March 19, 2013
As of January 1, 2013, there are two important and expanding changes under the Workplace Safety and Insurance Act, 1997 (“WSIB”):
How Does This Affect You?
The following table shows how the recent change to the WSIB affects you as a business owner:
Partner in a Partnership
Executive Officer in a Corporation
|Before Jan 1/13||You were not required to register under WSIB and were granted independent operator status.||You were not required to register with WSIB if you did not employ any workers. If you did have workers, you had the option of registering for optional WSIB insurance for yourself as owner or officer of the business.|
|What’s new?||You must register with WSIB by January 1, 2013, report your earnings, and pay premiums unless you qualify for one of the 2 exemptions (however, see grace period below).|
|Exemption for partners and corporation executives and||Whether the corporation/partnership employs workers or not, you may select one executive officer/partner to apply for exemption but that officer/partner must not perform any construction work.|
|Exemption for Home Renovators||May continue to elect not to have WSIB coverage if they work exclusively in home renovation work and meet all of the following requirements:
However, if you have workers, you must still have WSIB coverage for your workers. If you hire a subcontractor, you must request a Clearance Certificate from your subcontractor.
|Insurable Earnings||Report actual insurable earnings.
||Report based on an estimated annual amount of insurable earnings OR use last year’s net business income.
||Report earnings of each partner based on an estimated annual amount of insurable earnings.
||Report the regular income for each officer throughout the year
*Independent Operator is an individual sole business owner, incorporated or not, who does not have any employees (other than yourself) and works for more than 1 person/company in an 18 month period.
**2013 Maximum amount is $83,200; Minimum is 1/3 of Maximum so is $27,456.
Why the Changes?
These changes ensure that every construction owner and worker who is performing construction work (other than 2 exemptions) have WSIB coverage and that all persons hiring a contractor or subcontractor have an obligation to request a WSIB Clearance Certificate or risk liability for a non-complying person’s unpaid premiums.
Principals – Those That Pay Contractors & Subcontractors
You are considered a “Principal” if you hire a contractor or subcontractor. For example, if you are a manufacturing company and hire a contractor or subcontractor in the construction industry to provide work to your company, you are required to request a Clearance Certificate from all persons with whom you contract directly. If that person cannot provide a Clearance Certificate (meaning that they are not considered an Independent Operator), then you must report that person’s earnings as the total labour portion of the person’s invoice to WSIB up to the Maximum amount and pay premiums on those earnings.
All persons who retain a contractor or subcontractor to perform construction work, are required to obtain from those persons before construction work commences, a WSIB Clearance Certificate showing that the contractor has registered with WSIB and has complied with all obligations under the WSIB Act. Failure to obtain Clearance Certificates can result in costly fines and result in the risk of liability to pay the unpaid WSIB premiums of the non-complying contractor or subcontractor. For clarity, if you are a contractor hiring a subcontractor, you must request from that subcontractor a WSIB Clearance Certificate. If you are a manufacturing company hiring a contractor, you must request from that contractor a WSIB Clearance Certificate.
Penalties For Non-Compliance
Penalties for non compliance of the WSIB requirements can result in fines for individuals of a maximum of $25,000 and/or 6 months in jail. For a corporation, fines are a maximum of $100,000. In addition to these fines, unpaid premiums will need to be paid together with interest on the unpaid amounts.
The WSIB has issued a policy to ease the introduction of the new mandatory coverage requirements. From January 1, 2013, up to and including December 31, 2013, the WSIB will waive penalties and/or refrain from investigation and/or laying charges for non-compliance of:
You should be aware that while WSIB will not prosecute during this grace period, it will contact parties to create awareness and educate regarding obligations under WSIB. WSIB will pursue employers and individuals who knowingly make false or misleading statements or representations to WSIB. As well, WSIB may during this grace period make adjustments to your WSIB account requiring you to pay all premiums and charge interest for non-compliance.