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Can I collect CERB and disability benefits? (A: Maybe — but be careful)

By David Brannen

For the past few weeks we have received questions from people who want to apply or have applied for the CERB while having an open disability claim. Most of these people have determined that they should qualify based on legitimate grounds, perceived loopholes, or justifications -- “Everyone else gets it, so why not me?”

The problem is that the vast majority of people with open disability claims do not qualify for the CERB. This includes people who are not yet approved for benefits, those who are receiving benefits, or who are appealing a denial of disability benefits. 

You will face serious consequences for receiving the CERB if you are not eligible. 

You will have to pay the money back next year. In addition to that you may face fines and prosecution for fraud. If you are wrongfully receiving the CERB, it is important you act immediately to tell the government you made a mistake so you will avoid fines and fraud charges.

In this article I will review the criteria for who qualifies for the CERB. I will then set out the circumstances for when a person with an open disability claim can qualify for the CERB.

This article is part of our COVID-19 resources

What is the CERB and who is eligible?

In response to the unprecedented economic shutdown in March 2020, the Government of Canada created the Canadian Emergency Response Benefit (CERB). The purpose of the CERB was to provide temporary economic assistance to people who stopped work because of COVID-19. The CERB pays $500 per week for up to 16 weeks. Here are the requirements, taken from the CERB website:

The Benefit is available to workers:

  • Residing in Canada, who are at least 15 years old;
  • Who have stopped working because of reasons related to COVID-19 or are eligible for Employment Insurance regular or sickness benefits or have exhausted their Employment Insurance regular benefits or Employment Insurance fishing benefits between December 29, 2019 and October 3, 2020;
  • Who had employment and/or self-employment income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and,
  • Who have not quit their job voluntarily.

So, how should these criteria be interpreted?

First, when interpreting legal criteria for a program like this, you need to keep in mind the overall purpose of the program. This will help determine how any ambiguous clauses should be interpreted. In this case, the purpose of the CERB is clear: it provides temporary economic relief to people who stopped working because of COVID-19.

This rule is fairly clear-cut. If you did not stop working because of COVID-19, then you don’t qualify for the CERB. 

When can someone with an open disability claim also qualify for the CERB?

I will begin by saying that the vast majority of people who have an open disability claim will not qualify for the CERB. By “open disability claim,” I mean that you stopped work because of disability and have filed a disability claim. This includes those who have applied and are waiting on a decision; who are approved and receiving payments; and who are appealing a denial of disability benefits. 

Following are the scenarios when a person on a disability claim can qualify for the CERB:

You became eligible for EI Sickness Benefits AFTER March 15, 2020

If you became eligible for EI Sickness benefits after March 15, 2020, then your claim will automatically be delivered under the CERB. The Government created this exception out of necessity because the EI system became overwhelmed with mass layoffs in March 2020. 

However, if you became eligible for EI Sickness benefits before March 15, then your application would be processed under the normal EI Sickness process by Service Canada. 

We are finding this is one of the greatest areas of confusion. Many people have misread this criteria to say that if you qualified sometime recently for EI Sickness, then you automatically can get the CERB after the EI Sickness claim has finished. This is wrong. If you became eligible for EI sickness after March 15, then you have the option to process your claim as the CERB. 

You cannot file a CERB claim once your EI sickness claim runs out. There is an exception that allows this for Regular EI benefits -- that you can claim CERB when regular EI runs out — but this does not apply for EI Sickness.

You had to stop work because of a COVID-19-related Illness

You will qualify for the CERB if you had to stop work because of a COVID-19 related illness. The CERB would be paid as long as you remain unable to work because of the COVID-19-related illness. This would apply in situations where a person is off work because they are infected with COVID-19. 

Where it becomes less clear is situations where COVID-19 is a factor, but the person isn’t literally infected with the virus. For example, someone might take a sick leave for anxiety that was worsened because of the COVID-19 situation. In these situations, you would need to have very strong medical evidence and opinions that the person wouldn’t have needed sick leave if it weren’t for the added stress related to the COVID-19 situation.

You had to stop work because of COVID-19 and earned at least $5,000 in 2019 or in the last 12 months.

The CERB is meant for people who had to stop work because of COVID-19 and earned at least $5,000 in 2019 or over the past 12 months. This applies equally to people who also happen to have an open disability claim. 

Some people with an open disability claim continue to work part-time, either for an employer or as self-employment. There is nothing improper about this as most disability programs and plans allow employment under certain conditions. For example, a person receiving CPP disability is allowed to earn $5,800 per year from employment before they even have to report it to the CPP disability program.

To qualify for the CERB under this category, you must have stopped your part-time work because of COVID-19. This can mean you were laid off from your employment or you have seen a drop in employment income. You must also be able to prove that you earned a minimum of $5,000 in 2019 or in the last 12 months. This will be easy for people who were employed and receiving a paycheck. You can get a Record of Employment (ROE) from your employer showing your income earned.

It can be harder to prove your earnings in self-employment situations if you don’t have a paper trail to verify the earnings. For example, it will be difficult to prove your earnings if you were paid in cash and didn’t file taxes. Another problem for self-employed people is the difference between revenue and income. You have to show that your self-employed income (revenue minus expenses) was greater than $5,000. If you had revenue over $5,000, you wouldn’t qualify if your income after expenses was less than $5,000.

If you are in a situation with unreported self-employment income, you should seek advice from an accountant or tax advisor. The best evidence of income in these situations is to file your for 2019 with proper reporting of expenses. Expect extra scrutiny in these situations; the government will know that it’s easy for self-employed people to manipulate financial statements by not reporting ongoing cash income (creating a loss of income on paper) or by underreporting expenses (inflating income to reach the $5,000 threshold).

What if I’m laid off or let go while on sick leave?

There is a lot of confusion around layoffs automatically qualifying someone for the CERB. The key thing is that you must have stopped working because of COVID-19

For some companies, mass layoffs also included people who were already on sick leave. If you were on sick leave at the time of your layoff, then you would not qualify for the CERB. In this case, COVID-19 isn’t the reason you stopped working — you were on an unrelated sick leave. 

Avoid Fraud

When applying for the CERB or any government benefit, it is your responsibility as the applicant to make sure the information you submit is accurate and complete.

The government recognizes that mistakes can happen when people unknowingly give false or inaccurate information — this is referred to as innocent misrepresentation. On the other hand, the government has a history of cracking down on people who knowingly give misleading or incomplete information in order to secure approval for a benefit.

The Government of Canada routinely fines and prosecutes people for fraud involving wrongful Employment Insurance claims and tax evasion. If you knowingly make false statements, you should expect to be fined. The amount of the fine can vary, but it can be up to 150% of any money you owe back. You would have to pay back any money you received in addition to the fine. If you can’t pay it all back, you would start owing interest on the entire amount. In the worst case scenario, the government can prosecute you for fraud under government regulations or the Criminal Code. 

We have noticed that some people are very nonchalant about the consequences of applying for CERB if they don’t really qualify. There seems to be a belief that the government isn’t going to audit the program or take actions for repayment.

We believe this shouldn't be taken lightly. 

It is important to appreciate that the CERB is administered by Service Canada and Revenue Canada. You may not realize it, but these two agencies just happen to be the most effective collection agencies in Canada. They can easily garnish your income or other benefits you would otherwise receive from them (GST/HST returns, tax refunds). They both have entire departments of people whose job it is to detect fraud, refer cases for prosecution, and to collect money back from people. 

We expect it will be easy for Service Canada and Revenue Canada to verify if you meet the income criteria for the CERB — after all, they have access to your tax returns and payroll information. They will know if you worked in the 12 months leading up to March 15, 2020. 

They will likely do an initial scan to find cases where a person did not report payroll or taxes in 2019-2020 and will flag those cases for further investigation. If you are one of those people, expect to get a letter asking for you to provide proof of your employment and income. 

Remember: when they contact you, you have the obligation to prove that you met the eligibility criteria. If you fail to give proof, they can deem you to be ineligible — and don't be surprised if that comes with consequences. 

How a wrongful CERB claim hurts your valid disability claim

Your biggest asset in any disability claim is your credibility. As I have discussed previously, telling the best story is the key to winning your disability claim. The key to telling the best story is to avoid doing things that make you look like the stereotypical “disability cheat.”

The disability cheat is a powerful negative stereotype in Canada. The disability cheat is someone who is lazy, blames others for their problems, and is dishonest. I cannot stress enough how even one hint of dishonesty can destroy an otherwise valid disability claim. 

When you misrepresent your situation to get the CERB, you are being dishonest and destroying your credibility. Even if it was always your intention to pay the money back later, you will still be tainted by the dishonesty.

If you are waiting for approval of your disability claim or appealing a denial, you can expect to be totally denied if the insurance company learns that you wrongfully received the CERB. If the insurance company sees that you were dishonest about your CERB application, they will view you as being dishonest with your disability claim. Any questionable part of your claim will be viewed in the worst possible way. They will deny your claim knowing that this damage to your credibility will make it very hard for you to win at trial, even if you are otherwise entitled to benefits. 

I can also foresee issues with long-term disability claims that go to a lawsuit. During a lawsuit, you are required to answer questions under "oath to tell the truth." Once the insurance company has you under oath, they will get you to admit to the requirements to be charged with fraud. They will get you to agree to all the known facts, proving that you knew you were ineligible for the CERB but applied for it anyway. This is a lawyers’ favourite tactic. If you continue to be dishonest and they can prove it, then you are also at risk to be charged with perjury, which is a very serious crime in Canada.

Judges have very little patience for people who make dishonest government claims or cheat on their taxes. Once it becomes known that you did one of these things, it will be very hard to win your disability claim. This is because almost all successful cases require the judge to believe the person making the disability claim. There are some things that can’t be proven objectively, so the judge needs to either believe you or not believe you. When you have a history of dishonesty, you greatly diminish the chances the judge will believe you. 

What impact will a wrongful CERB claim have on my approved long-term disability claim?

You can pretty much expect the insurance company to stop your long-term disability payments if they find out you are wrongfully getting CERB payments. The insurance company may not do this immediately, but a wrongful CERB claim will harm your credibility in the eyes of the insurance company — so much that you should expect it to trigger a whole range of investigations and medical assessments that attempt to show that you’re probably being dishonest with them as well.

I think I received the CERB wrongfully. What should I do?

If you now realize you are wrongfully getting the CERB, you need to contact Service Canada or Revenue Canada immediately to report it. If you do this now, you will have to pay the money back — but you are unlikely to be subject to fines and prosecution. You will also be able to lessen or eliminate the potential negative impact on your credibility and therefore salvage your ongoing disability claim.

 

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David Brannen
Founder & Managing Lawyer, Resolute Legal
As Resolute Legal's managing lawyer, David spends his days representing people with disability claims and overseeing other disability lawyers within the firm. David is a former occupational therapist and is one of the few lawyers in Canada who focus exclusively on disability-related claims. David is the author of A Beginner's Guide to Disability Insurance Claims in Canada and The Beginner's Guide to CPP Disability.