For most employers in Ontario, paying insurance premiums to the Workplace Safety and Insurance Board (“WSIB”) is part of the cost of doing business. To a large extent, the premiums owing the WSIB are determined based on the employer’s insurable earnings, which, in turn, are commonly and understandably believed to be the pay by hourly rates or salary received by its employees. That said, and what come as a surprise to many employers, is just how broad of an approach the WSIB takes in regards to what constitutes “insurable earnings” for purposes of calculating premiums.
In a document titled, Determining Insurable Earnings, dated February 2, 2008, the WSIB took to setting out what it considers is included as an insurable earnings. Stating its position, the WSIB noted that an employer’s insurable earnings can be determined by looking to the amounts reported on employees’ earnings statements and any income reported in box 14 of their T4 slips as gross earnings. This includes, among other things, income derived from:
- Health Care
- Dental Plan
- Union Dues
- Honorarium (greater than $500)
- Room and Board
- Stand-by Pay
Employers that have not been properly calculating their insurable earnings for purposes of calculating the WSIB premiums could find themselves owing the WSIB significant amounts of money in unpaid premiums. Pursuant to the legislation, not only does the WSIB have the power to require employers pay “additional premiums in an amount sufficient to rectify any previous error” dating back two years, the WSIB may also direct the employer to pay to the WSIB itself an amount equal to those same “additional premiums”.
For example, the WSIB sends a Notice of Audit Visit to Acme Inc stating that a WSIB auditor will visit the employer on October 4, 2010. Acme requests a postponement of the visit until January 4, 2011 and the WSIB auditor agrees. The WSIB auditor visits Acme on January 4 and discovers that Acme has underreported its insurable earnings back to January 1, 2005 because Acme failed to include room and board in calculating its employees’ earnings. Acme is liable to the WSIB for unpaid premium amounts. The audit being concerned, initially, with the 2010 reporting, Acme’s exposure extends back to 2008. This means that as part of the Acme audit review, the WSIB auditor will advise Acme to adjust its 2010 insurable earnings’ reporting accordingly, and require a debit adjustment for the unpaid premiums for the two prior years.
While the legislation does provide the WSIB with discretion to adjust the amounts of monies owing where it is satisfied that any incorrect calculations were not intentional and there was an honest desire to pay the correct amount, there is no requirement on the part of the WSIB to do so. Given that changes in the WSIB’s position respecting premium calculations can have significant consequences to employers, employers are well-advised to remain current on such affairs. Despite the legislation requiring the WSIB notify employers of these types of changes, the legislation also states that the failure on the part of an employer to receive any such notice does not excuse them from payments being made in accordance with the current manner of calculation required by the WSIB. To this end, there is a significant onus placed on employers to ensure they are operating in accordance with the current WSIB policies.
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