WORKPLACE SAFETY AND INSURANCE BOARD
APPEALS RESOLUTION OFFICER DECISION
DECISION NUMBER: 20180011
ACCOUNT: xxxxxxx
FIRM: xxxxxx
OBJECTING PARTY: Ontario Limited
REPRESENTED BY: Employer Adviser
HEARING: Hearing in Writing
HEARD BY: K. Azzopardi, Appeals Resolution Officer
DATE: May 9, 2018
ISSUE(S)
The employer is appealing the Auditor’s decision dated September 2, 2016 finding that Executive Officer Exemption from Mandatory Coverage for Mr. R. is effective July 21, 2016.
The employer is requesting that the exemption become effective January 1, 2014.
BACKGROUND
The employer has been registered with the Workplace Safety and Insurance Board (WSIB) since January 1993.
The employer is classified under Class G for Construction RG 719-01, CU 4271-099 for Plaster, Drywall and Acoustical Work. As a result, Bill 119, “Compulsory Coverage in Construction” was applicable to the firm effective January 1, 2013.
A WSIB audit was completed on August 30, 2016. The 2014 and 2015 years were reviewed.
A review of the firm file records indicates a signed and dated “Partner or Executive Officer in Construction-Exemption from Coverage” form (1208A) was received by the Auditor for Mr. R. on July 21, 2016. As a result, his exemption from coverage was granted effective July 21, 2016.
The “Request for Rate Group 755, Non-Exempt Partner and Executive Officer in Construction” form 1209A was received on July 21, 2016 and as a result the Auditor added RG 755-04 to the account effective January 1, 2016.
The Auditor wrote the employer on September 2, 2016 advising of the audit findings and confirmed that Mr. R.’s 2014 to 2015 earnings were considered insurable under RG 719 since a request for exemption had not been received until July 2016. The Auditor advised in the decision letter that RG 755-04 was added effective January 1, 2016. The employer was advised to contact the WSIB to close RG755-04 once Mr. R.’s July earnings were reported.
The employer representative contacted the Auditor advising of the intent to object to the decision of September 2, 2016 and provided a Direction of Authorization form.
The employer representative submitted an Objection Form (Employer Account) dated December 19, 2016 with arguments supporting the appeal for retroactivity.
On January 13, 2017, the Auditor reconsidered her decision based on the new submissions and confirmed her original decision to grant retroactivity on the exemption from mandatory coverage effective July 21, 2016 based on policy 12-01-06.
The appeal entered the Appeals Services Division and was withdrawn on April 5, 2017 as the employer representative did not have access to the firm file.
Another Objection Form was received by the WSIB on October 13, 2017 with additional submissions supporting the objection and a signed affidavit from Mr. R..
The Auditor wrote the employer representative on November 17, 2017. She advised that exemption from mandatory coverage for Mr. R. remained the same and that she was unable to grant the objection.
On March 1, 2018, the employer representative agreed to the issue in dispute and to a hearing in writing with a 35 page submission for consideration including the affidavit of Mr. R..
AUTHORITY
Policies:
12-01-06 Expanded Compulsory Coverage in Construction
11-01-12 Legislative Authority
11-01-03 Merits and Justice
14-03-12 Reconciliation
ANALYSIS
I have reviewed the account file documents, including computerized notes, the policies, and considered the employer representatives submissions dated December 14, 2016, November 2, 2017, and March 1, 2018.
The objection is denied based on application of the Workplace Safety and Insurance Act (WSIA), operational policies and assessment of the evidence. The following analysis will describe how I have arrived at this decision.
Legislative Authority
Effective January 1, 2013, section 12 (2) of the WSIA considers that every executive officer of a corporation carrying on in construction are workers. Section 1 of O. Regulation 47/09 states that one partner in a partnership or one executive officer carrying on business in construction is exempt from the application of subsections 12.2 (1) to (4) if the following conditions are met: The partner or executive officer does not perform any construction work and a declaration is filed with the WSIB. Section 1(3) provides that the exemption is effective from the day the Board receives the declaration.
Prior to 2013, executive officers were not covered and their earnings were not insurable unless they opted for WSIB optional insurance.
Applicable Policy
Policy 12-01-06 sets out more specific rights. It describes that effective January 1, 2013, compulsory coverage under the insurance plan is extended to independent operators, sole proprietors, partners and executive officers in the construction industry, with certain exceptions. These persons are deemed workers under the WSIA. The exemption of one partner or executive officer is allowed under the policy if the partner or executive officer does not engage in any construction work. In order to be exempt from coverage, a WSIB approved exemption form must be completed with the full name of the one partner or executive officer to be exempted along with any other information the WSIB requires. The exemption takes effect the day the declaration is received [emphasis added] by the WSIB. The policy further stipulates that the WSIB “will not retroactively apply the coverage exemption”, while adding that “this rule is waived in the case of a business closure.” This is the only exemption provided in the policy.
The exemption for the selected executive office is significant. When coverage exists for an individual, there is a right on the part of the person and a responsibility on the part of the WSIB, to administer claims, pay benefits, cover health care costs, provide retraining when appropriate etcetera. As well, the employer has the obligation to report and pay premiums on the individual’s insurable earnings.
If a Schedule 1 employer’s worker (compulsory covered or by application) cause injury to another Schedule 1 employer’s worker, the parties cannot sue. The accident must be managed within the WSIB’s no-fault insurance system. Consequently, other people’s right to sue is impacted by whether an individual is covered under the WSIB or not.
Notice to Construction Industry
In an effort to educate the construction industry about the new legislative requirement, the WSIB conducted a comprehensive media campaign in 2012 which included print advertisements, radio ads, and presentations to construction and trade audiences, newspaper ads, trade publication articles, media interviews and public posters.
The WSIB sent letters to all construction employers in November 2012. The letter to registered firms included the following details:
Information regarding the impacts of mandatory coverage (specific to this business type) including the action employers need to take for coverage (i.e. when to start reporting earnings)
Details about the two exemptions (One Executive Officer or Partner & Home renovation exemption)
Forms applicable to the partner/executive exemption and request for Rate Group (RG) 755 for Non-Exempt Partners and Executive Officers
Facts of the Case
A review of the firm file indicates that a “Declaration for Exemption from Compulsory Coverage in Construction” form (1208A2) was received by the WSIB on July 21, 2016. The form was signed and dated by Mr. R. on July 21, 2016.
In submissions dated December 19, 2016, October 13, 2017, July 2017 and March 1, 2018, the employer representative argues:
Estoppel by representation may be used to prevent unfairness and does not constitute an infringement on policy. Section 119 of the WSIA allows for discretion in decision making thereby allowing for estoppel by representation to apply in the case under review.
The WSIB made representations in 2014, 2015 and 2016 which were false and which the employer relied on to his detriment.
The employer has stated in an affidavit that he was unaware of the expanded coverage in construction.
Is Estoppel by Representation Available for Use Against the WSIB?
The employer representative has identified that estoppel by representation is available for the use of the WSIB where a statue allows a government official some discretion or where its use to prevent unfairness does not constitute an infringement of government policy or contrary to a specific result mandated by a statute.
The representative has further submitted that estoppel by representation has three necessary components: representation, reliance and detriment that apply to this case. His submission outlines how he believes each component has been met.
It is my view the estoppel by representation argument warrants consideration, but that all three components must exist. I further find that in reviewing the facts of the case, the components of representation and reliance have not been met and therefore the benefit of estoppel by representation cannot apply for this employer. My rationale is as follows:
Representation
(a) What is the WSIB’s scope of authority to ignore specific legislative intent?
The coverage of executive officers in construction is a mandatory provision of the WSIA. The formality required to qualify for the exemption is the completion of the declaration per Regulation 47/09. Where legislation requires that a specific formality be followed, estoppel by representation cannot be used to remedy a failure to follow that legislative formality.
It is well established in Workplace Safety and Insurance Appeals Tribunal (WSIAT) jurisprudence that estoppel cannot be applied in a situation where it contradicts the express provisions of a statue. WSIAT has considered similar situations regarding the application of estoppel by representation. In Decision No. 715/10, Paragraph 44 it is noted:
[e]stoppel cannot operate to interfere with the determination of parties’ statutory status under the Act. Except where the Crown may be involved in something in the nature of contractual relations with the party raising the estoppel, estoppel cannot be raised to deprive a party of a statutory or public right or to prevent a public authority from applying the law.
A more recent WSIAT decision, Decision No. 3354/17 took the same position on the issue of estoppel by representation.
I therefore do not agree with the employer representative’s argument. Regulation 47/09 is clear; the exemption is effective on the day the Board receives the declaration. Policy 11-01-12 states the WSIB has the power to determine its own policies, practices and procedures. However, the WSIB does not have the power to amend or change the WSIA (Regulation 47/09).
(b) Did the WSIB intentionally or unintentionally mislead the employer about its obligations?
The representative argues that the WSIB made misrepresentation to the employer in 2014, 2015 and 2016 which the employer relied upon to his detriment. The implication in this statement is that the WSIB intended to have the employer to continue to deduct executive officer earnings in 2014 and 2015, when the employer was not allowed to do so without seeking an exemption first. However, the employer representative does not provide explicit evidence to support such intent by the WSIB other than to argue there was lack of explicit direction on the Reconciliation Form to ask for exemption from coverage. In the absence of such explicit information the employer did not know that he should have made such a request effective January 1, 2013.
Per policy 14-03-12, a monthly reporting employer submits the Reconciliation Form at year end to report their worker’s actual earnings for the year just past. I note the representative’s argument that the “WSIB has never put anything on the front of the Reconciliation Form that would alert a construction employer that notwithstanding the explicit directions to deduct executive officer earnings, that the opposite was true.”
I acknowledge that it is the WSIB’s responsibility to inform employers on how to go about reporting. I also note that the Reconciliation Form, at the top, upper right side indicates: “Visit www.wsibon.on.ca for a detailed guide to filling out this form.” The information for completing the Reconciliation Form is available to employers on the WSIB’s website and through the Reconciliation Guide.
It is important to note that the 2015 and 2016 Annual Reconciliation Guides issued to support the completion of the 2014 and 2015 Reconciliations Forms respectively, specifies executive officers of a corporation in the construction industry are deemed workers and their earnings must be reported except if they are performing home renovation work or if the executive officer has been granted an exemption from compulsory coverage by the WSIB. On the Reconciliation Form itself, under Item 8: “Deductions from Gross Earnings”, it is specified that “For construction, on this line enter the partners’ and executive officers’ earnings included in boxes 1 and 2 for the time period they were exempt from mandatory coverage because of an approved exemption for one partner or executive officer in the partnership/corporation.”
Given that the WSIB’s insurance plan is a self-reporting payment system, it is the employer’s obligation to read and stay up to date with the reporting duties stipulated in the Reconciliation Guide. This practice ensures that the insurable earnings reported to the WSIB on the Reconciliation Forms are accurate. In an effort to reinforce compliance and accurate reporting, the stated insurable earnings may be verified through the audit process. As such, I note the WSIB’s self-reporting employer system accepts the employer’s forms as reported and relies on employer audits to ensure compliance and correct reporting.
I find that the component of representation is not met because there is no evidence that the WSIB intentionally or unintentionally misled the employer, either in terms of the requirements of Regulation 47/09 or that the Reconciliation Form provided explicit directions for the employer to continue to deduct executive officer earnings.
The employer was notified on the Reconciliation Form to refer to the Reconciliation Guide for more information. I do not find that the Reconciliation Form is ambiguous or misrepresented. I find the form provides a line for the deduction of executive officers earnings. This could be interpreted that the item or line requires completion in all cases. However, it could also be interpreted as a field that is available should it apply in the employer’s circumstances. I find the Reconciliation Form makes no positive indication directing employers to complete all fields. If anything, I find the employer under review left fields blank on its Reconciliation Forms, suggesting that the employer was aware that not all fields required completion.
The Reconciliation Form indicates to visit the WSIB website to access a detailed guide to completing the form. The Reconciliation Guides did draw attention to the special rules for construction employers. Given that there was information for requesting an exemption for executive officers, I find that this is further proof that the employer was not mislead by the WSIB to continue to deduct executive officer earnings.
Detriment
The representative argues that consideration should be given to the fact that the employer was not aware of the publicity campaign and did not receive notification from the WSIB. He submits that the WSIB should accept the uncontradicted affidavit evidence submitted and the cited court decision supporting his arguments. I accept the employer’s statement in the affidavit and I also acknowledge that the employer views the audit surcharge as a detriment, since the premiums resulting from his earnings which were found to be insurable are central in this appeal. However, I find the WSIB’s intent in implementing the new legislative requirement for executive officers was clear and there is no evidence of misrepresentation. As noted earlier in my analysis, the WSIB made a methodical effort to use many methods to educate registered construction firms that exemption of coverage would only be considered once a signed approved form was received by the WSIB. The WSIB’s policy is also clear on the effective date of the exemption.
Reliance
I acknowledge that the employer relied on his knowledge of WSIB reporting obligations based on his experience with reporting insurable earnings on the Reconciliation Form since the 1990s. However, for the reasons explained above, he had a responsibility to understand his obligations and to act on any legislative and/or policy changes.
Merits and Justice Consideration
The WSIB’s Merits and Justice policy recognizes that “there may be rare cases where the application of the relevant policy would lead to an absurd or unfair result that the WSIB never intended.” Consequently, the Merits and Justice policy gives decision makers the authority to “depart from a policy if it can be shown that the case has exceptional circumstances that justify doing so.” The WSIB does have exclusive jurisdiction to make decisions under the WSIA, but it does not mean that it can negate what the legislation requires. As a WSIB final decision maker, I do not have the authority to alter the mandatorily prescribed rights and responsibilities under the WSIA or apply merits and justice considerations because to do so would be to questions the legislators’ intent in adopting such legislation. However, since the WSIB developed a policy in support of the new legislative requirement for executive officers in construction, I do have the authority to consider the requirements of that policy and apply merits and justice considerations based on the facts of the case before me. For me to set aside policy requirements there would have to be something unique about this employer’s case such that the application of the policy would be considered unfair or absurd and therefore the appropriate remedy would be that this employer be allowed to benefit from the executive officer exemption in 2014 and 2015 through a retroactive application of the exemption sought in 2016. I have already determined that the requirements of estoppel by representation do not apply in this case.
I further find that there are no other circumstances or facts to suggest that the application of the policy would be unfair or absurd to hold the employer to their exemption requirements as dictated by the policy. Therefore, the policy requirement that the exemption from mandatory coverage for Mr. R. applies effective on the day the WSIB received the declaration.
CONCLUSION
Since the test for estopple by representation has not been met and since there are no other extenuating circumstances to warrant a departure from the requirements of Policy 12-01-06, the employer’s request to exempt Mr. R. from mandatory coverage in construction effective January 1, 2014 is denied.
DATED May 9, 2018
K. Azzopardi
Appeals Resolution Officer Appeals Services Division