No free lunch. Court rules fraudulent meal expenses of minimal value justifies termination.
In Mechalchuk v. Galaxy Motors, the Supreme Court of BC ruled that Galaxy Motors, an automotive retail company, had a valid reason to fire a senior employee who claimed personal meal expenses as business expenses. The accumulation of expenses in dispute totaled approximately $250 CAD.
5 Take-Aways
The reason the decision is noteworthy isn't because the ruling changes the law, it's not new that employees shouldn't lie about expenses. It's noteworthy because :
- The dollar value of the expense in question was minimal.
- The employee's compensation was $30k a month plus bonuses.
- The decision confirms that lying about expenses can be a reason to fire an employee for cause (no notice/severance), especially (but not exclusively) if the employee is in a senior position of trust and authority and how the employee’s actions affected the employer’s trust.
- It confirms that how the employee behaves during the employer’s investigation matters a lot. While deception unto itself isn’t necessarily a fireable offense, a deliberate act to conceal it is more damning, the judge noted.
- For me, this case is also notable because of Mechalchuk's decision to pursue this in court and his willingness to air the dirty laundry publicly. Did he believe he had a chance of winning? Who will hire him at a salary of $30k/month after the significant press he received?
Background
Mr. Mechalchuk began his career in the automotive retail business in 2003. He worked his way up to general manager at a Galaxy Motors dealership in spring 2020.
He rose from a general manager to a VP of Operations and then to President and CEO in just two years. He had a lot of power, responsibility, and a good reputation.
About a month after the title change, the owner of Galaxy Motors passed away suddenly. The owner’s niece, Amy Jones, and her brother inherited the business.
The new owners and Mechalchuk had a good relationship until they disagreed over a group dinner expense where wives were present and Mechalchuk joked with Jones that 'this was a team building event, right?'. She disagreed. This led the employer to check the employee’s previous expenses and find out that he had lied about some of them. He had submitted two receipts for meals that he said were with other employees, but they were actually with his spouse.
The employee did not admit the truth when the employer asked him about the suspicious expenses. The employer fired him for cause. The employee sued the employer for wrongful dismissal and damages.
Bottom Line
- Don't fudge expenses, regardless of amount.
- Don't lie about it if you get busted.
Ariane Laird is CEO & Founder of ConnectsUs HR, a company that provides tools & resources to quickly set up a Human Resources department.
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