This is the eighth 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 11, 2020 and is current as of May 19, 2020.
During the week of May 11, 2020, the federal government announced new bridge loans for large employers, new funding to aid research institutes during the pandemic, and the extension and expansion of the Canada Emergency Wage Subsidy (“CEWS”). Ontario’s government extended the provincial state of emergency, issued a new emergency order affecting long-term care homes, passed new legislation, announced the reopening of more workplaces, and announced further funding for agencies addressing gender-based violence and human trafficking.
These key developments, as well as others, are set out below.
New Federal Bridge Loans Available to Large Employers
On Monday, May 11, 2020, Prime Minister Justin Trudeau announced that the federal government will make bridge loans available to larger employers that cannot access credit through conventional financing mechanisms. The Large Employer Emergency Financing Facility (“LEEFF”) will provide support to businesses with annual revenues of over $300 million. The program aims to protect jobs and help businesses avoid bankruptcy.
LEEFF recipients will be required to respect union contracts and keep workers on the payroll, and to disclose climate action plans and sustainability goals in order to qualify. Recipients will also face strict limits on dividends, share buybacks and “excessive” executive pay. In order to qualify, businesses will be required to share their complete financial structure and will be evaluated based on their employment, tax and economic activity in Canada. Businesses convicted of tax evasion will not be eligible for the program.
The program will be accessible to commercial businesses in all sectors of the economy except for the financial sector, and to certain not-for-profit businesses.
Additional details on the bridge loans and application process are expected to be announced soon.
Expanded Business Credit Availability Program
On May 11, 2020, the Prime Minister also announced that the Business Credit Availability Program (“BCAP”), initially put in place to keep small businesses solvent, will be expanded to medium sized businesses. Businesses can access the BCAP through financial institutions and credit unions.
City of Toronto “ShopHERE” Program for Online Stores
On Monday, May 11, 2020, the City of Toronto announced the launch of “ShopHERE”, a new digital initiative that will enlist volunteer web developers from tech companies, such as Shopify and Google, to help Toronto’s small independent businesses and artists set up online stores.
The ShopHERE program is open to local artists as well as businesses with under 10 employees (or under 25 if they are a restaurant or bar) that pay commercial property tax in Toronto and are not corporate chains or franchises.
Eligible businesses will receive hands-on assistance in setting-up online stores, as well as training in marketing and shipping. The goal of the program is to develop 3,000 online stores over the next three months. The City estimates that nearly 50,000 businesses are eligible for the program, and is encouraging more local technology companies to volunteer to increase the program’s capacity.
Ontario Extended its Declaration of Emergency and Passed New Legislation
On May 12, 2020, Ontario extended its Declaration of Emergency under the Emergency Management and Civil Protection Act (the “EMCPA”) until June 2, 2020. This extension will allow the province to continue enforcing the Emergency Orders that it has made under the EMCPA and to issue new emergency orders until at least June 2, 2020.
The government also passed the COVID-19 Response and Reforms to Modernize Ontario Act (the “Act”), which is intended to help people conduct business while practicing appropriate physical distancing.
Some of the changes implemented by the Act that are most relevant for employers include:
- corporations can now call and hold certain meetings virtually, and the time period for when annual meetings must be held will be extended in certain circumstances;
- businesses are now allowed to file business registration documents electronically, and the Ministry of Government and Consumer Services will accept copies of business registration documents and e-signatures; and
- the Attorney General is empowered to make regulations that would allow for documents to be commissioned and notarized remotely.
For information on what this means for your business, please read our recent article.
Ontario Issued a New Emergency Order Affecting Long-Term Care Homes
On May 13, 2020, Ontario made an emergency order that allows the Director appointed under the Long-Term Care Homes Act (the “LTCHA”) to issue temporary mandatory management orders under s.156 of the LTCHA to long-term care (“LTC”) homes that are struggling to deal with COVID-19. With this power, the Director can require any LTC home in which a resident or staff member has tested positive for COVID-19 to retain any person, including a corporation or a hospital, to temporarily provide them with “management assistance”, in order to protect residents and front-line staff. Prior to this emergency order, the Director was only empowered to make mandatory management orders in respect of LTC homes that had failed to comply with the LTCHA, or where the Director had reasonable grounds to believe that the LTC home cannot or will not properly manage itself without assistance.
Whether management assistance is required for any particular LTC home will be determined on a case-by-case basis. Nonetheless, the Ontario government has stated that LTC homes may require management assistance if:
- high numbers of staff or residents have COVID-19;
- there are high numbers of deaths;
- there is an unresolved outbreak;
- there are significant staffing issues; or
- there are outstanding requirements from infection prevention and control assessments.
Notably, s. 156 of the LTCHA provides that LTC homes that are subject to mandatory management orders must retain the entity providing the management assistance at the LTC home’s own expense.
Ontario Announced Further Support for Gender-Based Violence and Human Trafficking Agencies
On May 13, 2020, Ontario announced that it is investing $1 million to help frontline agencies provide remote service delivery to victims of gender-based violence and human trafficking during the COVID-19 pandemic.
For example, the Assaulted Women’s Helpline will receive $200,000 to develop text and on-line chat counselling platforms, set up toll-free lines, and hire additional staff in response to increased call volumes.
The new funding is in addition to millions of dollars that Ontario previously committed to provide to agencies addressing domestic and sexual violence during the pandemic.
Ontario Reopened More Workplaces on May 16 & 19, 2020
On May 14, 2020, Ontario Premier Doug Ford announced that more Ontario workplaces would be allowed to reopen on Saturday May 16, 2020, and that even more would be allowed to reopen on Tuesday May 19, 2020 when Ontario entered Stage 1 of its Framework for Reopening Our Economy (read our recent article for an overview of the framework).
On May 16, 2020, the following workplaces were allowed to reopen partially or fully:
- golf courses;
- marinas, boat clubs, and public boat launches;
- private parks and campgrounds;
- businesses that board animals, but only to allow boarders to visit, care for, or ride their animals.
On May 19, 2020, the following workplaces/activities were allowed to reopen/resume:
- all construction projects;
- all retail stores with a street entrance that are not located in a shopping mall, so long as they have appropriate social distancing measures in place;
- seasonal businesses, non-team sports competitions for individual/single competitors, and recreational activity facilities that can be used while maintaining appropriate physical distancing (without spectators), such as tennis courts, off-leash dog parks, track and field facilities, and racetracks;
- animal/pet care services, such as groomers, trainers, and veterinary clinics;
- indoor and outdoor household services, such as cleaning and maintenance, that can follow public health guidelines; and
- certain health and medical services, such as in-person counselling and scheduled surgeries that meet certain criteria.
Nonetheless, the Ontario government has made it clear that businesses should not reopen until they are prepared to do so safely, in accordance with public health guidelines. All employers will need to ensure that they take appropriate precautions for the health and safety of their workers when they reopen (for more information, please see the our recent article).
On May 14, 2020, the Ontario government also launched the Workplace PPE Supplier Directory, a website providing an up-to-date list of companies and business associations that supply personal protective equipment (PPE). This directory is intended to ensure that businesses can obtain necessary PPE to meet public health guidelines.
The Federal Government Announced $450 Million in Aid for Research Institutes
On May 15, 2020, Prime Minister Justin Trudeau announced that the federal government will provide $450 million of aid to help research institutes during the COVID-19 pandemic. Trudeau stated that this funding was to address the fact that many labs that conduct valuable research to help keep Canadians safe have closed due to the pandemic or are at imminent risk of closing.
In particular, universities and affiliated research institutes that have been affected by the pandemic will be provided with temporary support in paying workers’ wages through federal granting agencies.
This funding will provide much needed help to employers operating research institutes and help ensure that they can continue their important research, including the search for a vaccine for COVID-19.
The Canada Emergency Wage Subsidy: Extension to August 29 and Expansion
On May 15, 2020, the federal government announced that it will extend the CEWS until August 29, 2020 (for an overview of the CEWS, please watch our recent FAQ video). The CEWS was set to expire on June 6, 2020 prior to this extension.
Prime Minister Justin Trudeau stated that the extension of the CEWS is intended to help businesses bring employees back to work as they reopen, and to help businesses expand where possible.
On May 15, 2020, the federal government also announced regulatory changes to expand the types of organizations that can be eligible for the CEWS, as well as proposed legislative changes with respect to the CEWS. Moreover, the government is considering changing the 30% decline-in-revenue eligibility criterion for the CEWS, in consultation with stakeholders, because “needing a decline should not be a barrier to growth”.
Regulatory Changes: Organizations That Can Now Be Eligible for the CEWS
The federal government has also prescribed through regulations that certain types of organizations that were not formerly eligible for the CEWS can now be eligible. 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 – April 11, 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.
Proposed Legislative Changes to the CEWS
The federal government has announced that it will propose legislative changes to close unintended gaps in the existing legislation, such that the CEWS would be available in respect of the wages of certain employees that are presently excluded or disadvantaged under the existing legislation. However, one of the proposed changes would reduce the number of tax-exempt trusts that are eligible for the CEWS.
First, to support seasonal employees and employees returning from extended leaves, as well as their employers, the government is proposing to allow employers to choose between two periods when calculating their employees’ baseline remuneration. Employers would be able to calculate the baseline remuneration of employees as the weekly average that they were paid from January 1 to March 15, 2020, or as the average weekly remuneration they were paid from March 1 to May 31, 2019 (excluding any period of 7 or more days in which the employee did not receive remuneration, regardless of which period is chosen). This change would be retroactive to the first CEWS qualifying period.
Second, corporations that have recently been formed through an amalgamation would be allowed to calculate their benchmark revenue for the purposes of the CEWS revenue-decline eligibility criterion by combining the revenues of the corporations that were amalgamated, unless qualifying for the CEWS can reasonably be considered to be one of the main purposes for the amalgamation. This change would also be retroactive to the first CEWS qualifying period.
Finally, tax-exempt trusts would only be eligible for the CEWS if they are a registered charity or if they are another type of prescribed eligible tax-exempt entity. Further, trusts that are public institutions would only be eligible for the CEWS if they are specifically prescribed to be eligible. These changes would be retroactive to May 10, 2020.
For information on what these changes mean for your business, please read our recent article.
Charities and Non-Profits May Now Apply for Federal Funding
On May 16, 2020, the federal government announced that Canadian charities and non-profits could begin to apply for funding through the Emergency Community Support Fund (“ECSF”) on May 19, 2020 (for more information on the ECSF, please read our recent article).
Accordingly, employers operating charities or non-profit organizations that need financial assistance due to the COVID-19 pandemic should apply to the ECSF as soon as practicable.
This blog is provided as an information service and summary of workplace legal issues. This information is not intended as legal advice.