THE WORKPLACE SAFETY AND INSURANCE BOARD
APPEALS RESOLUTION OFFICER DECISION
DECISION NUMBER: 20150005
DECISION DATE: March 30, 2015
OBJECTING PARTY: Employer ("W")
REPRESENTED by: Self-Represented
HEARING: Hearing in Writing
HEARD by: B. Patlik, Appeals Resolution Officer
ISSUE
The employer ("W") asks that a reallocation of insurable earnings as of January 1, 2011 take effect only as far back as November 2013.
BACKGROUND
W was registered with the WSIB as of 2009 under rate group 711, classification unit ("CU") 4121-001 ("Highways, Streets, and Small Bridges"), rate group 308, CU 2541-000 ("Prefabricated Wooden Buildings"), rate group 033, CU 2512-000 ("Sawmill and Planing Mill Products") and rate group 030, CU 0411-099 ("Logging Operations").
The WSIB performed an audit in 2013, relating to the period going back to January 1, 2011. The Auditor closed the rate for Sawmill and Planing Mill Products as of December 31, 2012, on the basis that the firm had sold that operation effective January 1, 2013. The Auditor found that W had calculated its insurable earnings accurately. However, he also found that W had been reporting its trucking wages under rate group 711 but that the wages for the transportation of logs from the bush to the mill should have been allocated to rate group 030. The Auditor transferred the trucking wages accordingly, from rate group 711 to rate group 030. This, in turn, affected the prorations of common payroll over all of W's CUs, and the Auditor adjusted those, too. He made adjustments affecting 2011, 2012 and the first nine months of 2013. The Auditor informed W of his audit decision in a letter dated November 20, 2013.
W objected to the audit adjustments, they were confirmed and the matter was ultimately referred to the Appeals Services Division.
In a telephone conversation, the spouse of W's owner advised me that they object to the fact that the adjustments were made retroactive to 2011 instead of applying only as of when they were informed of the adjustments, which she believed took place in November or December of 2013. The Auditor's letter was dated November 20, 2013, so that would be the effective date they are asking for.
AUTHORITY
Employer Classification Manual document A-030-01 ("Logging Operations").
Employer Classification Manual document G-711-02 ("Highways, Streets, and Small Bridges").
Operational Policy Manual document 11-01-03 ("Merits and Justice").
Operational Policy Manual document 14-02-06 ("Employer Premium Adjustments").
ANALYSIS
Having reviewed the information and submissions, I confirm that it was correct for the WSIB to have reallocated the log hauling payrolls from rate group 711 to rate group 030 as of January 1, 2011. In addition, since the adjustments to the prorations flow directly from those reallocations, I find that they, too, were correctly made for the same period.
The WSIB's retroactive adjustments policy is set out in Operational Policy Manual ("OPM") document 14-02-06. It states that the WSIB makes premium adjustments back to January 1 of the second calendar year prior to the "notification date." If the change giving rise to the adjustment took place as of some later date, the WSIB goes back to the date the change took place.
For issues that arise in the audit department, the version of the policy that applies to this case defined "notification date" as "the date of the audit visit indicated on the Notice of Audit Visit." In the case of W, that was May 28, 2013. Therefore, the period that qualifies for adjustment would normally go back to January 1, 2011.
The policy set out four exceptions to the normal rule of two years of retroactivity:
Where provisional premiums had been issued because the employer had failed to give payroll information, the WSIB could adjust any number of prior years.
Where there had been a lack of full disclosure, involving wrongdoing by the employer, the WSIB could make debit adjustments only – not credit adjustments – for up to five prior years.
Where the employer committed fraud or an offence under the Workplace Safety and Insurance Act, the WSIB could make debit adjustments for any number of prior years.
Where the adjustment was a classification change and there had been no provisional assessment, lack of full disclosure, fraud or offence, the WSIB made adjustments only as far back as January 1 of the "current year."
A "classification change" was specifically defined in the retroactivity policy as a change resulting in the addition or deletion of a CU. Therefore, a reallocation of insurable earnings between CUs already existing on an employer's account was not considered to be a "classification change." As a result, such a reallocation triggered the normal two years of retroactivity.
None of the other exceptions applies to the case of W. Therefore, it was consistent with WSIB policy for the Auditor to have reallocated payrolls retroactive to January 1, 2011.
As with all policies of the WSIB, someone can be exempted from the rules regarding retroactivity if that is justified by the "merits and justice" of the case. The WSIB's merits and justice policy is set out in OPM document 11-01-03. It provides that decision-makers cannot "disregard the relevant provisions of the Act [that is, the Workplace Safety and Insurance 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, it goes on to state, "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."
In the case of W, I do not find that there are exceptional circumstances that support exempting the employer from the normal retroactivity period and making the payroll reallocations on a go-forward basis from when the company received formal notification.
The employer's submission is, in essence, that the WSIB assigned W the rate groups and accepted its payroll estimates, so it must have discussed the allocation of payroll with someone at W. The implication is that the WSIB, not W, was responsible for the company's allocation of log hauling payroll to the CU for highways, streets and small bridges rather than the one for logging operations, so it would be unfair for the WSIB to change it retroactively. I do not accept this line of argument.
W says in a June 16, 2014 letter that the WSIB sent out an Employer Profile in 2009 and took payroll estimates. They submit, "We have to assume that some discussion took place at this time between [a particular employee of W] and someone at the WSIB as to how she arrived at these amounts." However, that is not necessarily so, and in my view it is not necessarily even likely that that is what happened.
The Employer Profile itself did not say which specific kinds of workers were to have their insurable earnings allocated to which CU. There would be no reason for it to do so, since that is not the purpose of the Employer Profile.
In addition, unless there is an audit, a question from the employer, or an inquiry motivated by the WSIB when it notices an employer is reporting in what looks like an unusual or incorrect way (such as reporting zero earnings for several reporting periods in a row), the WSIB does not customarily ask employers how they are calculating their insurable earnings figures or deciding how much to report under each CU. The WSIB relies on employers to self-report accurately, given that each employer is in a better position than the WSIB to know what is going on in the running of their own business. If an employer has a question or needs assistance of some kind, they should go to the WSIB's website or call any of the phone numbers the WSIB provides in its mailings and to the public.
In summary, the WSIB receives payroll information in the performance of its day-to-day functions, and unless there is a specific review or inquiry, it has no reason to know or question what employers understand about what to include where or how they have made their calculations. Therefore, the fact that the WSIB applied the classifications and took payroll information does not suggest that it gave W instructions about how to report the log hauling payroll. Much less does it suggest that the WSIB specifically instructed W to report the log hauling payroll under a roadbuilding rate.
On that last point, about reporting log hauling under a roadbuilding rate, it does not seem plausible that the WSIB would tell anyone to report that way, or that it would be reasonable to think that was the correct way to report. There is no ambiguity in the titles of the CUs or the descriptions of what they each cover, such that a person would reasonably understand log hauling to belong under a roadbuilding rate. The roadbuilding rate used in the case of W is called "Highways, Streets, and Small Bridges" and it includes the construction, installation or repair of a number of things, including logging roads. The logging rate, on the other hand, specifically includes "transporting logs from the bush to the sawmill (by the logging employer)."
In addition, in my view the name of the CU used by W – "Highways, Streets, and Small Bridges" – has less connection with log hauling than any of the other three CUs it had on its account at the time – "Prefabricated Wooden Buildings", "Sawmill and Planing Mill Products" and "Logging Operations." The "Highways, Streets, and Small Bridges" CU had the lowest premium rate of all of them. There is no direct evidence that W chose to report the payroll in question based the premium rate, but even if it chose the roadbuilding rate as a result of an honest error, such an error was not reasonable given the names of the CUs it had on its account. If W was uncertain, it should have contacted the WSIB for assistance.
There is no record of any contact between W and the WSIB in which the WSIB told W to use the roadbuilding rate, and no record that W asked for help from the WSIB in the event it was unsure of what to do.
Considering all of the above, I see no evidence that the WSIB told W to use the roadbuilding rate for log hauling payroll, and I do not accept the assertion that it did so.
I understand that W is in financial difficulty. However, as stated by the Workplace Safety and Insurance Appeals Tribunal ("WSIAT") in Decision No. 2377/10, "deciding cases based upon the merits and justice of them does not mean that sympathy becomes the basis for a decision." Instead, an objective assessment must be made of how an employer came to report in the wrong way and what it takes to correct it fairly and in accordance with the WSIB's intentions.
In the case of W, I find no evidence that the WSIB told W to allocate the log hauling payroll to the roadbuilding rate and I do not find it credible that that is what happened. The best that might be said is that W made an error. If it had always reported that way, it has had the benefit of being able to retain that incorrect method of reporting for 2009 and 2010. Correcting it back to 2011 is not only consistent with normal WSIB policy where there is no finding of employer wrongdoing, it also seems a fair compromise compared with potentially going back to 2009.
In any event, the way the retroactive adjustments policy is written, the normal retroactivity period applies where there has been an honest error by the WSIB or by the employer. If the case of W is accepted at face value as involving mere error – in my view by the employer, not by the WSIB – it is consistent with the WSIB's intentions to apply a payroll reallocation for two prior years, that is, going back to January 1, 2011.
Finally, a review of WSIAT decisions shows that cases where WSIAT has departed from the normal retroactivity period generally entail some kind of obvious, extreme mistake on the part of the WSIB. Simple error by the WSIB or the employer would not be a sufficient basis for exempting the employer from the normal retroactivity policy.
CONCLUSIONS
The reallocation of insurable earnings for log hauling from rate group 711 to rate group 030 as of January 1, 2011 was consistent with WSIB policy and the merits and justice of the case.
The objection is denied.
DATED March 30, 2015.
Brenda Patlik
B. Patlik
Appeals Resolution Officer
Appeals Services Division