COVID-19 – Navigating the Non-Essential Business Closure (Part II)

Matt Benson
Posted April 3, 2020 Category: Businesses
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Earlier today (Friday April 3, 2020) the Government of Ontario released an updated list of essential businesses.  This list narrows the field of businesses deemed ‘essential’ in the context of the present COVID-19 pandemic.  Please refer to our earlier note which addressed the first “essential business” list published on March 24, 2020 under Regulation 82/20.

Any business that is not included on the updated list is required to close its physical location by 11:59 p.m. on Saturday, April 4, 2020.  However, the Government has made it clear that the updated list will not preclude:

  1. the provision of work and services by entities that are not on the list, either online, or by telephone or by mail/delivery;
  1. delivery of services of any publicly funded agency or organization that delivers or supports government operations and services, including operations and services in the health care sector; or
  1. teleworking or online commerce (which may continue for all businesses)

It is not yet clear whether any further exceptions will be provided.  We note that the regulation setting out the original list of essential businesses permitted temporary access to a closed business for certain purposes, including attending at the place of business temporarily to deal with critical matters that cannot be attended to remotely, or to access materials, goods, or supplies that may be necessary for the business to be operated remotely. 

We have included a chart at the bottom of this note comparing the new essential business list as compared with the list published on March 24, 2020.  It is clear from the chart below that:

  • certain businesses that were previously included in the original essential businesses list have been omitted;
  • certain businesses may now only provide services in a particular manner, such as curb side pick-up and delivery; and
  • only critical construction projects will be permitted to continue, such as petrochemical plants and infrastructure projects, such as hospitals, roads, and bridges.

What immediate steps should you take?

All businesses in Ontario will need to review the current list and make an assessment as to whether they are required to close their physical locations by 11:59 p.m. on April 4, 2020.  If you are unclear as to whether your business is reflected on (or has been omitted from) the updated list, contact the Government of Ontario’s “Stop the Spread Business Information Line” at 1-888-444-3659.

Please note that the updated list may be subject to change, and as such, please refer directly to the official Government list when determining whether your business qualifies as an “essential business”. 

What are the consequences for remaining open if your business is not on the list?

We anticipate that this new updated list will be published as a regulation under the Emergency Management and Civil Protection Act (as with the prior list) or as an update to the prior regulation.  Assuming that is the case, there are serious consequences under the Emergency Management and Civil Protection Act for failing to comply with the Regulation.  Such failure is an ‘offence’ under the Act punishable:

  1. In the case of an individual, by a fine of nor more than $100,000 and imprisonment for up to a year;
  1. In the case of a director of officer of a corporation, by a fine of not more than $500,000 and imprisonment for up to a year; and
  1. In the case of a corporation, by a fine of not more than $10,000,000.

Each day that the offence continues (e.g. the business remains open) is a separate offence that could trigger a new set of penalties.  Further, the court may increase any fine imposed on any person in an amount equal to any financial benefit that the offending person received as a result of the offence.

What are your options if you are forced to close?

If your business does not fall within the scope of the “essential businesses”, and the exceptions (e.g. working remotely) do not provide a viable alternative for your business, then your business will be forced to close. 

Businesses who are forced to close should consider whether they have any insurance coverage, such as business interruption insurance, which may be responsive to the COVID-19 crisis.  In the absence of such coverage, business owners will need to consider a number of options to preserve the viability of their business, including:

  1. Labour and employment considerations – such as the potential need to reduce payroll costs.  Please contact our labour and employment group for more information on this topic;
  1. Financing options – including the availability of loans from federal or provincial governments or banks to assist with immediate cash flow obligations;
  1. Contractual relief options – including the availability of any applicable force majeure provisions, or possible similar arguments at common law.  See our recent blogs on force majeure clauses; and
  1. Government relief and subsidies – such as those relating to employee subsidies.  Our labour and employment group would be happy to discuss any questions you may have on this topic.

Please contact our business team if you have any questions about this article or wish to discuss your business’s options for mitigating its risks in response to the COVID-19 emergency.  Our lawyers are tracking the developments and stand ready to assist as you navigate the shifting business landscape.  Please see our webpage for daily updates across all disciplines.

We look forward to helping you through this.

Click here to review a detailed comparison of the March 24th and April 3rd essential business lists. You can also download the document below.

This update is provided as a courtesy for your general information and does not constitute legal advice. Every organization is unique and may also be subject to other laws not contemplated in this update. This update should not be relied on as a substitute for legal advice which necessarily must be specific to your organization, your objects, your operations, and your structure. If you have any questions about this information please contact one of the lawyers listed above.

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Matt Benson
Posted April 3, 2020 Category: Businesses

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