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THE WEEK IN REVIEW #10: KEY COVID-19 DEVELOPMENTS FOR ONTARIO EMPLOYERS

June 1, 2020

This is the tenth bulletin in a weekly series that provides a recap of important COVID-19 developments and their impact on employers as they navigate these challenging times. This recap covers the week of May 25, 2020 and is current as of June 1, 2020.

During the week of May 25, 2020, the federal government opened applications for a commercial rent assistance program, launched a financial planning hotline for small businesses, and expanded the eligibility for the CEWS. The federal government also continued discussions with the provinces and territories on providing all workers with ten days of sick leave per year.

Additionally, the Ontario government published a new regulation that will dramatically change the current law on leaves, layoffs, and constructive dismissal related to COVID-19. The Ontario government also announced a new testing strategy for COVID-19, and began considering a regionalized approach to reopening the province.

Finally, the Ontario government launched an investigation and issued mandatory management orders to address troubling conditions in several Ontario long-term care homes.

These key developments are set out below.

Applications Opened for the Canada Emergency Commercial Rent Assistance Program

During the week of May 25, 2020, applications for the Canada Emergency Commercial Rent Assistance (“CECRA”) program opened for commercial property owners with tenants impacted by COVID-19. The CECRA provides rent relief in the form of forgivable loans to commercial property owners covering 50% of the monthly gross rent owed by impacted tenants. Businesses and non-profit/charitable organizations that generate $20 million or less in gross annual revenues, pay $50,000 or less in monthly commercial rent payments and experienced a reduction in revenues of at least 70% in April, May and June 2020 are eligible for the program.

Under the CECRA program, the property owner must reduce rent by at least 75% for the months of April, May and June, and the tenant is expected to cover the remaining portion (up to 25%) of the rent. The loans will be forgiven as long as the property owner complies with all the program’s terms and conditions, including not evicting tenants during the months of April-June and not recovering forgiven rent amounts when the program is over. For more details about the CECRA program, please read our recent article.

Eligible small businesses and organizations should contact their landlords to determine whether they plan to apply for CECRA, as this program would provide considerable financial relief to businesses that have experienced significant losses due to COVID-19.

Federal Government Launched Financial Planning Hotline for Small Businesses

On May 25, 2020, the federal government launched the Business Resilience Service (“BRS”), a hotline service available to help small businesses and entrepreneurs, including not-for-profit organizations and charities, with financial planning advice.

Business advisors who are chartered professional accountants are available through the BRS to provide customized financial guidance to small business owners in most urgent need, particularly those that do not have access to an accountant. The advisors are able to answer questions about tax regulations and COVID-19 implications, provide information on government support programs, and provide longer-term financial planning advice.

Small business owners and entrepreneurs struggling to navigate financial planning through the pandemic should consider taking advantage of this national service, which is available seven days a week, from 8:00 am – 8:00 pm. The hotline is a four-week trial project, which may be extended in the coming weeks.

Discussions on Providing Ten Paid Sick Days to all Employees Continued between Federal and Provincial Governments

On May 25, 2020, Prime Minister Justin Trudeau announced that the federal government was continuing discussions with the provinces and territories about providing all workers with ten days of paid sick leave per year. The measure would help workers with COVID-19 symptoms stay home to reduce the risk of a second wave of cases. The federal government also announced it is considering other long-term sick leave support.

On May 29, 2020, Prime Minister Justin Trudeau noted that the provinces had expressed concerns about not adding more costs onto businesses/employers during this period, and offered reassurance that the federal government would take on a large part of the cost for the paid leave, at least in the short-term.

Extremely Troubling Conditions in five Ontario Long-Term Care Homes

On May 26, 2020, a report by the Canadian Armed Forces on troubling conditions in five long-term care homes in Ontario (the “Report”) was made public. The Report and its consequences present a stark cautionary tale for employers on the importance of meeting their health and safety obligations during the COVID-19 pandemic, and what may happen if they fail to do so.

The Report revealed extremely troubling conditions in the 5 Ontario long-term care homes to which the Canadian Armed Forces have been deployed since April 28, 2020, including cockroach infestations, residents languishing in soiled diapers, force feeding of elders, inadequate provision and use of personal protective equipment (“PPE”), and COVID-19 patients being allowed to roam around freely.

Ontario Premier Doug Ford stated that Ontario had begun launching a full investigation into the allegations contained in the Report. The results of this investigation will be shared with police to consider whether any criminal charges are warranted. Ontario will also launch an independent commission into Ontario’s “broken” Long-Term Care system, which is set to begin in July 2020.

On May 27, 2020, Ontario announced that it is issuing mandatory management orders for four of the five long-term care homes discussed in the Report, pursuant to the emergency order that the province issued on May 13, 2020. This is in addition to two long-term care homes for which Ontario issued mandatory management orders on May 25, 2020. Ontario also announced that it is prepared to revoke the licenses of unsafe long-term care homes and shut down their facilities where necessary.

This situation underscores how crucial it is for employers to comply with their health and safety obligations amid the COVID-19 pandemic, and offers a glimpse of the severe consequences that may befall employers that fail to meet their obligations.

Regulations Published Expanding the Eligibility of the CEWS

On May 27, 2020, the federal government published Regulations Amending the Income Tax Regulations (COVID-19 Eligible Entities) which implement previously announced expansions to the types of organizations that are eligible for the Canada Emergency Wage Subsidy (“CEWS”).

These types of organizations include:

  • partnerships with one or more non-eligible members, so long as the non-eligible members of the partnership collectively account for not more than 50% of the fair market value of the entire partnership at all times during the qualifying period;
  • tax-exempt indigenous government-owned businesses, and their wholly-owned subsidiaries, as well as partnerships in which each partner is an Indigenous government or an eligible employer;
  • tax-exempt Registered Canadian Amateur Athletic Associations;
  • tax-exempt registered journalism organizations; and
  • non-public educational and training institutions, including non-profit and for-profit institutions such as art schools, language schools, and driving schools.

These changes are all retroactive such that these entities can be eligible beginning from the first CEWS qualifying period of March 15 to April 11, 2020 as well as all subsequent qualifying periods. To be clear, these organizations must still meet the other existing eligibility criteria for the CEWS to receive it. (For background information on the CEWS, please watch our recent FAQ video).

The expansion of the types of organizations that can be eligible for the CEWS is great news for employers because it will allow more businesses to access the CEWS than before.

Ontario Implemented a New COVID-19 Testing Strategy

On May 29, 2020, Premier Doug Ford announced the Ontario Government’s new testing strategy for COVID-19. Individuals who are concerned that they may have been exposed to the virus but do not have any symptoms are now being encouraged to go get tested. This includes essential workers who are at risk of exposure through their employment. The new strategy has three branches:

  1. Expanding capacity of Assessment Centres to test concerned asymptomatic individuals, along with continued routine testing of individuals with symptoms.
  • Expanding surveillance of asymptomatic high-risk and vulnerable populations, including workers in “priority sectors” and individuals in shared living spaces such as long-term care homes, retirement homes, and shelters.
  • Maintaining a reserve testing capacity to respond rapidly to new outbreaks in specific communities, workplaces and institutions through mobile testing teams.

The new testing strategy was announced as the province continues to expand testing capacity and develop its contact tracing efforts.

The expanded testing strategy may be a positive sign for employers and return to work, as recent research shows that effective testing ad contact tracing can significantly reduce lost working hours by minimizing workplace disruptions and public fear.

However, the new testing strategy may also carry other implications for employers. As asymptomatic individuals are encouraged to get tested, this could result in many employee absences. The government has not yet provided clear guidelines on the protocols for asymptomatic individuals who get tested, although it seems they may be allowed to return to the workplace while their test results are pending.

Employers in “priority” sectors may expect some disruption if many workers are required to get tested within a short period of time, and may be expected to dedicate resources to support workplace testing. As mentioned in our recent article, there may also be privacy and human rights implications for employers if they are required to monitor testing of employees.

Ontario Considering New Criteria and a Regional Approach to Reopening

On May 27, 2020, Ontario’s public health units released specific data-based thresholds that they feel should guide the reopening of Ontario and/or the reinstituting of restrictions where necessary. These criteria, which have been signed by all 34 of the province’s officers of health, are generally more detailed and quantitative than those set out in Ontario’s The Framework for Reopening our Province (the “Framework”) (read our recent article for more information on the Framework).

On May 29, 2020, Ontario Premier Doug Ford also stated that he is considering a regionalized approach to the staged reopening of Ontario, under which the relaxation or tightening of restrictions would vary by region depending on the public health conditions in each region. The Premier stated that a regional approach is only one option that is being considered as the province anticipates moving into Stage 2 of the Framework, and the province will look to the experience of other provinces to determine if such an approach is right for Ontario.

Whether or not Ontario adopts the newly proposed criteria and/or a regional approach for a staged reopening of the province will have substantial implications for Ontario employers. For example, the adoption of the newly proposed criteria would impact the timeline for the province’s reopening and/or the reinstitution of restrictions by altering the thresholds that would determine such decisions. Similarly, a regional approach to reopening Ontario would mean that timelines for reopening would vary between regions, which could be particularly impactful to employers that have an integrated business model across multiple regions in the province.

A New Ontario Regulation Implemented Significant Changes to the Law on Layoffs, Leave and Constructive Dismissal related to COVID-19

On May 29, 2020, the Ontario government published a new Regulation, O. Reg. 228/20: Infectious Disease Emergency Leave, under the Employment Standards Act, 2000 (the “ESA”).

Among other changes, the Regulation provides that the reduction or elimination of an employee’s hours, or the reduction of an employee’s wages, by an employer for reasons related to COVID-19 in the period beginning on March 1, 2020 and ending six weeks after Ontario’s ongoing state of emergency ends does not constitute a layoff under the ESA. This is a clear change from the normal operation of the ESA, when such changes often constitute layoffs and are therefore subject to the ESA’s limits on the duration of layoffs.

The Regulation also deems that those same changes to employee hours or wages during that period do not constitute constructive dismissal.

Further, the Regulation deems that employees whose hours of work are temporarily reduced or eliminated due to COVID-19 during the period outlined above are deemed to be on the recently-enacted Infectious Disease Emergency Leave (“IDEL”) under the ESA. However, there are important exceptions to this rule, including that employees whose employment is terminated permanently are not deemed to be on that leave.

The new Regulation will have a dramatic impact on Ontario employers impacted by COVID-19, as it significantly impacts the existing law on layoffs, leave and constructive dismissal for non-unionized employees.

For more detailed commentary on this important new Regulation, please see our forthcoming article.

This blog is provided as an information service and summary of workplace legal issues. This information is not intended as legal advice.

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