Exposing the ‘side-hustle’: Worker fired for moonlighting during business hours

Photo: HR Law Canada/Canva

In a recent court case centered around wrongful dismissal, the extent to which an employee is entitled to engage in a “side-hustle” during work hours was put into the spotlight.

The case sheds light on the delicate balance between personal endeavors and professional responsibilities. And we won’t lie — the facts are a bit confusing as the worker’s boss was a former lover, and was also involved in the side business that got her into trouble.

Background

The worker, ZD, had a diverse work history in baking, cooking, and the food industry before joining Destiny Software Productions,, a technology company. Destiny’s CEO, SV, was not only the plaintiff’s close friend but also her former romantic partner. However, the plaintiff clarified that their relationship had ended by the time she started working at Destiny.

Initially, ZD performed administrative tasks for Destiny in exchange for using office space for her crystal business. Although she was not officially on Destiny’s payroll or given a job title, ZD was present at the office during normal hours. In 2009, she was formally “hired” as Destiny’s List Manager, responsible for overseeing and managing the company’s list management service, PlayMPE.

Destiny’s list management service, PlayMPE, played a role in marketing music within the music industry. The accuracy and currency of Destiny’s recipient network were vital for the success of PlayMPE. Destiny, wholly owned by Destiny Media Technologies, aimed to maintain ethical conduct and address conflicts of interest between personal and professional relationships, as outlined in its code of conduct.

The ‘side business’

Despite lacking prior experience in the technology industry, ZD’s performance at Destiny was generally satisfactory until issues arose after SV’s involvement in a commercial business venture. SV purchased a cafe and general store in Lions Bay, B.C., with another partner, referred to as LB.

ZD started performing unpaid work for LB, leveraging her expertise and prior experience in the food industry. However, conflicting representations emerged regarding ZD’s status at LB. Although she denied being an owner, the plaintiff and others involved referred to her as an “owner” in various LB correspondence. This misrepresentation was deemed necessary to gain credibility with LB’s suppliers and contractors.

From January to June 2017, ZD increasingly devoted time during Destiny’s regular office hours to LB-related tasks. While she claimed to spend no more than an hour a day on LB work, evidence showed her involvement in thousands of LB-related emails and discussions during this period. She also stored LB goods at Destiny’s premises and controlled LB’s main email address.

Business plan not submitted

Additionally, ZD failed to fulfill a crucial request from Destiny’s board of directors to submit a business plan, which was essential for the company’s 2018 budget preparation.

Despite receiving guidance and questions to help her in completing the plan, she did not provide the requested information by the deadline. Instead, she cited her busy schedule, which included LB-related responsibilities, as a reason for the delay.

ZD’s absenteeism during the January to June 2017 period further exacerbated the situation. She frequently missed work, which affected her ability to stay current with internal PlayMPE emails. Her failure to respond to inquiries and her lack of progress on the business plan raised concerns among Destiny’s management team.

The combination of the plaintiff’s involvement in LB-related activities during work hours, failure to fulfill important work obligations, and frequent absenteeism led to disciplinary actions against her. Eventually, she was dismissed from her position at Destiny.

Attendance concerns

As an aside, the company’s CFO had concerns about spotty attendance by both SV and ZD at Destiny, and began monitoring when they were in the office. His tally had ZD taking 24 vacation days between March 1, 2017, and April 12, 2017, alone.

ZD was suspended on June 22, 2017, and an investigator was hired. Following the investigation, she was fired for cause on June 28, 2017. (SV was also terminated, and is involved in a separate lawsuit.)

At the time of dismissal, her compensation consisted of a base salary of $70,000 and the right to participate in an employee share purchase plan, which she had exercised over the years. She had 19,909 shares as of the date of her dismissal. The shares were placed under her control on March 14, 2023. Between her dismissal date and the date she gained control, the share price fluctuated between 45 cents and $1.60 (USD).

Credibility issues

The B.C. Supreme Court said ZD had a number of reliability and credibility issues. For example, she often told people she was married to SV, or was an owner of LB, which showed a “willingness to misrepresent facts when it serves her interest.”

“The plaintiff gave her evidence in a painfully circuitous manner. She would start in one place, then head off into an array of tangents, to the point where it was difficult to understand what she was trying to communicate.,” it said.

It also noted SV did not testify, and that “somewhat surprisingly” the plaintiff did not advance the argument that SV — as her boss — insisted on her working at his LB business.

“The court alerted the self-represented plaintiff on several occasions that this could well be an alternate defence on the evidence, but the plaintiff made it clear that this was not an argument she wished to advance,” it said.

The ruling

The court noted employees have a duty to provide full-time service to their employer, unless otherwise agreed. Working for an outside business during business hours without approval can be a basis for dismissal, it said.

It ruled Destiny had just cause to terminate her employment “not based on any one factor.” It was a cumulation of factors, including:

  • volume of emails that showed substantial LB work being done during Destiny’s work hours without prior approval
  • her LB work was broad-reaching across its operations
  • the LB work impacted her ability to stay current with her duties at Destiny
  • the fact she did not doing any work on the business plan for Destiny.

“My sense is that (ZD) had a fixed capacity to work over the relevant period, so she chose the work that she found more enjoyable — being her volunteer work for LB,” it said. “However, that was not her choice to make, particularly without Destiny’s express permission.”

Had it ruled she had been wrongfully dismissed, it would have awarded nine months’ notice, it said.

It did award ZD $1,000 for late delivery of her shares. It noted that it was a “thinly traded stock” and the share price varied dramatically day-to-day. Therefore, Destiny argued it would have been difficult for her to time any sale to do better than the period after she received access to them. The court agreed.

It awarded costs to Destiny at Scale C as the substantially successful party.

For more information, see Dove v Destiny Media Technologies Inc., 2023 BCSC 1032 (CanLII)

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