Generous To A Fault : Canada's Solution to COVID-Linked Unemployment or The Irresistible Appeal of Petty Larceny

"Effective immediately, while processing a claim, if an agent uncovers information that suggests potential abuse of the EI system by a client, an employer or a third party, they do not impose a stop pay and do not refer the file to integrity unless it is considered an urgent investigation."

"This is a result of the integrity service branch suspending all non-official investigations. In addition to suspension of Claimant Information Sessions [CES], in-person interviews and on-site visits, they have suspended all Integrity Operations activities for compliance and enforcement of the EI program."

Employment and Social Development Canada, memorandum to employees

"Governments should be assuming that everyone is honest, but that doesn't mean they should suspend any and all attempts to follow up potential cases of fraud."

"Even a small percentage [of fraud] can mean hundreds of millions of dollars wasted."

Aaron Wudrick, federal director, Taxpayers Federation of Canada

"In normal times, it is essential that the EI [employment insurance] integrity branch do their job to limit abuse and error."

"The government is using its spending power to buffer the impact of unemployment and loss of business."

"[Auditors] will have a number of years to address program error -- and they will."

Kevin Page, (former) Parliamentary Budget Officer

The employment insurance section of the Government of Canada website is shown on April 4, 2020. Jesse Johnston/The Canadian Press

Tens of millions of applications for emergency and employment-insurance (EI) benefits have flooded into offices of the Employment and Social Development Canada department from Canadians eager to apply for financial assistance as a result of having lost employment due to the federally-imposed lockdown in Canada in response to the global pandemic which has infected tens of thousands of Canadians (71,157) and caused the deaths of thousands (5,169). 

Canada's prime minister, in empathizing with the rising number of unemployed resulting from his mandated lockdown conditions under these hugely unusual circumstances in the global threat from SARS-CoV-2, promised that tax-funded relief will be going out to people in financial duress who qualify, as soon as possible. Now, federal employees who vet those millions of applications have been advised to ignore obvious instances of cheating on the part of applicants who don't qualify.

Should employees come across what they feel is abuse they must, under these new rules, continue to process the payment and refrain from referring the questionable file to the department's integrity branch. The memorandum issuing these new guidelines states the suspension of the integrity-operations branch of the EI program, directed to give aid in managing the new Canada Emergency Response Benefit (CERB) payments.

Helena Hanson | Narcity

An inside source has spoken anonymously for fear of reprisal, to news outlets, informing that some 200,000 applications were "red flagged" before the issuance of the memorandum from department headquarters. These flagged applications were considered to be potential fraudulent claims, some flagged for dubious claims of past employment income and applications from people living abroad as well. 

According to the minister is charge of the department the government is well aware of a heightened risk of fraud related to pandemic-aid programs but felt it to be more important to ensure that Canadians receive the promised financial aid speedily. Their intention was to make an effort once the emergency situation had passed to identify the fraudulent claims and claim unwarranted payments be returned to government coffers. For the time being, civil servants are to ignore any possible abuse of the system.

The newly-established CERB program sends out $500 weekly to the unemployed who have applied for the assistance during an initial four-month period for people whose jobs have been lost as a result of the pandemic and lockdown. They must have earned at least $5,000 in 2019 or the previous 12 months. People eligible for Employment Insurance backed by their work history receive the same amount for the same period of time.

The memo instructing claim workers to ignore potential faulty applications also instructs them to consider as "urgent" matters that clearly should be referred for investigation, such as applications on behalf of the deceased, dormant social insurance numbers, and those never used until the processing of the benefit claim, along with false records of employment. According to the inside source, however, even evidence of fraudulent employment records is being overlooked, paving the way for CERB or EI to be paid out.

International students whose visas permit them to work 20 hours weekly only during classes are claiming to have put in 40 hours weekly, as they make application for EI. Applicants across Canada apply for CERB or EI even while they are being paid by employers under the table, pointed out the internal source. In their considered experience, it is doubtful that the 200,000 red-flagged cases will be investigated at a later date, since each would take days and manpower; resources not available. Those fraudulent claims will be, he warns, written off.

On another occasio,n a Canada Revenue Agency employee informed the federal broadcaster CBC how common applicant abuse is, citing an elderly woman and her two disabled children applying for CERB, though none was eligible. And according to Radio-Canada, even inmates at a Trois-Rivieres, Quebec prison have received CERB cheques. 

The CERB applies to wage earners, contract workers, and self-employed individuals who meet the following as per Canada.ca:

• Workers who must stop working due to COVID-19 and do not have access to paid leave or other income support
• Workers who are sick, quarantined or taking care of someone who is sick with COVID-19
• Working parents who must stay home without pay to care for children that are sick or need additional care because of school or daycare closures
• Workers who still have their employment but are not being paid because there is currently no sufficient work and their employer has asked them not to come to work
• Wage-earners and self-employed individuals, including contract workers, who would otherwise not be eligible for Employment Insurance

Applicants must have been out of work for at least 14 consecutive days within the 4-week period in which they apply for the payment.
They must also have earned at least $5,000 in 2019 or in the 12 months immediately preceding their application. This income can be from employment or self-employment, maternity or parental leave benefits.
You must also be a resident of Canada and at least 15 years of age or older.
Recent information provided by CRA is that you can count non-eligible dividends towards the $5,000 income requirement to be eligible for CERB