manitoba determined the former employee’s theft resulted in losses of $425,755.92 over the course of six years. The Court ordered the former employee to repay that debt – without the possibility of absolving the debt through bankruptcy proceedings.

Takeaways for employers

This case demonstrates employers can successfully advance claims against former employees following incidents of theft or fraud. Further, once theft is established, the respondent bears the onus of disproving the calculation for losses advanced by the employer.

In this instance, surveillance camera footage helped the employer advance its case. While employers should always be cautious about using surveillance cameras, an employer may carefully consider installing them when there is a legitimate and objective investigative basis for their use. Employers should be mindful of their privacy obligations prior to implementing surveillance cameras, particularly hidden cameras, and it is recommended that an employer seek legal advice before implementing surveillance.

This case also serves as a reminder for employers to implement policies, procedures and controls to monitor potential theft and fraud by employees, particularly fiduciary employees and employees who work alone. If you’re interested in learning more about monitoring for theft in your workplace or the use of cameras in the workplace, contact a member of our Labour & Employment team to learn how we can help.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.