COVID-19: Essentials for Child Care Providers

COVID-19 has had a devastating impact on all sectors of Ontario’s economy.  Child Care services providers are not immune. In fact, child care service providers were among the earliest organizations subject to mandatory closure and have been among the hardest hit economically speaking, due to the evaporation of revenues and continuing obligations to landlords and workers.

In this article, we provide answers to COVID-19 related legal questions we’ve been receiving from the child care centres we support across the province.

When can Child Care Centres operate?

Since March 17, 2020, licensed child care centres have been under heavy restrictions on whether and when they can operate.  Until May 19, 2020, at the earliest, child care centres can only operate if they are an existing child care centre and meet all of the following criteria:

1. Meet all of the requirements of the Child Care and Early Years Act;
2. Provide care only for children with a parent or guardian who are an essential worker;
3. Follow all current Ministry of Education (the “Ministry”) policies and guidelines (the Ministry will consider amending licenses as needed to support mixed-age groupings);
4. Consult the local Medical Officer of Health, who must support all of the established settings;
5. Have a plan or protocol in place in the event that a child, parent or staff member at the site is exposed to COVID-19;
6. Not have more than 50 people in the location at one time, including children, employees, parents and guardians;
7. Be thoroughly cleaned every day and before opening;
8. Not allow visitors to enter the centre;
9. Permit no more than 50 persons, including children, to be present at any time at the centre; and
10. Are identified as being allowed to operate by the Minister of Education or his delegate;

Essential workers include a variety of professions deemed essential by the province, such as regulated health professionals, police officers and other emergency personnel, persons working in emergency child care settings, staff in developmental services, and certain other front line essential services.

The Ministry of Health offers guidance for emergency child care centres to help prevent the spread of COVID-19 in the centre.

Child care centres that operate under these rules will be providing government-funded child care to emergency workers, free of charge to the workers themselves.

Of course, this exception for the operation of emergency child care does not allow the child care sector to continue operating as usual. Many child care centres cannot operate even with this exception. They may not receive authorization or the risks of staying open are too great.

Can a Centre charge fees during periods of closure?  

The Provincial Government has issued an emergency order providing that child care centres cannot charge fees for providing child care unless it is for people actually receiving emergency child care. Of course, since emergency child care is funded by the government, this in effect means that child care centres cannot charge fees during the emergency closure. This particularly affects centres that are closed. This order means that such centres cannot keep charging families while their centre is closed, despite any agreement the centre may have providing for continued fees during periods of closure.

Further, child care centres cannot penalize any person for not paying fees while they are closed. That means centres will have to allow families to resume their position and continue to receive service once a centre reopens without any penalties.

When do employees of Emergency Child Care Centres have a right to be excused from working?

Centres that continue to operate may find themselves dealing with staffing shortages, whether due to staff illnesses, staff self-isolation, or leaves of absences

In addition to the usual Employment Standards Act, 2000 (“ESA”) leaves that were in place before the crisis, the Provincial Government has enacted new infectious disease emergency leaves. Employers will also have to consider requests for leaves based on the Human Rights Code.

ESA Leaves

We provide a full summary of the new emergency leaves here. Available leaves include job protected unpaid leave for employees for a variety of “infectious disease” related purposes – including:

• The employee is under medical investigation, supervision or treatment for COVID-19;
• The employee is acting in accordance with an order under the Health Protection and Promotion Act;
• The employee is in isolation or quarantine in accordance with public health information or direction;
• The employer directs the employee not to work due to a concern that COVID-19 could be spread in the workplace;
• The employee needs to provide care to a person for a reason related to COVID-19 such as a school or day-care closure; and
• The employee is prevented from returning to Ontario because of travel restrictions.

Special rules apply in relation to these leaves, including a prohibition on employers requesting medical certificates as evidence to substantiate eligibility for these leaves.

Human Rights Leaves and Accommodations

An employee may also become entitled to a leave of absence as an accommodation under the Human Rights Code. This will most often arise if the employee has a disability that puts them at greater vulnerability of COVID-19 complications or if they have family care obligations that require them to be away from work for the duration. While these forms of leave have largely been superseded by the new ESA infectious disease leaves for the duration of the crisis, they may still arise.

If an employee requests such a leave, child care centres have an obligation to investigate what accommodation is reasonable (if any). It does not have to be the employee’s preferred accommodation if it actually meets the need. For example, an employee might be able to be accommodated in the workplace, allowing them to continue work. Further, a child care centre only has the duty to accommodate to the point of undue hardship. While that requires the child care centre to bear some cost, the cost does not have to be undue (a tricky concept).

In most cases, if the employee is genuinely facing a need to take a leave for disability or family care reasons, they will likely be entitled to take the leave without pay. In the family care case, however, a child care centre is entitled to seek reasonable evidence to substantiate the request and that the employee actually provides care to the family member in question (for example, an elder relative).  When it comes to child care related leave requests, note that staff may be eligible for Emergency Child Care, which would then allow them to continue to work.

Note, if the employee asks for a leave without stipulating why, a child care centre may have a duty to inquire to determine if it is for a human rights code protected reason (such as disability). The best practice is to probe as to why the employee wants to take the leave before making a decision.

Do child care workers have a right to refuse work just because they are afraid of COVID-19?

Child care workers who continue to work at this time may have a right to refuse work as unsafe where they can point to a specific hazard or perceived hazard in the workplace. For example, they may point to the risks of the employer not screening visitors to the centre or not providing adequate handwashing facilities. This right arises from the Occupational Health and Safety Act.

However, an employee will generally not be entitled to refuse work merely because of a generalized fear of contracting COVID-19. They must be able to point to a particular workplace hazard or risk.

If an employee is refusing to work, the child care centre should first attempt to ascertain why they are refusing before taking any action. If the employee can point to a specific hazard, the child care centre generally must treat it as a valid work refusal and undergo a proper work refusal investigation. However, if the employee cannot articulate why they are refusing to work beyond “COVID-19”, then the child care centre can require them to continue working on pain of discipline. Now, there is a risk to doing this, so child care centres should seek legal advice before imposing discipline (if time permits).

Does a Child Care Centre have to continue to pay workers during periods of closure?

Child care centres have stark choices when faced with mandated closure and resulting elimination of revenues: either continue to pay workers during the closure or not.  For non-union centres, “or not” comes with the risk of employees considering themselves terminated and claiming constructive dismissal (and associated legal damages and costs).  However, as for most employers that have closed and therefore are without revenues, continuing to pay wages to employees who aren’t working is not a viable option, that is, unless wages are heavily subsidized by the government.  Enter the Canadian Emergency Wage Subsidy…

What is the Canadian Emergency Wage Subsidy?

The Federal Government recently passed the Canada Emergency Wage Subsidy (“CEWS”) program into law. This provides all eligible employers who suffer a specified drop in revenue (15% in March and 30% in April and May) with a 75% wage subsidy for all employees (up to $847 a week per employee). This can be provided to employees who are working or those on paid leave. It operates as a reimbursement through the Canada Revenue Agency.

We provide a summary of the details of this new program in another article. The Federal Government has also provided a detailed information page for the program with a useful calculator-tool that can allow employers to estimate their likely subsidy.

This new program is likely to apply to all child care centres that see the eligible revenue drop so long as they are not a public institution. Public institutions are specifically defined as the following (likely to exclude a non-publicly or municipally owned and/or operated daycare:

• Schools, school boards, hospitals, health authorities, public universities, colleges, and/or
• Certain Income Tax-Exempt Institutions, including governments, municipalities, and government controlled or owned corporations (note, charities and not for profits remain eligible for the benefit, even though they are tax exempt).

Applications for the wage subsidy open on the CRA Webportal on April 27, 2020.

This subsidy is not available for employees who have not been receiving pay from an employer in a period of 14 or more consecutive days in a given wage subsidy eligibility period (4-weeks). As this matches on to the Canada Emergency Response Benefit (“CERB”) eligibility periods, this effectively precludes employees from claiming both CERB and the wage subsidy. However, the Federal Government is allowing employees to change their decision to opt for CERB over the wage subsidy, but may require them to repay the CERB they have received.

That means employees and child care centres will have to weigh the benefits to employees of each program. If an employee stands to gain more than $500 a week even with only 75% of wages, a return to work on wage subsidies will be preferable. Even if the employee will only break even, the wage subsidy will extend the period when they will receive benefits (as CERB is limited to only 16 weeks of benefits). However, if the employee stands to make substantially less than $500 a week on the wage subsidy, then it may be preferable for them to choose CERB (and the child care centre to support their taking it).

Unfortunately, subsidies are paid out as reimbursements. That means child care centres will have to actually have the funds to pay employees before claiming the subsidy (a potential barrier to cash-strapped child care centres). Further, while it is expected funds will become available shortly after applications open on April 27, 2020, it is still not known for certain exactly when payments will be made.

It was also recently announced that employers can retroactively apply the wage subsidy to employees who were laid off or furloughed over the past two months. However, the child care centre will first have to pay the employee their back wages before receiving the wage subsidy. This could be a very expensive up-front payment. Further, the employee will have to repay any CERB benefits received to the Federal Government. This may prove too burdensome for both sides. Nonetheless, it remains an option.

What if Child Care Centres Can’t Continue to Pay Workers During Periods of Closure?

For employers who cannot stay open and cannot continue to charge fees, the options are limited. Centres must choose between continuing to pay staff or laying them off temporarily.

Temporary Layoffs

Most child care centres cannot afford to maintain employees on paid leave until business resumes (though the Canada Emergency Wage Subsidy, described above, may change that).

Fortunately, the ESA permits employers to temporarily lay off employees for up to 13 weeks (or 35 weeks if they provide certain forms of prescribed economic benefits or make an agreement with the employee). We provide further information regarding temporary layoffs here. Temporary layoffs maintain the employment relationship and avoid the need to pay termination benefits. They also allow employees to seek the CERB to support themselves.

Temporary layoffs are not, however, without some risk. In normal times, if an non-unionized employee does not have a clause in their contract that allows temporary layoffs then unilaterally placing such employee on a temporary layoff may constitute a significant enough change to the terms of their employment to constitute a “deemed termination” or “constructive dismissal” in law.  In that case, an employee could seek termination related entitlements such as damages in lieu of notice of termination. However, given the circumstances of the crisis and the mass-layoffs nationally, it is generally thought that the risk of constructive dismissal is low. Nonetheless, child care centres should seek legal advice before instituting temporary layoffs and consider alternatives, such as voluntary temporary layoffs or maintaining partial earnings while allowing employees to seek the CERB.

What is the Canada Emergency Response Benefit (“CERB”)?

The Federal government has also announced direct benefits to out of work employees that will be relevant to the employees of closed child care centres.

As of April 6^th, the Federal government has been providing a new emergency benefits program (separate from normal Employment Insurance) to people who have stopped working or seen a reduction of hours and pay as a result of COVID-19. The CERB provides eligible people with $500 a week for up to 16 weeks. People will qualify for the benefit on a month by month basis, and have to meet certain requirements in each month’s eligibility period.

We’ve provided details of the CERB and who is eligible in a previous article on our site. However, since the article was posted, additional changes have been made to the benefit.

The CERB previously only covered those who made no earnings during the relevant eligibility period each month. Now, however, it will cover those who made $1,000 or less over at least 14 consecutive days in the first month where CERB is claimed, and $1,000 over the entire 4 week period of each subsequent month. This will expand coverage not just to employees who are out of work, but those that might see a reduction of hours. That means that employees who work at both a child care centre that is closed and another business that stays open may be eligible for CERB to make up for their lost income. As will be discussed briefly in the next section, it may also allow a child care centre to provide payments of up to $1,000 to employees to “top-up” their CERB benefits without disentitling the employee.

Additionally, the Provincial government has announced that Canadians who receive Ontario Disability Support Pension or Ontario Works benefits will be entitled to retain part of CERB without claw back (which would usually be applied). We’ve covered the details of this new rule in another article.

Finally, while students who meet the eligibility requirements of CERB may claim it, many other students who may have been planning to work at a child care centre over the summer and didn’t qualify for CERB were previously locked out of CERB. As of April 22, 2020, the Federal Government has announced a new Canada Emergency Student Benefit that provides eligible students with $1250 a month from May to August this year, or up to $1750 a month if they care for someone else or live with a disability. More details of this new program will come in the days ahead.

Note, CERB will not disentitle employees to Employment Insurance (“EI”). While both EI and CERB cannot be claimed for the same time, employees can seek CERB after their EI expires (so long as it is before October 3, 2020) or EI after their CERB expires. As of March 15, 2020, however, all new EI applications have been redirected to the CERB program.

The Federal Government has posted a Q&A page for the CERB program with additional details.

Can a Centre Top Up CERB or EI payments for employees on temporary layoffs?

Under traditional EI, employers are able to register a Supplemental Unemployment Benefits (“SUB”) plan with Service Canada to top-up employee EI benefits to up to 95% of employee salaries. This allows laid off employees to continue receiving almost full wage at a substantial discount to the employer. We described the details of SUB plans in a prior article.

However, while SUB plans continue to apply and new plans can be registered, at present their utility is significantly diminished by CERB. As all new EI claims are presently being rerouted to CERB, and since EI SUB Plans only apply to EI benefits, only employees who were previously in receipt of EI (or who exhaust their 4 months of CERB later in the year) will be eligible for SUB benefits.

At present, the Federal Government has not announced a plan to allow top ups of CERB, and top-ups may actually disentitle employees to the benefit (since it could raise their income above the eligible levels). However, the new reduced-income rules for CERB may in effect allow a top up of up to $1,000 a month to employees receiving the benefit. The Federal Government has promised to study whether to allow formal top-ups of CERB too, so employees should continue to monitor this space for developments in the weeks ahead.

PooranLaw will continue to monitor legal developments related to child care centres. In the meantime, if you require legal assistance, we encourage you to reach out to your regular PooranLaw lawyer, or any member of our team.