N.S. company can’t withhold wages from former employee it alleges stole over $150,000

The Nova Scotia Labour Board has ordered an Antigonish company to pay a former employee her back pay, even though she was terminated for allegedly stealing more than $150,000 from KVS Electrical Inc.

KVS appealed a decision from Lynn Hartley, the province’s director of labour standards, that awarded Kari Lynn Stewart $1,807.69. But the electrical service provider lost its appeal.

“The board upholds the damage award of the director of labour standards and orders KVS to pay Stewart $1,807.69 less statutory deductions,” said the decision, signed by Jasmine Walsh, who chairs the labour board.

The award is equal to two weeks of Stewart’s wages.

‘No dispute’

“There is no dispute that Stewart’s employment was terminated by KVS for cause and that KVS did not pay Stewart for her final two weeks worked from May 9, 2022 to May 22, 2022,” said the labour board decision, dated Jan. 17.

KVS argued that it shouldn’t have to pay Stewart her wages.

“She was terminated for theft from KVS,” said the decision.

“KVS stated that the amount of Stewart’s theft exceeded $150,000.00. They are seeking to offset this loss by withholding Stewart’s wages.”

Separate matters

Stewart argued successfully that her rights under the Labour Standards Code are separate from the criminal matter, that she worked from May 9 through May 22, 2022, and that she is entitled to be paid for her work. “The panel unanimously agrees,” said the labour board decision.

There was little evidence presented to the labour board in this case, said the decision.

“The panel relied on the statements provided in KVS appeal documents and on one document provided by KVS. The document is an RCMP undertaking signed by Stewart. In it, she confirms that she has been charged with theft over $5,000 … and with possession of property obtained by crime.”

The same document “prohibits Stewart from communicating directly with KVS, (the company’s president) Kyle Van de Sande and two others. It also compels her to attend court in relation to the criminal matter,” said the labour board decision.

Intends to fight charges

Stewart sent the labour board an email, “in which she asserts an intention to defend these charges in court, and that she is still entitled to be paid for her work by KVS,” it said.

The labour board decision points out that an employer can’t “withhold, deduct or require payment of all or part of the employee’s wages for the purpose of paying for a loss that occurs while the employee is working unless allowed by statute, court order or written authorization.”

The labour board said it “considered the breadth of circumstances that are covered by the protections afforded by” the Nova Scotia Labour Standards Code.

“In short, the law provides for a special level of protection for wages. Once wages are earned by an employee there are only a few narrow situations where an employer is permitted to make deductions to cover losses. This principle applies in circumstances of business losses that occur at the hand of an employee, even when the employee is culpable.”

‘Fundamental protection’

The Labour Standards Code sets out minimum employment standards to protect employees, said the decision.

“One of the code’s purposes is to protect the right of employees to be paid for their work,” it said.

“In short, being paid for the work one does is a fundamental protection afforded by the code.”

The standards laid out in the code “require that employees be paid for the work they perform even if they cause their employer to suffer a loss,” said the decision signed by Walsh.

“I read ‘loss’ as intending to refer to various different types of losses that could be experienced by an employer. While business loss is one reasonable interpretation of loss (outlined in the Labour Code), in my view, loss arising from theft is another. Accordingly, I am not persuaded that it is appropriate to read the word ‘loss’ … narrowly, to exclude theft as a loss. I am even less convinced that the Legislature intended that the definition of ‘loss’ exclude what was, at the time these events occurred, a disputed allegation of theft.”

Onus on KVS

KVS wasn’t “entitled to offset Stewart’s wages simply because of a business loss that the employer believes was caused by her theft,” said the decision.

“The onus in this appeal is on KVS. KVS’s onus is to persuade the board on a balance of probabilities either that there is a statutory requirement to withhold Stewart’s wages, a court order that requires withholding Stewart’s wages or a written agreement with Stewart that the wages be withheld.

“No evidence was provided that either of these three exceptions applied and so the board concludes that KVS’ appeal fails.”

‘Presumed innocent’

Stewart did not respond to a request for comment, but her lawyer did.

“Given that there are outstanding matters before the provincial court in Antigonish, Ms. Stewart can’t comment on any related matter,” Halifax lawyer Thomas Singleton said Thursday in an email.

“She is presumed innocent in regards to the criminal charges; I can’t comment any further on these matters at this time.”

The offence dates for the charges against Stewart are between Aug. 20, 2020, and May 24, 2022. The 43-year-old Port Hawkesbury resident is slated to be arraigned Jan. 24 in Antigonish provincial court.