WORKPLACE SAFETY AND INSURANCE BOARD
APPEALS RESOLUTION OFFICER DECISION
DECISION NUMBER: 20180023
FIRM: xxxxxx
OBJECTING PARTY: Contractor
REPRESENTED BY: Employer Adviser
HEARING: Hearing in Writing
HEARD BY: K. Azzopardi, Appeals Resolution Officer
DATED: May 10, 2018
ISSUES
The employer is appealing the Auditor’s decision dated March 11, 2015 and subsequent decision dated April 3, 2017 finding:
Exemption from mandatory coverage in construction for Mr. X is effective February 24, 2015.
The addition of Rate Group (RG) 755-11 is not retroactive effective January 1, 2013.
The employer is requesting:
- Exemption from Mandatory Coverage for Mr. X is applied retroactively to January 1, 2013.
Alternatively;
- If retroactive exemption to January 1, 2013 is not granted that Mr. X’s 2013 to February 24, 2015 earnings are assessed under RG 755-11, Non-Exempt Partners and Executive Officers in RG 751.
BACKGROUND
The firm has been registered with the Workplace Safety and Insurance Board (WSIB) since 2012.
The employer is classified under Class G for Construction RG 751-02 for Glass and Glazing Work.
The employer was initially audited in 2015. The 2013 and 2014 years were reviewed. It was confirmed that Mr. X and Mr. Y were corporate directors or executive officers of the firm during the audited year. In the decision letter dated March 11, 2015, it is indicated that Mr. X was an executive officer of the firm who worked in the office and had not requested exemption from coverage in construction during the period under audit.
According to the Auditor’s Appeals Issue Sheet, Mr. X completed and signed the “Partner or Executive Officer in Construction-Exemption from Coverage” form (1208A) on February 24, 2015.
The WSIB Auditor wrote the employer on March 11, 2015 advising of the audit findings and confirmed that Mr. X’s 2013, 2014 and January 1, 2015 to February 23, 2015 earnings were considered insurable under RG 751-02 since a request for exemption had not been received until February 24, 2015.
On April 14, 2015, the employer wrote the Auditor advising of the intent to object the exemption effective date for Mr. X’s exemption.
The Auditor wrote the employer on June 3, 2015 and confirmed exemption from mandatory coverage for Mr. X was effective February 24, 2015. The Auditor also provided the employer with the opportunity to add RG 755-011 effective January 1, 2015 to February 23, 2015 per policy 14-02-06 upon receipt of: 1) the completed “Request for Rate Group 755, Non-Exempt Partner and Executive Officer in Construction” 1209A form; and 2) payroll segregation indicating the total payroll and Mr. X payroll for January 1 to February 23, 2015.
The employer wrote the WSIB on June 18, 2015 indicating he did not fully understand the February 24, 2015 letter. A review of the firm file indicates that the auditor attempted to contact the employer several times by telephone to verbally explain the decision however, her calls were unreturned. As a result, the Auditor wrote the employer again on August 4, 2015 advising that if the form 1209A was completed and payroll segregation provided, RG 755-11 would be added to the account effective January 1, 2015 to February 23, 2015 “which is basically a clerical rate for non-exempt executive officers who do not perform any construction work.” The Objection Form was enclosed with the letter for the employer’s completion.
An Objection Form dated August 13, 2015 was submitted.
The Auditor wrote the employer on October 5, 2015 advising that exemption from mandatory coverage for Mr. X was effective February 24, 2015 and as a result, his earnings were considered insurable for the years 2013, 2014 and from January 1 to February 23, 2015. There is no record on the firm file of a completed 1209A form.
The employer representative submitted a letter on June 14, 2016 clarifying the objection and the issues under dispute.
In a reconsideration letter dated April 3, 2017, the Auditor denied the employer representative’s request to: retroactively exempt Mr. X effective 2013 based on policy 12-01-06 and assess his insurable earnings under RG 755-11 effective January 1, 2013 per policy 14-02-06.
A revised Objection Form dated April 26, 2017 was submitted by the employer representative.
The Auditor once again reconsidered the decisions dated March 10, 2016 and April 3, 2016 on December 7, 2017 and confirmed that she was unable to reverse her decision.
On March 28, 2018, the employer representative agreed to a hearing in writing with further final submissions via facsimile.
ISSUE 1: EXEMPTION FROM MANDATORY COVERAGE
Authority
Policies:
12-01-06 Expanded Compulsory Coverage in Construction
11-01-03 Merits and Justice
14-03-09 Premium Remittance
Analysis
I have reviewed the account file documents, the file itself including computerized notes, the policies and the evidence provided including the submissions dated June 14, 2016 and March 28, 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.
Executive Officer Exemption from Mandatory Coverage in the construction industry was legislated effective January 1, 2013. Prior to 2013, executive officers were not covered and their earnings were not insurable unless they opted for WSIB optional insurance. Bill 119 changed the law. Employers in Class G construction businesses, other than those engaged exclusively in home renovation work, no longer had the choice of optional coverage. Under the new legislation, one executive officer in a corporate entity, who does not perform any construction work, is eligible to be excluded from the new compulsory coverage program.
In an effort to educate the construction industry, 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.
Moreover, 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
Policy 12-01-06 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 by the WSIB.
The exemption is significant because it establishes the rights and responsibilities that exist for the individual, the WSIB and other parties.
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 February 24, 2015. The form was signed and dated by Mr. X.
On the Objection Form and submissions, the employer representative argues:
Mr. X did not know of his obligation to complete an exemption form and “did not receive the WSIB form letter allegedly sent to them in November 2012.”
Mr. X received instruction in a telephone conversation with a WSIB staff member and was told about mandatory coverage and was never told to complete a form to claim his exemption.
The attachment with the premium remittance forms did not notify of the requirements to sign a form opting out of coverage and relied on the information provided with the premium remittance forms to his detriment.
As is true with all policies, the one relating to compulsory coverage in the construction industry is subject to the consideration of the merits and justice of the case. 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.”
There would have to be something unique about this employer’s case such that the application of the policy is not warranted. It is to say that there must be something unique about this case, compared with other employers and executive officers in the construction industry, such that the application of the policy would result in an outcome that is unfair or absurd and not what the WSIB expected or intended to happen. I find that there are no circumstances making it unfair or absurd to hold the employer to their exemption requirements as dictated by the policy.
The employer representative makes the case that consideration should be given as the employer was not aware of the changes and did not receive notification from the WSIB. However, as a registered Class G Construction employer, the firm was informed by the WSIB and was sent targeted mailings about the compulsory coverage program, in November 2012, prior to the effective date of the new policy.
I find there is no evidence that the letter was not received. There is no record on file that the letter was returned by Canada Post. Even so, the WSIB advertised in many ways: at industry trade shows, at some government agencies, in certain construction-related retail locations, in newspapers, trade publications, radio commercials and on its website on another websites to educate the industry of the new mandatory coverage program. I acknowledge the employer’s claim he was aware of the media campaign and did not receive any mailing in 2012, however, I find the WSIB’s intent is clear. It 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. As a result, it is the employer’s responsibility to stay abreast of changes to their WSIB account and policy changes.
A thorough review of the account and computerized notes indicates that there is no documented conversation with Mr. X concerning Bill 119 as the employer claims. I do note there are a number of documented calls stipulating Mr. X contacted the WSIB to verbally report quarterly premium remittance earnings instead of completing the Premium Remittance Forms.
I have also considered the argument that the WSIB did not advise the employer of its reporting obligations with the filing of the Premium Remittance Forms. According to policy 14-03-09: “Employers are required to calculate, report, and pay their premiums based on either actual insurable earnings for those reporting monthly or quarterly, or on estimated earnings for those reporting annually, by due dates set by the WSIB.” It is the WSIB’s responsibility to inform employers on how to go about reporting. This information is available to employers on the WSIB’s website and through the Reconciliation Guide. Given that the WSIB’s insurance plan is a self-reporting payment system, it is the employer’s obligation to ensure that the insurable earnings reported to the WSIB on the Premium Remittance Form is accurate. The reported 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 it is an employer’s obligation to ensure that it stays up to date with any changes in reporting insurable earnings and its WSIB obligations.
A review of the employer’s firm file records indicates the 1208A2 form was completed by Mr. X and received by the WSIB on February 24, 2015.
I do not consider anything unique about this employer’s situation. The fact that the firm claims it was not aware of their obligations is not an excuse to exempt them from their legal obligations.
I note the argument of detrimental reliance; however, I find the employer had the education and tools to understand its reporting obligations. There is no evidence that there is anything exceptional about this firm compared to others in the same situation (construction industry).
I find it appropriate per policy 12-01-06 that the exemption of coverage is extended on February 24, 2015 to one executive officer, namely, Mr. X, as this is the date the form was received by the WSIB. No exceptional circumstances exist to justify waiving the policy.
ISSUE 2: CLASSIFICATION RETROACTIVITY
Authority
Policies:
14-02-06 Employer Premium Adjustments
11-01-03 Merits and Justice
Employer Classification Manual (ECM) document:
G755-11 Non-Exempt Partners and Executive Officers in Rate Group 764
Analysis
The compulsory coverage policy for the construction industry allows for the insurable earnings of any partners and executive officers who are not exempted to be classified under RG 755. This RG was established to cover individuals not exempted. For construction firms to be covered under RG755, the employer must apply by completing the “Request for Rate Group 755, Non-Exempt Partner and Executive Officer in Construction” form (1209A). The effective date of RG 755 is the date the first partner or Executive Officer is eligible or January 1 of the year the WSIB receives the signed, written request.
The employer representative’s submission presents no specific reasons for requesting the retroactivity of RG 755.
Under section 118 of the WSIA, the WSIB has the ability to determine classification of a firm. Based on this, the WSIB established RG 755 to cover partners and executive officers in Class G, Construction who were not exempt from coverage. The WSIB established that the addition of RG 755 would require an application and that it would be effective the date the first partner or executive offer is eligible to apply for the rate or January 1 of the year the WSIB receives the completed form.
The rules and requirements for the addition of RG 755 are specifically stated on the form and are key to WSIB practices in administering the application of RG755. The WSIB has the ability under Section 118 of the WSIA to establish and administer those rules. It is clear that the WSIB intended those rules. They are stated on the form and are crucial to the practices of the WSIB. Decision makers, including myself have no authority to make a finding that those rules are not applicable. The intent of the WSIB and the program and requirements are beyond the scope of what a decision maker can overturn under the Merits and Justice policy.
The rules for additions or changes to an employer’s classification are described in Policy 14-02-06 which stipulates changes to an employer’s classification are effective January 1 of the current year of the date of notification. I find the WSIB Auditor diligently contacted Mr. X in writing on June 3, 2015 and August 4, 2015 to obtain a form 1209A and segregated payroll with no success. I find the employer had the education and the ability to contact the WSIB auditor in order to understand his reporting obligations. However, the employer did not take the action required or respond to the Auditor’s request. Since a form 1209A was not received by the WSIB, I find the application of RG 755-11 is not applicable.
In reviewing the case, I can find no exceptional circumstances that make it unfair or absurd and contrary to the WSIB’s intent.
Given the account file, policy 14-02-06 and the evidence, I conclude the retroactive application of RG 755-11 to 2013 is not applicable. There is no basis to grant retroactivity of RG 755-11 effective January 1, 2013 and the reclassification of insurable earnings during 2013, 2014 and January 1 to February 23, 2015 from RG 751-02 to RG 755-11.
CONCLUSION
The employer’s request to:
- Exempt Mr. X from mandatory coverage in construction effective January 1, 2013
Alternatively,
- Assess Mr. X’s 2013, 2014 and January 1 to February 23, 2015 insurable earnings under RG 755-11, Non-Exempt Partners and Executive Officers in RG 751
is, therefore, denied.
DATED May 10, 2018
K. Azzopardi Appeals Resolution Officer Appeals Services Division