May 12, 2012by Israel Foulon LLP
Effective January 1, 2013, Compulsory coverage under the Workplace Safety and Insurance Act, 1997 (WSIA) is expanding to include independent operators, sole proprietors, partners and executive officers in the construction industry, who will be considered “deemed workers” under the Act, with certain exceptions.
The principal responsible for retaining a contractor or subcontractor to perform non-exempt work in construction is required to obtain a WSIB certificate of clearance prior to the commencement of work. If a clearance certificate is not obtained, the principal risks being held liable for the unpaid premiums owed by the contractor or subcontractor. Clearance certificates are to be retained for a period of three years and must be produced upon request by WSIB.
In order to obtain a clearance certificate, the contractor or subcontractor must have its WSIB account in good standing, which requires:
an open account with the WSIB;
appropriate classification for the work performed;
premium amounts being accurately reported to WSIB; and
payment being received for all premiums and other amounts owing.
Effective January 1, 2013 a contractor or subcontractor cannot perform construction work for a principal without a valid clearance for the construction work.
Home Renovation Work
If an independent operator, sole proprietor, partner or executive officer is engaged exclusively in home renovation work the exemption applies to these individuals (not to workers hired by these individuals).
In order to qualify as home renovation work,
the work must be conducted on an existing private residence (which includes a house, a condominium unit, an apartment or a recreational private residence) or structures that are normally incidental to the residence, such as a pool, garage or shed; and
the contractor must be directly retained by the occupant of the residence or a family member of the occupant.
The home renovation exemption does not apply to:
an employer engaged in both exempt and non-exempt work, even if one partner or executive officer performs only home renovations (in that case all earnings are reportable);
renovations to a commercial aspect of a residential property (ie. a commercial garage located on a residential property); or
subcontractors performing home renovation work.
If a business starts to perform only home renovation work, the independent operator, sole proprietor, partner or executive officer may contact the WSIB to cancel coverage. An employer will be responsible for reporting and paying premiums on exempt work until coverage is cancelled.
Note: there is a three month minimum coverage period.
Exempting One Partner or Executive Officer
Partnerships or corporations with workers or without workers but multiple executive officers, may exempt from coverage one partner or one executive officer, if that person does not perform any construction work and subject to:
providing the WSIB proof of executive officer status; and
WSIB receiving a completed Declaration of Exemption form.
Construction work includes manual work of a skilled or unskilled nature, the operation of machinery, or the direct on-site supervision of workers. Periodic site visits are permitted as long as no construction work is performed on site.
If at any point the exemption criteria no longer applies, the corporation or partnership must notify the WSIB within 10 days of a material change in circumstances.
Independent operators, executive officers and partners in a partnership working in construction who have no workers may pre-register now electronically on the WSIB website at: https://eservices.wsib.on.ca/portal/server.pt/community/eservicespublic/eregistration or by calling WSIB at 416-344-1000 or 1-800-387-0750.
There is no cost to pre-register and premiums will not begin until January 1, 2013.
The sole proprietorship, partnership or corporation, without workers, must register as a “deemed employer” as soon as non-exempt work commences. If already registered as an employer, the individual must be covered and their earnings reported in addition to their workers’ earnings for all construction work, including home renovation work.
Upon request, WSIB will allow the insurable earnings of non-exempt partners and non-exempt executive officers who do not engage in any construction work to be reported under a separate rate group in class G.
Offences and Penalties
Failure to comply with the expanded compulsory coverage in construction may result in charges under the Provincial Offences Act. The penalties under this section of the Act include a fine for an individual not exceeding $25,000 or imprisonment not to exceed six months, or both. A corporation found liable of an offence may be subject to a fine not exceeding $100,000.
Until January 1, 2014 WSIB will waive penalties and will not lay provincial offence charges when an employer or individual is found to be non-compliant with the registration and clearance certificate obligations under the expanded compulsory coverage requirements.
WSIB will however pursue employers and individuals who have knowingly made false or misleading statements or representations to WSIB.
If non-compliance continues past December 31, 2013, WSIB may consider the entire period of non-compliance, back to January 1, 2013, when determining the appropriate penalty.
WSIB may make adjustments and charge interest for non-compliance of an employer’s obligations under the WSIA commencing January 1, 2013.
Independent operators, executive officers and partners in a partnership working in construction who have no workers should register prior to January 1, 2013 in order to avoid principles refusing them work without the appropriate clearance certificates.
Partnerships or corporations with workers or without workers but multiple executive officers that wish to exempt a partner or executive officer should prepare and submit the necessary documentation to the WSIB in order for the exemption to apply on January 1, 2013.
It is in the principle’s interest to obtain clearance certificates in compliance with the expanded compulsory coverage in order to limit its liability.
Clearance certificates should be obtained by the principle during the tendering/bidding process, prior to commencing construction and throughout the construction process. The clearance certificate will stipulate the date on which it expires.