The Provincial Government declared a state of emergency on March 17, 2020 which emergency orders and regulations have now been extended to at least April 20, 2020 and which will be extended for a further 28 days this week. Health Care workers providing emergency care were deemed an essential service. The Royal College of Dental Surgeons of Ontario strongly recommended that all non-essential and elective dental services be suspended.
Below are some of the suggestions and programs that we believe dentists and doctors should review with their accountants and lawyers. Please note the below information is not to be construed as legal advice and you should consult with your professional advisors before taking any action.
Check your office insurance policies for Pandemic Coverage
Many professional office insurance policies have pandemic coverage. For instance, the TripleGuard Insurance held by most of the Province’s dentists has a category for compensation in the case of pandemics. However, the RCDSO initially indicated that it consulted with the main company handling all dentist insurance, CDSPI, which took the initial position that CDSPI will not pay pandemic insurance unless the government orders a closure which the government has not done—only a partial closure, as dentists were permitted to provide for emergency services. Since that time, Aviva Canada, which provides the TripleGuard insurance for dentists, has reversed its initial comments and has stated that it will stand by the pandemic coverage provided to the dentists in respect to those provincial orders closing down all non-emergency dental treatment. At this time Aviva has not issued guidance to dentists so that they can each submit claims that will be individually evaluated and settled. Aviva has not yet advised whether retroactive claims to the date the office was closed will be honoured (following the directive of the Royal College of Dental Surgeons of Ontario) or how specific claims and payouts will be determined. Your claim can be completed and submitted online, and we would suggest that this be done as quickly as possible.
If you are not a dentist, you will have to check with your own office policy to determine what business interruption coverage you may have in the event of the shut down. It should be noted that there are court cases where the court has determined that the insurance company has to pay when there is physical damage – despite the general meaning of “physical damage”, the unprecedented nature of this economic crisis may encourage governments and courts to broaden the circumstances where a business is entitled to interruption coverage – we would suggest that you make application and see how the insurance company responds.
Leases
You are either closed or closed for all non-emergency services. In this case you are legally bound to pay rent in accordance with your leases. However, some landlords have been willing to discuss a short deferment (not forgiveness) of rent on the condition that the deferred rent is paid within an agreed period of time. We would suggest you call your landlord to discuss but would suggest that the amount deferred not bear interest and be extended as long as possible to ensure that your office is back working with a full patient load.
We have had a number of clients who recently entered into new leases with the intent of building out their offices but have been forced to stop working as contractors for commercial offices were not included on the list of essential services and are not able to build out the offices. There are exceptions for medical offices so you should consult the essential services list to see if your contractor is allowed to work. We would suggest that you speak to your landlord to attempt to defer your possession date and all dates dependent on your possession date and push back all dates until you are able to obtain permits for your construction and your contractor is able to commence work.
Employees
Many professional offices forced to close temporarily have laid off their employees and independent contractors in order for the employees and independent contractors to be eligible for $2,000.00 per month for up to four (4) months. There is a provision in the Employment Standards Act, Ontario for temporary laying off of employees. However, there is some opinion that employees without written employment contracts that were temporarily laid off in this may be able to treat the layoff as a constructive dismissal entitling them to damages under the common law (most written contracts contain a waiver by the employee of any common law damages). However, there is much doubt whether a court would, in these circumstances, award damages.
On March 27, 2020 the Federal Government announced it would increase the temporary wage subsidy for businesses to 75% on the first $58,700.00 of an employee’s pay meaning that eligible employers could receive up to $847.00 per week per employee, retroactive to March 15, 2020. To receive this subsidy the business must have at least a 30% decrease in revenue as a result of the COVID-19 pandemic.
If you are an employer who has temporarily laid off employees, you could consider re-hiring them and then applying for the 75% wage subsidy.— Although it may turn out to be more expensive than simply laying off all your employees, it will provide future goodwill towards you as employer for the employees.
$40,000.00 Federal Government Business Account loan
You are entitled to apply to your bank for an interest free loan up to $40,000.00 on the condition that you paid between $50,000.00 and $1,000,000.00 in total payroll in 2019. If you repay the loan prior to 2023, $10,000.00 of the loan will be forgiven. There is no limitation on the number of companies that you own that can apply for the loan and therefore if you own a number of dental practices you can apply for a separate loan for each practice. It should be noted that the company has to have been in existence as of March 1, 2020. You should discuss this loan with your accountant and bank who will handle the application to ensure you qualify.
Speak to your Bank about a deferral of loan payments
If you are having difficult with meeting your loan obligations as a result of reduced billings most of the banks are willing to work with you in deferring payments for a period of time, including extending or temporarily deferring principal payments.
Other Matters where monies can be deferred
- Realty tax grace periods. If you are paying realty taxes directly to the municipal tax department most cities are providing a grace period.
- Personal Extension of tax filings and payments. The deadline for individual personal tax filings has been changed to June 1, 2020, and the deadline for payment of tax owing has been changed to September 1, 2020. There will be no interest or penalties if you pay by September 1, 2020.
- Corporate tax deferment. Corporations can now defer income tax payments owing on or after March 18, 2019 and before September 1, 2020 until September 1, 2020 with no interest or penalties.
- Principal Residence Mortgages. Most banks will discuss deferring mortgage payments for 6 months.
Other Matters Generally
If you are thinking of buying a new house or commercial property, ensure that you have clauses to protect you in the event that there are difficulties closing due to the COVID-19 pandemic.
We, at Kutner Law LLP wish everyone good health during these trying times.