Everyone in construction has heard of the changes that the Workplace Safety & Insurance Board (WSIB) has proposed to make to their rate framework. Although we did see decreases in some construction WSIB rate groups during 2017, there is still much confusion and uncertainty over what the future holds for WSIB premiums.
The consultation period for input into the new rate framework closed in January 2018 with the new rate framework set to roll out in January 2020.
Main Issues to Date
There are two main issues related to the new rate framework that have arisen to date:
- Changes to the historical multi-rate group;
- Removal of rate group 755 for non-exempt partners and executive officers.
Multiple Premium Rates
In the past, your company may have paid premiums under multiple WSIB rate groups for different work being performed by staff. The benefit to that was being able to access a lower rate group for at least some insurable earnings reducing your company’s overall WSIB burden. Under the new rate framework, the ability to qualify for more than one rate group is severely restricted.
In order to access multiple rate groups under the new rate framework:
- The business activity under the separate rate group must be significant (25% or more of the total insurable earnings and generate annual insurable earnings of at least five times the maximum insurable earnings);
- The business with wages under the separate rate group must not be integrated with the company’s other business activities (product or service must be primarily offered to external customers and is not part of the development of another product or service of the company);
If either of these conditions is not met, the company will be subject to the rate group of its predominant activity and not be eligible for multiple rates.
Removal of Rate Group 755
Rate group 755 was the class for individuals who were partners or executive officers of a construction company who did not perform any construction work and have elected to be exempt. For companies with high salary executives that never went to construction sites, this group greatly reduced WSIB premiums. If your company used this rate group, you likely have received a letter from WSIB stating that the rate group no longer exists with the implementation of the new framework. This means those salaries will fall under your predominant rate group starting in 2020.
WSIB has not yet come up with a solution for this problem. The letter companies are receiving states the executives may qualify for a separate rate group, however for that to be the case the conditions discussed previously must be met.
Together, these two changes can have a significant impact on the WSIB burden faced by a construction company. When added with other increasing business costs, such as the increase in minimum wage, the results could be devastating for small businesses. Of course there is a chance the changes will reduce your company’s WSIB burden, for example should your predominant rate group be lower than using multiple rates. In order to assess the impact of the WSIB changes, it is important for companies to plan ahead and consider what their predominant rate group will be.
Written by Kimberly Aitken, CPA, CA, Co-Leader of RLB LLP’s Construction Team. Contact her at 519-822-9933.