COVID-19 & your Small Business

This article will summarize some key information and resources for businesses on a few fronts:

  • Government resources and links
  • Legal issues
  • A general life update

It’s taken me a few more days to get this out to you than I would have liked, but I was waiting until government responses and support programs had firmed up, and frankly I’ve been busier than a one legged cat trying to hide shit on a marble floor as we convert Last Straw Distillery to produce sanitizer for the duration of the crisis.

So, without further ado…

COVID-19: Government Resources

I always recommend getting your information directly from official sources. Here are some key links for you and your business:

Here is an excellent summary of the financial supports available (as of March 18, 2020) which were forwarded to me by Cheryl Diab, an accountant in my network. You can reach her directly by email with accounting questions, if you like.

COVID-19: Legal Issues

The contents of this article are certainly not legal advice, however I aim to provide you with some basic information and recommendations on the legal effect of this outbreak on small businesses in Ontario. This will cover some obligations to:

  • Employees
  • Landlords & other contracts
  • Customers/the public
  • Insurance

Employees

Layoffs. As it stands now, unless you have a written contract with your employees that allows you to lay them off, laying them off is the same as firing them without cause. Same goes for reducing their hours significantly. That means you would either need to give them working notice, or pay in lieu of notice. Given how many businesses in Ontario are or will be in a tight spot on this front, I expect that we’ll see some direction from government in the near future that may give you some alternatives.

Leave. On the flip side, an emergency law was passed in Ontario allowing employees to take COVID19 leave in certain circumstances, including if they’re:

  • actually infected,
  • ordered into quarantine by a doctor or other public official,
  • caring for a family member,
  • in self-isolation as a control measure, or
  • ordered by their employer
I don’t see the “ordered by the employer” as a way to avoid the layoff/termination issue discussed above. The law was passed to prevent reprisals by employers against employees during the crisis. It’s not entirely clear what circumstances you can order employees home, but a safe interpretation is probably if they meet the categories that would allow them to take the protected leave (infected, businesses ordered closed by government – like restaurants, etc).

Other categories of unpaid leave – such as child care in the event of school closures – would also apply.

Safe work environment. This is a big one. Employees have a right to refuse unsafe work, and can’t be punished for doing so. You have a duty by law to provide a safe working environment, which would include a duty to protect employees from undue risk of exposure to the virus. Should you be open at all? If you determine that you must be open, what steps should you take to protect employee safety? What’s required will vary depending on your business. Email me to start the conversation.

Human Rights & Privacy. Kid gloves are required here. Your workers’ health status is their protected health information, and you are required to keep it confidential. Special rules apply to health information, compared to other personal information. Care must be taken to avoid your safety-motivated questions about worker health being interpreted as discriminating against a worker because of a pre-existing health condition. Email me to discuss what’s required.

Courses of Action. It seems that the most logical first step is to have a conversation with your employees, and see if you can:

  • assess the risks & vulnerability of each worker; and
  • agree with them as to the best way to approach the situation.
Most non-union employment contracts don’t have a right to layoffs, so you’ll need their agreement to the plan at some point in order to close up shop temporarily. Better to have the conversation now, and get everyone pulling in the same direction, rather than waiting until after the fact and risking a fight. The government programs include shortened eligibility periods for EI, which can give your employees some financial help if they agree to a layoff. You’ll need to provide a record of employment in order for them to do so.
Landlords & Other Contracts

Your biggest overhead expense is likely your most worrying. The outbreak may be a “force majeure” event covered by your lease, or it may not be (landlords commonly still require you to pay rent during the force majeure event). The landlord may be getting property tax breaks or deferrals that may or may not be passed on to you as relief from additional rent under the lease. It depends on the wording of your lease.

Similarly, other contracts with third parties may need to be suspended or terminated, and “force majeure” clauses may apply. What’s required depends on the wording of the contract.

Customers & the Public

As in normal situations, you have a duty to take reasonable care to prevent injury/loss to others. What’s reasonable during the outbreak will depend on the nature of your business, but in any event, the government recommended policies are probably a good starting point:

Insurance

It’s possible that your business insurance may have coverage for COVID-19 related business interruptions. This would typically be under “business interruption insurance”. This is a form of insurance that landlords often require when they don’t allow you to escape paying rent in a “force majeure” situation, so pretty common.

Review your policy, and see what the coverage and requirements may be. I haven’t heard yet how insurance companies are responding to the increased claims (whether by increased coverage denials or otherwise), but if you have a coverage dispute, let me know and I can recommend some insurance litigators to help you fight for what you’ve paid for.

Again, the above is provided as information, and not legal advice. You can reach me by email to discuss specifics for your business.
Mike Hook
Intrepid Lawyer
http://intrepidlaw.ca

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