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COVID-19 Update - Changes to the Ontario Employment Standards Act
On May 29, 2020 the Ontario Government published Regulation 228/20, a regulation under the Ontario Employment Standards Act , 2000 (“ESA”) which provides additional guidance to Provincially regulated employers in Ontario in how to manage their employees during the global pandemic. Please note this regulation does not apply to federally regulated or unionized employers in the province of Ontario. Regulation 228/20’s measures are predicated on the ‘COVID-19 Period’ which is defined as a span of time that runs from March 1, 2020 to 6 weeks after the Provincial Government lifts the declared state of emergency, as announced March 17, 2020. As of the date of this article the Ontario Government has not yet lifted the state of emergency. The Regulation has 3 key principles that employers can look to for guidance in managing their employees: Amendments to the previously enacted rules around Declared Emergency Leave; Statute imposed declarations that certain employees are not on temporary lay-off during the COVID-19 period; Statute imposed declarations that certain employer actions are not grounds for constructive dismissal during the COVID-19 period. Declared Emergency Leave The ESA was previously amended to grant employees entitlement an unpaid leave of absence where there has been a state of emergency declared. Regulation 228/20 has the affect of expanding the scope of Declared Emergency Leave to include employees who have had reductions or eliminations in respect of hours, or if the employee is no longer performing the duties of their position for reasons related to COVID-19. Employees who have observed such reductions by reason of either (1) a closure of their employer’s business as stipulated by the government or (2) the associated deterioration in the economy during this time, are now deemed to be on an ESA leave of absence. It is important to note that this amendment does not apply to employees that are unionized, federally regulated, or if the employer has terminated the employment relationship with the employee, closed its entire business, or if the employee has resigned in response to a notice of termination or as the result of a constructive dismissal prior to May 29, 2020. Statutory Declarations of Employees not on Lay-off Regulation 228/20 also has the effect of deeming employees who have observed the reduction or elimination in wages or hours of work to not be on lay-off but rather these employees are deemed to be on a declared emergency leave. These statutory designations will not apply if the employment relationship was formally terminated by the employer or if the employer’s business completely closed as a result of COVID-19 . Constructive Dismissal Constructive dismissal has been a key issue for employers attempting to manage their workforces from the start of the declared state of emergency. Employers should take care to review the provisions of this regulation very carefully. Regulation 228/20 has the effect of deeming certain employer actions not to be grounds for constructive dismissal, during the COVID-19 period. If an employee is subject to a reduction or elimination in hours of work or a reduction in employee wages, during the COVID-19 period, for reasons related to COVID-19 – these actions are no longer grounds for constructive dismissal. This information should be seen as welcome guidance on these issues as employers have had precious little guidance on this issue thus far. Please note , these statutory designations do not apply to employees have been constructively dismissed and have resigned prior to May 29, 2020 and as such, employees who have resigned in this time may continue their constructive dismissal claims against their employers. Please further note this update only applies to provincially regulated employers. Employers involved in federally regulated businesses such as transportation are not governed by Regulation 228/20. If you have any questions in respect of your obligations as a provincially or federally regulated employer, please do not hesitate to contact our employment law practice group. Author: Timothy D. Affoo
Own a condo? Surprise! You may be required to pay "Special Assessment Fees"
Owning a condo is an exciting real estate opportunity - it allows you to live in a community that often has amenities that wouldn't be possible for the average homeowner, such as maintained grounds, fitness and leisure spaces, and event rooms. Rights and Responsibilities of Condo Owners Condo owners also have access to unique rights, such as the right to quiet enjoyment of your unit, the right to vote for members of the condo board, and the right to become a member of the board by seeking election. However, condo owners also have certain responsibilities. They must follow the condo building's by-laws and declarations, maintain and repair their units, and pay a common expense fee to the condo corporation. Common Expense Fees Common expense fees are paid to the condo corporation for the maintenance of the lovely amenities present in the condo complex - pools, gyms, grounds-keeping, etc. When paying common expense fees, condo owners have to be aware that these fees may include "special assessments" that they may be responsible for. What are special assessments? Your condominium corporation has the right to charge for special assessments in addition to regular monthly fees. Your share of the special assessments is based on the same calculations used to calculate common expense fees. Usually, these special assessments will be added to the regular monthly fees for: Lawsuits – Your fellow condominium owners have the right to bring lawsuits against your condominium corporation for a variety of reasons. Given the type of lawsuit and the amount of time spent fighting it, the costs associated with a lawsuit can be significant. In the event that the condominium corporation losses a lawsuit and is unable to pay the required judgement, the corporation may level a special assessment to pay the judgement. Unexpected Expenses – Unexpected expenses can occur at any time. For example, faulty plumbing may lead to leaking pipes, resulting in flooding of the building. These unexpected expenses are always unfortunate - but to add insult to injury, they may occur during a critical year for the reserve fund. If the condominium has depleted the reserve fund and is unable to foot the bill for unforeseen expenses, you may find yourself on the hook for a share of the unexpected expense. Budgeting Issues – Sometimes, despite a condominium corporation’s best efforts, budgeting can be an issue and a repair or expense is more costly than expected. The corporation may then have to level special assessments to ensure that the repair and/or expense can be completed. Do You Have to Pay Special Assessment Fees? Yes. Failure to pay Special Assessment Fees can result in the Condo Board putting a lien on your property. Can you challenge Special Assessment Fees? It's always a good idea to request all relevant documentation in relation to any Special Assessment Fees. This will help you understand how the fees are structured and to see if the documentation supports what you are being asked to pay. If the corresponding documents don’t match the Special Assessment Fees, you may have grounds to appeal the fees! In the event that you find yourself wanting to challenge your special assessment fees, or are a condo board facing a challenge to special assessment fees, make sure you retain a lawyer quickly. At VK Law Group, we are experienced in working with condo boards and condo owners. Don't hesitate to call our office for a consultation - we can help.
Thinking of advancing funds from a personal line of credit to jump-start your business? Think again.
Borrowing funds from your personal line of credit to finance business endeavours may be an enticing option. It might be difficult to have a business loan approved, or your business may be looking for an expedited advance. You might not think twice about it, but there are tax consequences which could arise from using a personal line of credit interchangeably with your business’s accounts. The Issue: Once your business generates profit and the personal line of credit becomes due, withdrawing funds from the business account to reimburse oneself for the balance on the line of credit becomes problematic. If not specifically characterized and declared as personal income on your T1, this seemingly innocuous transaction may fall under the purview of undeclared income within the Income Tax Act (“ ITA ”) framework. Section 15 of the ITA indicates that if a benefit is conferred by a corporation on a shareholder of the corporation then the amount or value of benefit is to be included in computing the income of the shareholder, subject to a few exceptions. The Tax Court of Canada has determined that a repayment of a personal line of credit does confer a benefit to an individual  , and this determination can even be made where an individual alleges there had been a loan to the corporation. The burden of proof in demonstrating that the deposit into one’s account was not a benefit and therefore should not be taxed lies on the person making such a claim  . Simply demonstrating that a deposit was previously advanced through a personal line of credit to a business is not sufficient to establish that the funds have been loaned to the corporation by the individual, nor to prove any intention of the individual to reclaim the funds at a later time  . Another difficulty arises when business purchases are commingled with personal ones, such as in the case of Nguyen v. The Queen where a restaurant owner made food purchases which would be distributed amongst both the individual’s household and restaurant  . The source documents in an instance like this cannot clearly identify whether the items purchased were used by the individual or by the business. Applying business funds to repay such expenses cannot therefore be justified. The Tax Court of Canada has maintained that accounting records must be foolproof and must be supported by unequivocal documentation  . The Penalty? Depositing funds from a business account to repay a personal line of credit or a personal account can therefore expose an individual to the gross negligence penalty under section 163(2) of the ITA for knowingly or neglecting to report income. This section imposes a fine of the greater of (a) $100.00 or (b) 50% of the tax payable on the amount that was not reported correctly. Depending on the amounts advanced and when the issue is identified by the appropriate authorities, a business owner could find themselves owing a substantial amount of taxes and interest for simply utilizing their business and personal accounts interchangeably.  Tyskerud v. The Queen , 2012 TCC at para 30.  Ibid at para 28.  Ibid at paras 22 and 31.  2015 TCC 7 at para 6.   Ibid at para 16.
The War on Skiplagging - Do Airlines Stand a Chance?
What is Skiplagging? “Skiplagging” is a practice that allows air travelers to take advantage of what are called “hidden city” fares to beat the system and reach their destination at cheaper rates. A simple explanation for the practice is that the passenger buys a ticket where the layover is their desired final destination. For example, say the goal is to fly from Toronto to Calgary; the price for a direct flight is $1000. The passenger finds a cheaper flight for the price of $750 from Toronto to Vancouver with a layover in Calgary. Instead of booking the direct flight, the passenger books the flight to Vancouver but does not board their connection in Calgary, as they have reached their end destination. While the flights may not always be the cheapest, if the passenger looks hard enough they may be able to get a better price. Where did skiplagging start? This practice first began receiving media attention in 2015 when United Airlines bought a lawsuit against a website called “Skiplagged”, which helps passengers find cheap airfare and hidden-city ticketing trips. United Airlines and Orbitz sued the website for unfair competition and deceptive behaviour, making a claim for $75,000.00 in lost revenue. Unfortunately for United Airlines, the case against Skiplagged was dismissed. The Judge held that the case had been filed in the wrong jurisdiction - the matter was brought forth in Chicago, while Skiplagged operated in New York. Because the case was dismissed on procedural grounds, neither party ever made legal arguments. The founder of Skiplagged was convinced that United would retry the case in the proper jurisdiction, but they never followed up. Skiplagged is still active and unfortunately for United Airlines, now functions with the tagline "Our flights are so cheap, United sued us… but we won.” Will Lufthansa have better luck? In late 2018, Lufthansa sued a passenger for skiplagging. They alleged that he was flying from Seattle to Oslo, but missed the last leg of his journey after getting off the plane for a layover in Frankfurt. He then flew on a separate ticket, with the same airline, to Berlin. READ MORE: Lufthansa sues passenger, says he skipped a flight on purpose According to Lufthansa, the unnamed passenger was able to pay $743.00 to fly from Seattle to Oslo with connecting flights rather than paying $3,133.00 to fly direct to Frankfurt via skiplagging. Lufthansa wants to recover the difference, plus interest, as it feels this loss in revenue was a result of the passenger’s actions. A lower Court has already found in the passenger's favour; Lufthansa has appealed the decision in the hopes of overturning this result. The Future? If the European courts do find in Lufthansa's favour, skiplagging will be closely scrutinized and passengers will have to buy direct tickets to ensure they are not sued for a loss in revenue. This seems unlikely though, given the lower Court’s decision in favour of the passenger. What does this mean for airlines? Skiplagging can impact airlines on a financial and operational level. Financially, airlines will see a loss of profit in two ways. First, there is a direct loss of revenue when the passenger is able to pay less to obtain the same "direct" flight - i.e. the difference between $743.00 and the $3,133.00 that Lufthansa is claiming. Secondly, the airline loses the ability to sell the seat on the connecting flight to another passenger and the flight is not operating at full capacity. This is loss is indirect, but can have a significant impact on an airline over time. Operationally, skiplagging can cause delay and confusion at airports. Flights may leave late, waiting for passengers who have no intention of boarding. Luggage may get lost in the confusion. Finally, there may be implications for customs and border agents dealing with an influx of passengers who are only supposed to be transiting from one destination to another. Can airlines protect themselves? At the moment, there is no way for airlines to prevent skiplagging other than scanning their fares and preventing passengers from accessing these deals. If Lufthansa succeeds, they might be the first to achieve a defence to skiplagging.
Corporate Financial Disclosure in Family Law
A family law dispute results in a 50:50 split of family property between separating spouses. The income of each person in the relationship is calculated to determine whether spousal and child support is to be paid between the parties. Full and Fair Financial Disclosure - A Legal Obligation Each spouse is under a legal obligation to make full and fair disclosure of their family property and income. This information can be used by the parties to either resolve all issues by an agreement or under Court proceedings. A lack of full and fair financial disclosure by any party may lead to the entire separation agreement or Court proceeding being set aside. This is will only put a further strain on the parties, both in terms of the stress and emotional labour, and as a drain on their time and financial resources. There may even be greater consequences, including but not limited to one party paying the other party's legal costs. This post addresses the disclosure obligations of sole directors, owner-operators, and shareholders of corporations. Corporate Revenue - Corporate Expense = Income of Sole director/Shareholder support payor A corporation is a separate entity from its individual director and shareholders. In Ontario, family law requires that for the purpose of income calculation for support payments, there is no legal distinction between the income earned by a sole director/ shareholder and revenues of a corporation. This is important because it means that your business income is not distinct from your personal income. Revenue earned by the Corporation is deemed to be the income of the individual sole director/shareholder, after any legitimate business expenses have been deducted. The amount of child support and spousal support payments that must be paid by a support payor are determined based on corporate expenses subtracted from corporate revenues. The expenses of the corporation will be closely scrutinized by legal professionals and the Court; it is possible that certain expenses of the corporation may not be accepted as legitimate and will be deemed as income to the corporation and individual instead. Disclosing Tax Information The parties are under a legal obligation to disclose tax information and bank account information of both the individual director and the corporation for the previous three years from the valuation date. Clients often have financial professionals guide them to structure their corporation and finances for business and tax purposes. Unfortunately, this financial structuring may not apply in a matrimonial dispute. The legal scrutiny over corporate and shareholder/director income is detailed and broad, leading to a blurring of lines between corporate revenue and the individual’s income. As legal professionals, we can help you through the process of detailed financial disclosure. We will help clarify your obligations and help you stay informed of your obligations throughout the family law process. Our family law team consists of Ms. Leena Leva Kumar (Partner) and Ms. Jennifer Eensild (Student-at-law). We understand that the family law process can be confusing and difficult, and we are here to provide all the legal support you need during this stressful time. Ms. Kumar can be reached at 905.673.0185, ext. 105 for inquiries or to book a consultation.
Beware - MTO "Show Cause" Hearings Are Usually Fishing Expeditions.
Anyone who runs a transportation company in Ontario is likely already familiar with the safety regulations put in place by the Carrier Safety and Enforcement Branch of the Ministry of Transportation of Ontario (MTO). In Ontario, the Highway Traffic Act (HTA) requires that operators of all commercial motor vehicles need to have a Commercial Vehicle Operator's Registration (CVOR). Commercial motor vehicles are defined by the MTO as: Trucks, tractors or trailers, or a combination of these vehicles, that have a registered gross vehicle weight or actual weight of more than 4,500 kilograms Tow trucks , regardless of registered gross weight or actual weight Buses with a manufactured seating capacity of 10 persons or more, excluding the driver Accessible vehicles and school-purpose vehicles , depending upon use. The CVOR Program is distinct from the Carrier Safety Rating, which is a public label assigned to truck and bus operators. Operators are rated as either: Excellent Satisfactory Satisfactory - unaudited Conditional Unsatisfactory This information is available to the public and provides details of the operator's safety performance. It can be used by insurance agencies, financial institutions, shippers, or anyone using your services. Suffice to say, you want to have a good Carrier Safety Rating. And part of having a good Carrier Safety Rating is protecting your CVOR, ensuring that your violation rates are low. Once a driver is registered under a CVOR, the Ministry of Transportation in Ontario (MTO) can then suspend or cancel any operator's certificate based on a show cause. A show cause hearing is triggered by an MTO algorithm that identifies when the operator's CVOR rating has exceeded the MTO guidelines. What is a show cause hearing? A show cause hearing is a notice hearing where the owner of the trucking company is required to attended a meeting, and "show cause" as to why the trucking company should not face further penalties, including cancellations of their CVOR. We can help. Always retain a lawyer to help you prepare for and attend a show cause hearing. Arjun Vishwanth has extensive experience in MTO matters and show cause hearings. While there are many safety consultants who may claim they can bring you success in these hearings, this option should be exercised with care and in consultation with legal counsel. You should treat the hearing as a legal case being brought against your company. Statements made at the hearing can later be used at the Licensing Appeal Tribunal to support the argument for cancellation. Any materials that you intend to present must be drafted and presented with care. Any promises or undertakings made to the Registrar should also be carefully crafted, so as not to become evidence that your company failed to follow through with its obligations after the show cause hearing. Don't get caught up in a fishing expedition . At the show cause hearing, you will appear before an MTO panel including the Deputy Registrar, the Carrier Safety Ratings Administrator, and an MTO officer or detective. The detective will be there to ask questions with the goal of investigating and building a case against you. A legal representative can put a stop to such a fishing expedition while building a strong case in your favour. Keep in mind - only properly trained lawyers can provide you with the full picture of how a show cause hearing can impact your business. We can help you approach issues with the MTO in a way that minimizes your exposure to risk. At VK Law Group, our lawyers have a wide ranging knowledge of trucking and transportation safety compliance, laws, and regulations. We are familiar with protocols under the MTO, US Department of Transportation, Hours of Service, and Federal Motor Carrier Safety Administration.
Welcome to VK Law Group
Welcome to to the VK Law Group blog. Here you can expect to find articles about recent developments in the areas of law that we practise - everything from family law and child protection to the Construction Lien Act and commercial tenancies. Expect three new articles a week, posting every Monday, Wednesday, and Friday. For our first post, we would like you to meet our team. Our founding partners, and the heart of our firm, are Arjun Vishwanth and Leena Leva Kumar. Arjun studied law in New York and is licensed to practise both in New York and Ontario. He honed his legal skills with the Suffolk County District Attorney before moving to Hayman, Balin, Adler LLP. After transitioning to Ontario, Arjun continued to do criminal work while developing his network in the trucking and transportation industry. Trucking and Transport now form the majority of his practise, though he continues to handle a wide range of cases at the firm. Leena studied law in Bangalore, India, where she graduated first class with a Bachelor of Academic Laws. After being admitted to the Law Society of Ontario in 2013, she developed a thriving practise in the areas of family law, bankruptcy, tax, and civil litigation. She is a dynamic and strong litigator who cares deeply for her clients, particularly those struggling through difficult family situations. Sania Cherian is our managing partner. She studied at law at Penn State University where she specialized in International Criminal Law, winning the CALI Excellence Award in that field. After completing her NCAs, Sania articled with VK Law Group and was called to the Ontario Bar in November of 2018. Her practise is centred on complex transport law, civil litigation, corporate-commercial matters, and labour and employment law. She is also developing the firm's immigration branch. Our firm also has three articling students. Fatima N. Qamar obtained her law degree from the University of Windsor in June of 2018. At VK Law Group she has had the opportunity to work on extensive civil litigation cases and other corporate-commercial matters for many of our trucking and airline clients, as well as representing clients independently in small claims court. She hopes to move forward into developing a practise in civil litigation, trucking and transportation, corporate-commercial and transactional matters, employment law, and immigration law. Jennifer Eensild is another graduate of Windsor Law, obtaining her Juris Doctor in June of 2018. At VK Law Group she focuses on family law and civil litigation. She is excited about the firm's expansion and is looking forward to developing a practise in the areas of family law, child protection, criminal law, cannabis compliance, and medical malpractice/professional regulator defence. Nadia Asaad also graduated from the University of Windsor in 2018. Her focus at VK Law Group has been largely centred around real-estate transactions, civil litigation, corporate-commercial law, bankruptcy, and tax. She has proven herself a keen eye for detail in complex commercial contracts, and hopes to develop her practice further in these areas. We are incredibly proud of our firm and our people. Our goal is always to support our clients and to obtain the best possible results. When you step in to our law firm, we want you to feel welcome. We understand that you're here because you're looking for our help. We promise that we'll do our best to give it.