Coronavirus: managing “at risk”​ employees and wage/staff reductions

Although the coronavirus public health threat raises a host of potential issues for employers, the most commonly raised ones relate to:

1. The employer’s right or obligation to take steps to segregate or exclude employees (or others at the workplace such as contractors) deemed at risk of being infected/infectious from the workplace; and
2. For employers whose businesses are negatively impacted by the coronavirus scare and containment measures, what rights and liabilities does an employer have to reduce pay or working hours and pay to reflect reduced operating needs or revenue?

This Employer Alert will touch briefly on both. Please note this is a complex topic with rapidly changing health information on it and this Alert can therefore only provide a high-level summary applicable to Canadian employers. It may be subject to updating as events, and the law, evolve.

Segregation or exclusion of “at risk” employees

It seems clear that if an authorized government authority actually explicitly mandated closure of a business or operations such as offices or schools or the exclusion from the workplace of certain at-risk employees, this would constitute a “force majeure” excusing the employer from any liability for following the government’s orders, including for pay to those employees excluded from the workplace.

What is less clear is the right of an employer to take actions, even based on “recommendations” from public health authorities, to segregate or exclude employees from the workplace. On the one hand, employers have both the right and obligation to take reasonable steps to keep the workplace safe for co-workers and others such as customers who may be present. Indeed, provincial occupational health and safety regulations contain an express statement of this broad obligation. In addition, many provincial public health acts require anyone including employees from “willingly causing a “health hazard”, which is defined to include actions “likely to interfere with suppression of infectious agents” (quoting from the B.C. Public Health Act). Arguably, this provides further authority for an employer to take steps to avoid infection.

On the other hand, under human rights legislation, an employee who has or even who is perceived as at high risk of having coronavirus will be considered “disabled” and thus entitled to “reasonable accommodation” to the point of “undue hardship”. Where the employee has actually tested positive, it would seem reasonable to exclude them. There is little concrete guidance as to how to reconcile the duty to provide a safe workplace (and collaterally protect the employer’s interests) and the right to reasonable accommodation of the deemed “at-risk” employee i.e. where the employee is only deemed a high risk of being infected or contagious. Accommodation case law does recognize that concerns about the health and safety of others should get considerable weight but suggests a case-by-case approach is required, including considering, amongst other factors, the evidence an employee is infected or at risk, the role of the employee, including who they interact with and could infect (e.g. food service workers), what government authorities are recommending, and the state of knowledge of how contagious and/or deadly the virus is. Even if they can send employees home, employers will also have to consider if they can take steps such as setting up teleworking arrangements to allow the employee to work and thus earn income from home.

Ultimately, employers can ask employees to take steps such as staying home for 14 days after travel to a contagion area or contact with infected persons and hope most will comply. Surveys and anecdotal reports suggest many employees will comply voluntarily.

As for whether the excluded employee is entitled to pay if sent home by the employer, that is unclear, but our view would be that pay for time off work to avoid infection should be treated the same as entitlement to sick pay. Sick pay is only required if the employer has committed by policy to paying it and only within the limits of that policy. Short Term Disability insurance should be available to employees where STD coverage is in place, although that decision is made by the insurer. For those without STD coverage, EI offers 15 weeks of EI disability benefit after a one week waiting period and it is expected that, as in the SARS crisis, EI disability benefits will cover those excluded from work for preventative reasons. For employees with no sick pay, liability for wages may turn on whether the employer is judged to have good grounds for the decision.

Employers who foresee the need to exclude employees should take steps to communicate their policy e.g. 14-day quarantine for employees returning from specific areas or cruises now so employees have a chance to reconsider travel plans. But such communications should expressly state the policy may evolve with knowledge of the disease.

Employer rights to reduce pay/hours of work due to reduced business volumes, revenue, etc.

The law here is clearer. Notwithstanding that coronavirus is a public health risk for which employers are not responsible nor able to control, any material steps by an employer to:

1. Cut pay;
2. Reduce hours and pay; or
3. Place employees on temporary lay-off.

to reflect lost business or lower demand due to coronavirus will generally trigger non-union employee rights to claim “constructive dismissal”. The exception would be those rare employers where employees have either explicitly agreed in writing that such changes can be made or workplaces where such cuts are part of the normal flow of work (e.g. industrial operations with a tradition of temporary lay-offs). For all other employees, such changes will constitute a constructive dismissal, allowing them to quit and claim the same severance as if terminated without cause. Making these kind of changes with unionized workers may not even be possible without union agreement or subject to collective agreement rules e.g. on lay-offs.

An exception to this analysis would be where a government order directly shuts down a business e.g. a mandatory closure of all pubs and restaurants. In that situation, the employer can likely take the position the government order suspends the obligation to employ and pay the employee without being liable for severance.

To avoid such claims, where such cuts need to be made, for non-union workers, consider the following strategies:

1. Pay cuts: Start with benefits and incentive pay rather than base pay if you can, as cuts to these areas are less likely to be deemed a constructive dismissal. Such cuts impact employee ability to pay their bills less. Make sure you communicate why they are necessary, include all employees in the cuts (including management) and explain they are temporary. Many clients have found their employees will accept temporary cuts imposed this way during the last recession.
2. Reducing hours and pay: This can be a great solution for some employers. Again, properly explained and shared, reducing hours and pay (e.g. to 4 days a week) will often be accepted. At least under this solution, employees gain time off as an offsetting benefit. In addition, employers can apply to EI’s WorkShare programme to arrange for participating employees to receive EI benefit for the days not worked, which helps mitigate the impact on income.
3. Temporary lay-offs: This is the most difficult to get agreement on as it is selective and deprives the affected employee of income from work. While employees will qualify for regular EI benefit, there is a one week waiting period and EI benefit is only 55% of wage up to the Average Industrial Wage, currently around $54,200, so all employees suffer a major (45%) loss of income and higher earners suffer a proportionally higher loss of income. Employers may want to try to first seek out volunteers for temporary lay-offs. During temporary lay-offs, benefits should be continued. Under most Employment Standards Acts such as B.C. and Ontario, after 13 weeks, a lay-off is deemed permanent and statutory termination amounts become payable.

Some employers may want to try a combination of these measures. If possible, try to get signed consent to any changes since this precludes a constructive dismissal claim.

You can contact Geoff Howard at ghoward@howardlaw.ca, 604.424.9686.