WORKPLACE SAFETY AND INSURANCE BOARD
APPEALS RESOLUTION OFFICER DECISION
DECISION NUMBER: 20190089
ACCOUNT NUMBER: XXXXXXX
FIRM NUMBER: XXXXXXXX
OBJECTING PARTY: Employer
REPRESENTED by: Employer Representative
HEARING: Hearing in Writing
HEARD by: K. Azzopardi, Appeals Resolution Officer
DATED: May 24, 2019
ISSUE
The employer is appealing the Account Specialist’s (AS) decision dated October 26, 2018 and subsequent review dated January 17, 2019 confirming:
Reclassification retroactivity effective January 1, 2018 from Rate Group (RG) 737-04 for Custom Welding to RG 403-03 for Other Machinery and Equipment Operation.
Mandatory coverage in construction for executive officers is no longer applicable effective January 1, 2018.
The employer is requesting:
The retroactivity of the reclassification from RG 737-04 to RG 403-03 is from the inception of the account.
The employer’s mandatory coverage in construction is cancelled retroactively to January 2013.
BACKGROUND
The employer has been registered with the Workplace Safety and Insurance Board (WSIB) since 2011 and was classified under Class G-Construction, RG 737, CU 9942-000 for Custom Welding.
According to a review of the firm file notes, the employer representative contacted the WSIB on July 26, 2018 to request a classification review. The notes indicate the former representative advised “the firm was no longer not [sic] a welding firm but a manufacturing firm.”
As a result of the 2018 correspondence, the AS initiated a classification review of the firm’s business activity. In a decision letter dated October 26, 2018, the AS confirmed a change in the firm’s classification from Class G-Construction, RG 737, CU 9942-000 for Custom Welding to Class D-Manufacturing, RG 403, CU 3199-000 for Other Machinery and Equipment Operations effective January 1, 2018. The decision indicates the effective date of the classification change is January 1 of the current year (current year being the year of notification) based on Policy 14-02-06. The decision also advised the executive officers of the firm were no longer required to have mandatory coverage in construction effective January 1, 2018.
On December 28, 2018, the current employer representative wrote the WSIB objecting to the reclassification retroactivity and the fact that mandatory coverage for the executive officers should be cancelled January 1, 2013.
The AS reconsidered and confirmed the initial decision and date of retroactivity on January 17, 2019.
An Objection Form (Employer Account) dated January 30, 2019 was completed appealing the AS’s decision.
An Intent to Object Form dated April 15, 2019 was also completed where the former representative requested retroactivity of the classification decision to 2011.
The objection was forwarded to the Appeals Services Division for review.
The employer representative agreed to a hearing in writing and confirmed the issues under appeal in a facsimile dated May 7, 2019. Final submissions were forwarded on May 16, 2019.
Issue 1: Classification Retroactivity
Authority
Policies:
14-02-06 Employer Premium Adjustments
11-01-03 Merits and Justice
Analysis
I have reviewed the firm file history, policies, and considered the evidence on record and the submissions provided.
The employer’s request is denied based on application of the Workplace Safety and Insurance Act (WSIA), operational policies and my assessment of the evidence including the arguments provided.
Policy 14-02-06 stipulates where an employer’s rate group is changed, the change is effective January 1 of the year in which the change took place. The provision reads as follows:
Classification changes
For classification changes not involving the provisional premiums, lack of full disclosure, and offences or fraud, premium adjustments are limited to January 1 of the current year.
The policy goes on to read:
Notification Date
For WSIB’s operating areas other than Employer Audit, the notification date for a premium adjustment is the receipt date of a request from an employer or an employer representative with valid authorization, or the date of a site visit documented in the employer's file.
As is true with all policies, the one relating to classification retroactivity 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.”
The employer representative argues:
The merits and justice policy should be applied since classification errors made by the Board are unfair and exceptional.
The employer complied with the registration process and did not receive a classification decision letter in 2011.
The Employer Profile dated August 19, 2011 incorrectly classified the employer under RG 737.
The employer was never advised of their right to appeal the classification in 2011.
English is and was a challenge for the small employer.
In submissions dated December 28, 2018 and May 16, 2019, the representative argues the Merits and Justice Policy is applicable to the case under review. In order for that to be the case, there would have to be something unique about this employer’s case such that the application of Policy 14-02-06 is not warranted. It is to say that there must be something unique about this case, compared with other employers 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 have considered the arguments made by the representative and I find that there are no circumstances making it unfair or absurd to hold the employer to the requirements as dictated by the policy.
I do not find that the WSIB erred in classifying the employer from inception as the representative argues. The WSIB classified the employer at registration based on the information provided. I acknowledge the employer provided a copy of the Master Business License which listed the business activity as “Mechanical Engineering and Manufacturing.” On the other hand, the WSIB Employer Registration Form, completed by the employer on July 7, 2011 indicates the firms business activity was “Welding Mechanical Services.”
The WSIB wrote the employer on August 19, 2011 advising of the classification under RG 737, CU 9942-000 for Custom Welding Services. With the “Employer Profile: Registration and Classification” notification, the employer was advised to: “Please review the information about your business contained in this Employer Profile. Fill in any missing details, correct any errors, complete with an authorized signature and return it to the attention of the Employer Service Centre….”
I find the employer was made aware of their classification allocation and did not notify the WSIB of an error or classification concerns as they were advised to do with the Employer Profile dated August 19, 2011. Moreover, it is my opinion the employer would have been repeatedly reminded and aware of their classification under RG 737-04 with their reporting of the quarterly Premium Remittance Forms. I find, per the firm file, the AS reclassified the firm according to the information provided by the employer, including the submissions made in October 2018. There is no prior communication regarding classification prior to that date.
Moreover, it is of note that the classification change was made in conjunction and further to the Operation Policy Manual amendment and policy changes made to RG 737-04 effective May 1, 2018.
I have considered the argument that English is not the employers first language and that they are a small employer who was dependent on the WSIB to classify the firm correctly. The WSIB has an obligation to educate employers, and does so in many ways. I find information was available to the employer via the WSIB website, by telephone and through multilingual services. So, there were many forms of information and resources available to the employer and the former employer representative to communicate with the WSIB and to have made classification enquires.
I find for adjustments in WSIB departments other than Audit, the “notification date” is defined as “the receipt date of a request from an employer or an employer representative with valid authorization, or the date of a site visit documented in the employer's file.” In this case, I find the date of notification was the date of the employer representative’s contact in July 2018. It is my opinion that the employer, through its representative, notified the WSIB that the firm was no longer involved in welding and prompted a review of the firm’s classification via its July 2018 contact.
Policy 14-02-06 lists exceptions to the normal rule of two prior year’s retroactivity: provisional premiums, voluntary disclosure, lack of full disclosure, offences or fraud and classification changes. The exceptions listed in this policy only allow the WSIB to debit an employer when there is wrongdoing on the part of the employer.
The case under review involves classification and there were no provisional assessments and no suggestion of lack of full disclosure, fraud or offence. As such, the regular application of the retroactivity policy provides that the firm’s classification would be changed as far back as January 1 of the year containing the “notification date.”
The representative argues that the notification date should be the date of the account inception. However, this is not what the policy says. I find policy 14-02-06 plainly defines the classification retroactivity in this case. There is no discretion as the policy is clear that where an employer’s rate group is changed, the change is effective January 1 of the year in which the change took place which is defined by the date of notification. Based on my review of the firm file records, the employer’s “notification date” was July 2018. The WSIB did not err in its original decision to apply retroactivity to January 1, 2018. This is not considered an egregious error that might constitute relief as an exceptional circumstance in the Merits and Justice Policy.
I note the Workplace Safety and Insurance Appeals Tribunal (“WSIAT”) has considered similar situations regarding the application of Policy 14-02-06. In Decision No. 938/10, the purpose of limiting provision in the policy is described as follows:
As that excerpt notes, the merits and justice provision found in both the legislation and the policy is not to be applied so as to circumvent Board policy. Rather, it is to be applied where there exist circumstances so exceptional that the strict application of the policy would lead to manifest unfairness or injustice. The excerpt also states that Board policy regarding employer classification has to be seen as a “two-edged sword.” The Board has chosen to limit the retroactive impact of a classification change. Where the Board changes an employer’s classification, the effect can be either beneficial or detrimental to the employer, depending on the nature of the change. The intent of the policy is to restrict the scope of the detrimental impact, where a classification change results in a significant increase in an employer’s premiums. The other side of that intent is that, where a classification change results in reduced premiums, there is a limit to the beneficial impact the change can have on an employer. But, as the Vice-Chair noted in Decision No. 2407/06I, it is unavoidable that there will be gains and losses as a result of the application of policy. Earlier versions of Board policy had substantially greater retroactive periods. Subsequent policy changes have restricted those application dates. In the Panel’s view, the Board has determined that there is less overall negative impact on the employer community if classification changes are limited in their retroactive impact.
I find the policy on retroactive adjustments binds both employers and the WSIB to a time limit. The time limit may benefit the employer at times, and in other cases, will not benefit the employer. The Employer Premium Adjustment policy provides in all ordinary situations for the employer and the WSIB, the period of retroactivity for classification changes is the year of notification.
By applying the reclassification to the beginning of the current notification year, the premium adjustment policy anticipates and accepts that there will be prior years for which an employer was improperly classified but where no reclassification will occur. This is a “two-edged sword” as it will work to the employer’s benefit in some cases, and in others, it will work to the employer’s detriment. I find, however, it is the clear intention of the policy to limit adjustments in this manner.
In summary, given my analysis of the firm file evidence, policies and arguments, I find the notification date to be July 2018. As such, I confirm the date of classification retroactivity to be January 1, 2018 per Policy 14-02-06. I find there are no exceptional circumstances making it unfair or absurd or against the WSIB’s intentions. As such, there are no 2018 insurable earnings to adjust.
Issue 2: Mandatory Coverage In Construction
Authority
Policies:
12-01-06 Expanded Compulsory Coverage in Construction
14-02-18 Insurable Earnings-Construction
11-01-03 Merits and Justice
Analysis
I have reviewed the account file documents, including computerized notes, the policies, and considered the employer representative’s submissions, including those with the Objection Form.
The objection is denied based on application of the Workplace Safety and Insurance Act (WSIA), operational policies and my 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 officer 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.
Facts of the Case
A review of the firm file indicates that the executive officers did not apply for exemption from mandatory coverage in construction. The employer was classified in Class G Construction prior to 2018.
With the Objection Form and submissions dated December 28, 2018, the employer representative argues:
The executive officers were not required to have mandatory construction if the WSIB did not incorrectly classify the company.
The employer would not have applied for optional insurance under RG 403.
The executive officers did not file a claim or incur any claims costs.
The WSIB’s intent in implementing the new legislative requirement for executive officers in construction was clear. As noted earlier in my analysis, the WSIB made a methodical effort to use many methods to educate registered construction firms, including the employer under review who was registered in Class G for Construction and RG 707 for Custom Welding that mandatory coverage in construction was effective January 1, 2013. The employer was advised of this change and did not notify the WSIB that they wished an exemption form coverage. Had the executive officers not wanted coverage, the applicable forms would have been considered once a signed approved form was received by the WSIB. I find, if the employer did not desire coverage, as the representative is arguing, then the employer had the option of requesting exemption form coverage.
I acknowledge the argument that there were no claims or claim costs. I find the principle of payment for coverage is standard with insurance policies including disability, household and automobile. As I mentioned earlier, 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 for this coverage.
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 question 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.
I further find that there are no other circumstances or facts to suggest that the application of Policy 12-01-06 would be unfair or absurd to hold the employer to their requirements as dictated by the policy. Therefore, I find that the employer’s expanded compulsory coverage in construction was in effect from January 1, 2013 to December 31, 2017 in accordance with Policy 12-01-06, Expanded Compulsory Coverage in Construction.
CONCLUSION
The employer’s request to:
Apply retroactivity to account inception in reclassifying the firm from RG 737-04 to RG 403-03.
Cancel mandatory coverage retroactively to January 2013.
is, therefore, denied.
DATED: May 24, 2019
K. Azzopardi
Appeals Resolution Officer Appeals Services Division