Threatening jail time for CERB fraud could scare off legitimate claims, experts say — and it’s unlikely that anyone will end up in prison

New legislation threatening fines and jail time for Canadians who fraudulently claim the Canada Emergency Response Benefit (CERB) could scare off legitimate claims, say legal and labour experts — and it’s unlikely that anyone will actually end up in prison.

They liken it to tax fraud: most of the penalties are financial, such as payback with interest. Only in rare, egregious cases does anyone go to jail.

But if the federal Liberal government wants to discourage people from claiming CERB — Ottawa has already paid out about $ 43.5 billion — the introduction of legislation threatening jail for benefit fraud could be successful, said Sarah Molyneaux, a Hamilton labour lawyer.

The government bill, which failed to receive unanimous consent in Parliament on Wednesday, threatened penalties of up to $ 5,000 and six months in jail, in addition to returning the benefits received by those making false claims.

The same bill would expand wage subsidies to some seasonal workers but deny CERB to workers who failed to report to their jobs in a reasonable time if called back by their employers.

That language could intimidate those disproportionately affected by the pandemic, newcomers with language barriers and less educated workers, Molyneaux said.

But if the government is looking to score political points with Conservatives and Canadians who say CERB is discouraging people from returning to work, “I’m not sure it’s going to do the job,” she said.

“Whenever you have a benefit going to poor and working class people there is a misperception that the rate of fraud is high, and there is something we should do about it and that should be punitive,” she said.

“We have a track record of taking what we consider fraud on the part of poor and working class people very seriously and the fraud perpetrated by rich people and corporations not seriously enough.”

Peggy Nash, chair of the Centre for Labour Management Relations advisory committee at the Ted Rogers School of Management at Ryerson University, agrees that the Liberal about-face is a mistake.

Originally the government said anyone could have the money and overpayments would be caught in income taxes. There are now reports of about 200,000 voluntary repayments.

To say that people who took it and didn’t need it could go to jail would be terrifying to a lot of low-income people, said the former Toronto NDP MP.

“Fraud is already against the law. I don’t know why they need a special hammer in a new piece of legislation except for political communication,” Nash said.

In most cases where there’s an allegation of ineligibility for public benefits, the punishment is financial, usually just payback of the funds, said Toronto lawyer Andrew Langille, who has dealt with dozens of CERB inquiries, sometimes from people who were misinformed by the government.

He thinks the government is trying to get people to give CERB money back.

“If people realize they’re not entitled and they proactively pay it back you’re not going to be penalized,” he said.

Langille said the government needs to be more concerned about what happens when the CERB program expires on Oct. 3.

“Where are the benefits going to come from for the millions of Canadians that are still unemployed? They’ve pivoted to this get-tough approach when there’s still this massive economic crisis and the country is still in recession,” he said.

The proposed legislation also could pressure people to return to unsafe work environments, Langille said. He thinks the government is being influenced by Conservative and business lobby groups who say workers prefer to collect CERB rather than go back to work.

But in places like the GTA, the $ 2,000 monthly benefit barely covers rent for a lot of people.

It’s important to distinguish between those who made an honest mistake claiming CERB and those who set out to defraud the government, and the majority of the more than eight million applicants would be in the first category, said employment lawyer Stuart Rudner.

“Every program we have to help people, the vast majority who benefit are those who deserve it. But you’ve always got some who will take advantage. It makes perfect sense for there to be penalties. There should be consequences.”

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Ottawa did the right thing rolling out the benefit quickly, but there were mistakes, he said. Some people have received both Employment Insurance and CERB and there are instructions on the government website on how to repay the money.

Where the government got into trouble was the lack of a plan in the short term to review the applications.

“The word got out that nothing was going to happen until the next tax season and that upset a lot of people,” said Rudner.

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