Can You Successfully Sue An Employee For Losses Arising From Not Backing Up Data?
The short answer to whether you can successfully sue an employee or former employee for losses that arise from the employee's failure to back up data is "probably not." Whether the employer would be successful or not depends primarily on whether the employee failed to follow a clearly communicated policy on data back up. A recent case illustrates this principle.
The former employee had worked as controller for the employer for approximately a year before being terminated. She sued for wrongful dismissal. The employer countersued, claiming set off for losses in the amount of approximately $20,000, that occurred because of data loss due to the employee's failure to back up data.
The employer's computer system was backed up daily to ensure retention of data. However, in the normal course of her work, the employee created and updated accounting spreadsheets that she provided to the employer and to the bank. Her work product was created and retained on two USB keys. After she was terminated the employer could not find any work product or the USB keys. The employer claimed that re-creation of the work cost approximately $20,000.
The trial judge awarded the damages for wrongful dismissal and dismissed the employer's claim for set off. The employer appealed.
On appeal Divisional Court also rejected the claim for set off. It was troubled by the amount of the claim (some hard copies of the work existed so recreation was not extensive) The appeal judge was was also troubled by the fact that the employer did not have an IT policy regarding back up of data and that it was not a term of the employment contract that the employee back up her data regularly. The employer knew that the employee used the USB keys to create and retain the data as they had provided the keys to her. The court rejected the employer's assertion that the employee should have known the data required back up. It ruled that the employee being older would not have intuitively known that the data required back up.
The Lesson: Create a back up policy to retain data and clearly communicate it to all employees. Regularly review compliance with the policy as part of the employee evaluation process and document any needs for improvement. Such a policy can go a long way to convincing a court that an employee knew and should have been responsible for data backup retention.
Landry v Pointone Graphics Inc., 2016 ONSC 1131 https://www.canlii.org/en/on/onscdc/doc/2016/2016onsc1131/2016onsc1131.pdf
The content and the opinions expressed here is informational purposes only and does not constitute legal or professional advice. Nor does reading or commenting on it create a lawyer/client relationship with the author. I encourage you to contact me directly at adrianlawoffice@gmail.com if you have specific legal questions or concerns.
The author encourages you to share this article on social media.
Follow me on Twitter @gwendolynadrian