THE WORKPLACE SAFETY AND INSURANCE BOARD
APPEALS RESOLUTION OFFICER DECISION
DECISION NUMBER: 20150009
DECISION DATE: April 8, 2015
OBJECTING PARTY: SSR Employer
REPRESENTED BY: Self-Represented
HEARD BY: B. Patlik, Appeals Resolution Officer
ISSUE
The employer’s President (“MG”) asks the Workplace Safety and Insurance Board (“WSIB”) to classify his company (“SRR”) entirely under rate group 630.
BACKGROUND
SRR registered with the WSIB in 2010, and indicated on its Employer Registration form that it was a repair garage. At first the WSIB placed SRR into rate group 630 classification unit 6351-000 (“Garages (general repairs)”). The WSIB then reclassified SRR to rate groups 570, 704 and 707. The reason for the reclassification was that SRR performed work for (a) non‑associated customers and (b) two companies that it was associated with (“C” and “S”), and SRR could not segregate its payrolls to distinguish the earnings for (a) from the earnings for (b). In that situation, it was found to be appropriate to classify SRR under the rates that applied to its associated customers. C was under rate groups 570 and 704, and S was under rate groups 704 and 707.
The WSIB audited the business of SRR in 2013 and reviewed how it had reported for 2011, 2012 and the first three quarters of 2013. The Auditor noted that during the audited period, SRR performed work for (a) the general public and (b) associated companies C and S, and found that SRR had records backing up the splitting off of (a) from (b). As a result, he found that SRR qualified to have the payroll for (a) classified under rate group 630. He added that rate as of January 1, 2013. C ceased being associated with SRR on December 31, 2012, and rate group 704 had been removed from S’s account as of December 31, 2012, so the Auditor removed rate groups 570 and 704 from SRR’s account as of that date.
As a result, SRR was classified under rate groups 570, 704 and 707 for audited years 2011 and 2012, and rate groups 707 and 630 from 2013 and onward.
In his reporting letter, dated February 4, 2014, the Auditor noted that for audited years 2011 and 2012, SRR had reported all insurable earnings under the rate group with the lowest premium rate, which was rate group 704. As a result of his classification decision, the Auditor reallocated payrolls over rate groups 570, 704 and 707 for 2011 and 2012, and over rate groups 707 and 630 for 2013.
MG objected, arguing that “the way WSIB deals with their employer account classifications is unfair and cumbersome and puts added work on staff to try and break down all these rates depending on which piece of equipment is being worked on at what time.” He clarified to the Auditor that what he is looking for is to have SRR’s entire payroll classified under the garage category in rate group 630. MG reconfirmed this to me, stating in a telephone conversation that he wishes to have the garage rate overall instead of being given the rates of his customers.
RESOLUTION METHOD AND PROCESS
MG has agreed to my issuing a decision based on the information and submissions already on file, as well as some comments he made to me over the telephone.
AUTHORITY
Operational Policy Manual document 11-01-03 (“Merits and Justice”).
Operational Policy Manual document 14-01-01 (“The Classification Scheme”).
Operational Policy Manual document 14-01-03 (“Segregated Payrolls”).
Operational Policy Manual document 14-01-05 (Special Ancillary Rules”).
Operational Policy Manual document 14-01-06 (“Associated Employers”).
Operational Policy Manual document 14-02-06 (“Employer Premium Adjustments”).
ANALYSIS
MG’s position is that classifying SRR under the rates of its associated customers instead of completely under the garage rate is a “blatant money grab,” that he operates a small business that “has always been a full-blown garage,” and that it is “ludicrous and ridiculous” to ask him to differentiate the payroll for working on vehicles owned by associated customers from the payroll for working on vehicles owned by non-associated customers.
Having reviewed the file and considered MG’s views, I confirm that SRR does not qualify to have its entire payroll classified at the garage rate.
Under WSIB policy, if two employers are associated and one performs an operation that is ancillary to the other, the one performing the ancillary operation is to be classified on the same footing as the one for which the ancillary operation is performed. The Auditor found that SRR was associated with C and continues to be associated with S, based on common ownership by MG and controlling interest. He also found that SRR was performing an operation that was ancillary. I agree, considering that the WSIB defines “ancillary operations” as those that support or are incidental to a business activity and are on a list of specific kinds of work, including “operation of maintenance or repair shops for the purpose of servicing or repairing the employer’s vehicles or equipment.” MG does not dispute that SRR was associated with C and is associated with S, and that it performed an ancillary function for those two corporations during the audited period.
He also does not dispute having rate group 630 for work done for non-associated customers. What MG does object to is not having rate group 630 apply to all of SRR’s payroll. As I have said, the WSIB applied rate group 630 only as of January 1, 2013 and only for work done for non-associated customers.
Based on the classification rules that I have set out above, it was correct to have classified SRR under the rates of its associated customers (rate groups 570, 704 and 707) for performing ancillary services for them, and under the garage rate (rate group 630) for the separate business activity of performing work for customers that it had no association with.
The question remains as to why SRR was not given rate group 630 earlier. The answer is that the WSIB’s retroactivity policy says classification changes take effect as of January 1 of the current year. Since the audit was performed in 2013, the current year was 2013, so the proper effective date for the new rate was January 1, 2013.
I recognize that MG disagrees with the WSIB’s classification rules and that he feels a garage should be classified as a garage.
It is true that some of the classification policies of the WSIB are complicated and that an employer’s classification depends on more than just the nature of the work being performed. SRR’s case is a perfect example, demonstrating that garage work is classified differently depending on whether it is done for oneself or an associate, or is done for customers that are unrelated. Another example that comes up from time to time involves trucking. A firm that transports other people’s goods receives a trucking rate, but one that transports its own goods does not. If that employer is a manufacturer, the transportation will receive whichever manufacturing rate applies to its main operation. If it is a construction firm, transporting its own equipment, it will receive whichever construction rate it is under. If it is a department store, it will receive yet a different rate. In all of these situations, the work is substantially the same, but the rates given will vary, depending on whether or not it is ancillary and, if so, what kind of business it is ancillary to. Over and above these complexities, classification may depend on whether the employer has records verifying how much payroll relates to each operation.
I understand that it may appear unfair to have all these rules in place. However, they have existed in one form or another for decades, both in policy and in law, and are based on some important principles. For example, the rule that ancillary operations are classified based on what they are ancillary to is based on the idea that if an employer were to be entitled to one rate for the business it is in, another rate for its office, another rate for maintaining its vehicles, another for running its trucks, another for advertising and marketing, etc., that would be more complicated and time-consuming than just applying the rate for the kind of business the employer is in. More significantly, the total premium costs to the employer might end up being higher, not lower. After all, people in an office undeniably have less risk of injury than people working on a construction site, so charging the same rate for all of them means the premiums on the office people subsidize the accident costs for the people in the field. If they were to be split up and classified differently, the premiums for the office people would be lower but those for the construction workers would have to be raised. In the end, the cost and effort of keeping them separate would likely not be to employers’ advantage. This is why ancillary operations do not receive their own rates, and why C and S would not receive a separate garage rate if they were repairing their own equipment.
The reason why SRR does not get a separate garage rate for that work, either, is that associated companies are classified as if they were not separate companies to begin with. The idea is that it would not be desirable for an employer to be able to manipulate its classification by incorporating different companies to handle different parts of the same business. So, as long as SRR was associated with C and S, its repair of equipment belonging to those companies received the same classifications that C and S would have gotten if they had done the repair work themselves.
However, the garage work done for non-associated customers does qualify to be classified under the garage rate. As long as SRR keeps records differentiating this payroll from the payroll for repairing associated employers’ equipment, under WSIB policy it can have the garage rate.
All of these rules, while complicated, have reasons behind them and were put in place through legislation (the Workplace Safety and Insurance Act) and WSIB policy, and apply to all employers.
As an Appeals Resolution Officer, I have no authority to change WSIB policies, much less laws passed by the legislature. It does not matter whether I personally agree with them or not. The scope of my powers is set out in Operational Policy Manual document 11‑01-03, which states as follows:
The obligation to decide each case on the basis of merits and justice does not authorize a decision-maker to disregard the relevant provisions of the Act or WSIB policies. The Act and the policies must be taken into consideration, and cannot be ignored if they apply to a particular case.
However, I do have the authority to waive the application of a policy where the particular case has exceptional circumstances. Operational Policy Manual document 11-01-03 goes on to say:
There may be rare cases where the application of a relevant policy would lead to an absurd or unfair result that the WSIB never intended. Therefore, a decision‑maker may depart from a policy if it can be shown that the case has exceptional circumstances that justify doing so.
The decision-maker must clearly identify the exceptional circumstances and explain in the decision why the relevant policy is not applicable.
The “case” is the particular employer’s objection, not a review of or judgment about the policy itself. Therefore, while I may not create a blanket suspension of the policies that determine how to classify employers, I can waive the application of those policies if the particular case – here, the case of SRR – has “exceptional circumstances.” In other words, there must be something unique about this specific case, as compared with other employers’ cases, such that the application of the classification policies would lead to an outcome that is unfair or absurd and is not what the WSIB expected or wanted to happen. There is no evidence that SRR is in any special situation that makes the application of the normal classification rules unfair or absurd and against the WSIB’s intentions. Therefore, according to document 11-01-03, I am bound to apply them to SRR.
CONCLUSION
The decision that SRR does not qualify for classification entirely under rate group 630 was consistent with WSIB policy and the law. No merits and justice basis has been shown for exempting this employer from the normal operation of those classification rules.
The objection is denied.
DATED April 8, 2015.
B. Patlik
Appeals Resolution Officer
Appeals Services Division