June 8, 2020

McLennan Ross Update for Monday

By McLennan Ross Labour & Employment Team
What we are seeing
  • Last week, the Government of Canada announced assistance for municipalities facing a financial crisis due to COVID-19. First, the Government announced that it would accelerate $2.2 billion in annual federal infrastructure funding for communities. Funding will be delivered in one payment this month. These funds were promised to municipalities as part of last year's federal budget. The intention is to fund infrastructure projects to help restart local economies. Projects could include access to high-speed broadband internet, improvements to water and road systems, and the building of cycling and walking paths.
  • Municipalities are facing budget deficits due to continuing or increased demand for public services such as local police, ambulance and fire service, local public health, municipal waste collection and social services, while experiencing decreased revenues from user fees (such as public transit fares) and deferred or lost property or business taxes. The Federation of Canadian Municipalities (FCM) had already predicted a collective shortfall of at least $10 billion for its members. Despite the announcement from the Federal Government of the acceleration of funds already budgeted, that shortfall has not been reduced. 
  • As the hope is that the current revenue and expense issues facing municipalities are temporary and will return to normal once the pandemic has passed, providing short-term liquidity to municipalities, which cannot otherwise run a deficit, may be a simple and cost-effective solution for the Federal Government.
  • On June 5, 2020, the Federal Government also announced that it would be providing an additional $14 billion to provinces and territories to help safely restart their economies. Provinces were quick to support the concept but were critical of the details. The biggest issue appears to be that the Federal Government wants to control how the funds are spent, calling the assistance "targeted" and requiring the funds be used for programs and projects pre-approved by Ottawa. One such item is that the provinces legislate a requirement that employers provide their employees with 10 paid sick days, something we were critical of in an earlier blog post.
  • The provinces were also critical of the amount of assistance being provided, including its allocation on a per capital basis, as opposed to where COVID-19 had the biggest outbreaks and economic impacts.

What we are hearing
  • The Government of Alberta announced on June 5, 2020 that it was introducing legislation to prevent commercial landlords who refused to take advantage of the Canada Emergency Commercial Rent Assistance (CECRA) from evicting business tenants impacted by COVID-19. CECRA provided forgivable loans to commercial landlords if they reduced their tenants' rent by 75% for April, May, and June. As we discussed here, because the program was voluntary and placed restrictions on landlords' rights to evict tenants, some landlords elected not to participate in the program. Following in the steps of British Columbia, Alberta is attempting to further protect small businesses struggling to pay rent as a result of drastically reduced revenues. 
  • Premier Kenney also announced a one-time payment of up to 15% of monthly sales revenue, with the maximum amount capped at $5,000, for employers with 500 or fewer employees forced to close or curtail their operations due to the pandemic. The intention is that employers can use this money for start-up costs like purchasing inventory, acquiring personal protective equipment, and bringing back staff.

What we are saying
  • As we have been stating consistently, we envision a large volume of COVID-19 related litigation commencing in the next few months following the lifting of the state of emergency. The anticipated volume of claims will undoubtedly be increased by claims that are either spurious or may involve situations where a defendant employer may have absolute statutory immunity, such as with claims for workplace injuries that are the exclusive jurisdiction of the Workers Compensation Board.
  • With the Alberta courts already struggling to determine how to provide full service while resolving the large backlog of court dates that were postponed due to the state of emergency, we will be curious how these types of frivolous cases will be dealt with, and whether the courts will assist in separating these claims from legitimate ones.

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