COVID-19: Navigating the Non-Essential Business Closure

Matt Benson
Posted March 31, 2020 Category: Businesses
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On March 24, 2020, the Government of Ontario introduced Regulation 82/20 made under the Emergency Management and Civil Protection Act as part of a series of actions it has taken in an effort to curtail the spread of COVID-19.  This measure required all businesses that were not included in the list of “essential businesses” set out in Schedule 2 of the Regulation to close.

What are the “essential businesses”?

Schedule 2 of the Regulation currently includes the following 19 categories of “essential businesses”, which are described with a reasonable degree of detail.  These businesses may remain open for the time being.  However, the Government has signaled that this list is subject to change, and as such, please refer directly to the Regulation when determining whether your business qualifies as an ”essential business” at any given time:

  • Supply chains
  • Retail and wholesaling
  • Food services and accommodations
  • Institutional, residential, commercial and industrial maintenance
  • Telecommunications and IT Infrastructure/Service Providers
  • Transportation
  • Manufacturing and Production
  • Agriculture and good production
  • Construction
  • Financial activities
  • Resources
  • Environmental Services
  • Utilities and Community Services
  • Communications Industries
  • Research
  • Health Care and Seniors Care and Social Services
  • Justice Sector
  • Other Businesses
  • Business Regulators and Inspectors

What if my businesses is not on the list?

All businesses that are not listed under one or more of the above-referenced categories in the Regulation are required to close.  However, you should consider whether your business falls within one of the exceptions under Subsections 1(2), 1(3), or 1(5) of the Regulation.  Those exceptions provide that:

  1. ‘Non-essential’ business may continue to be operated remotely for the purpose of (i) providing goods by mail or other forms of delivery, or for pick up, and (ii) providing services online, by telephone or other remote means;
  1. Temporary access to a closed business is permitted 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; and
  1. All governments and any publicly funded agency or organization that delivers or supports government operations, including operations and services of the health care sector may remain open.

What if I need clarification?

For many, it may be unclear whether your business falls within the scope of the “essential business” list.  Many of the types of businesses listed are described inclusively with examples of businesses that may not include your business.  Similarly, it is possible that some of your business activities fall outside of the “essential businesses” list, but others are included on the list and may remain open.  If you are unclear as to whether some or all of your business is required to close, consider contacting the Government’s business information line to seek clarification.

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

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 my options if I am forced to close?

If your business does not fall within the scope of the “essential businesses” list in the Regulation (in whole or in part), and if 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 the doctrine of frustration; 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.

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Matt Benson
Posted March 31, 2020 Category: Businesses

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