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Untangling Workers' Compensation Insurance Misunderstandings

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Worker's Compensation Insurance (WCI/WCC) can get complicated. You may not be aware of your WCI responsibilities as a homeowner. You may have been told by your contractor that they don't need WCI coverage, which is true at times, and false at others. Most of the time, the rules differ between contractors you hire. Whatever the case, it's time that we clear the air regarding WCI. It's important that homeowners know their rights and responsibilities.

Since March is fraud prevention month, it's especially important that homeowners familiarize themselves with provincial rules. Unregistered businesses are participating in fraudulent activity by failing to pay legally obligatory premiums to the government; failing to declare their payroll; hiring workers under the table; and failing to keep their workers safe with adequate insurance. By understanding provincial rules, you can help the government keep workers safe, and legitimate. Hiring a business that has defaulted on its WCI premiums may mean that you have to make up for their unpaid premiums.

WCI regulations differ provincially; these differences can make matters exceedingly confusing and complicated if you've lived in various places, or have hired a contractor who has. Since WCI coverage depends on a combination of factors, it is difficult for homeowners to pre-emptively know conventions unless they're well-versed in policy.

It's important that you know if your worker requires mandatory coverage or not, and if they are covered by their employer.

Get the facts straight

  • If a company has employees, it will most likely have to have them covered with WCI, depending on the province, and the number of employees in the company.
  • Businesses must register with the government. Registering with the government means that companies pay their mandatory employee pension plans, mandatory WCI premiums, HST/GST/PST, and declare payroll. Withholding these payments from the government is fraud. Unregistered companies can face serious penalties, fines, and medical bill costs if an employee is injured on a worksite.
  • If the company employs workers of any kind (part-time, full-time, contract), most typically, they must have mandatory WCI coverage for them. Make sure to check the provincial guidelines below, as rules differ. Employing an uninsured worker on your property may entail legal action in the event of a workplace injury.
  • WCI is not necessarily determined based on the type of contract' that a company is hired to complete. Residential or commercial contract, working employees must be registered and insured with their provincial WCB. WCI is determined by provincial WCBs, the type of corporation the company is, and if it has any employees.
  • In most provinces, a sole proprietor, partner, and executive of a business is the exception to mandatory WCI coverage. They have the option to get personal (voluntary) WCI.
  • We recommend you contact your provincial WCB before you hire any contractors to work on your home. Ask your provincial WCB to provide a Clearance Letter or Letter of Good Standing (or both) for the company under consideration. These letters will notify the WCB if a company is working. They will notify you if the company is registered, and if they have fully paid their mandatory premiums to the WCB.

These rules vary between provinces and territories, please read on in your provincial section.

It is highly recommended that you contact your provincial/territorial WCB to be sure of the unique regulations that may apply to you. This article is a general summary of broad information. Highly specific information has been omitted.

What is Workers' Compensation Insurance?

Workers' Compensation Insurance protects workers in case they get injured on the job. Roughly one hundred years ago, the only salary and medical compensation a worker could receive in case of injury was through legal action against their employers. Today, WCI compensates a worker's salary if they cannot work due to injury. It helps employers cover medical and therapy bills for their injured employees. Employers pay industry and revenue-dependent premiums to their provincial WCB collectively. This helps protect employees, and keep businesses financially stable. Without WCI coverage, employers face serious fines, retroactive premiums, and compensation fees to cover for their employee's injuries.

mind map

Alberta

A company who employs contract workers, subcontractors, and any other type of worker is required by law to have WCI for its employees, unless these employees have WCI covered by another company. Sole proprietors without employees are not obligated to have WCI. They can opt for personal coverage options instead.

If a workplace injury occurs on the homeowner's property, the homeowner must check their home insurance coverage to see if they are considered liable. WCI only covers employee injury costs for their employers.

It is very important that Alberta homeowners check the proprietor's and company's standing with WCB-Alberta. Any proprietor who does not maintain their own WCB-Alberta account is considered the homeowner's worker, and the homeowner must register their WCI for them. The homeowner will have to pay their premiums for them.

Contact WCB-Alberta Toll-Free: 1-866-922-9221

British Colombia

Any employer hiring at least one worker on a full-time, part-time, or contract basis is required to register for WCI with WorksafeBC. General contractors hiring workers or labor contractors are also required to register their employees if they don't carry their own WCI. General contractors hiring subcontractors belonging to other firms may still need to register these subcontractors under their own business. Any contractor who does not carry their own insurance must be covered by their employer for the project. It's important that contractors verify that their subcontractors are covered by WCI in BC. If the subcontractor is not covered, the contractor may be liable for unpaid premiums.

In BC, principals are considered workers in their company. The principals of incorporated companies with employees are entitled to the WCI they provide for their workers.

Any homeowner who plans to build their own home may be required to register with the WCB. Homeowners should make sure that any subcontractors they hire are in good standing with WorkSafeBC. Subcontractors must carry their own registration. It's best for homeowners as general contractors to contact WorkSafeBC regarding their project, and who they plan on hiring. WorkSafeBC recommends you obtain this clearance letter if you take on the role as a general contractor in building your own home.

WorkSafeBC does not require homeowners to register the independent businesses they hire. Independent businesses are limited or incorporated companies; companies who have various clients; and/or companies who provide services with fixed contractors and included materials in the total project cost.

It's helpful to check if the contractor you hire is registered with WorkSafeBC, and has sufficiently paid their premiums. If they have not, you may be required to compensate for their unpaid premiums. You can check this information with WorkSafeBC by obtaining a clearance letter to assure that they are in good standing with the WCB.

Contact WorkSafeBC Toll-Free: 1-888-967-5377

Manitoba

WCI coverage is mandatory for most business who have their own employees. In general, contract workers in mandatory industries are required to have their own coverage. If the contractor works for an incorporated company, their employer must have coverage for them. Sole proprietors are not required to have their own WCI, but personal coverage is an option.

Homeowners don't have to have WCI coverage for contractors or subcontractors they personally hire. However, if the worker you do hire is uninsured because they do not qualify or apply to Manitoba WCB, the WCB may consider them to be your worker. If they get injured on your property, this could mean you need to cover their medical expenses.

In cases of injury on your property during a job, the extent of homeowner responsibility is dependent on home insurance policies. Like other provinces, workers covered by WCI cannot sue the homeowner if there is a workplace injury; uninsured workers can. Knowing whether or not your contract worker has WCI coverage can help you down the road in case of an accident. It's best to contact the Manitoba WCB and check if the workers you hire have WCI coverage or not. This will help you gauge your own liabilities.

Contact WCB Manitoba Toll-Free: 1-800-362-3340

New Brunswick

Any employer who hires three or more workers at any time in one year must register with WorkSafe NB for WCI coverage, no matter if they are full-time, part-time, or casual employees. This is considered mandatory coverage. Voluntary coverage may be requested by an employer who has fewer than three employees hired in a year. However, this coverage may not be granted.

Some contractors are not required to register with WorkSafe NB:

  • If you hire a non-required, unregistered contractor, you will be assessed by WorkSafe NB for their coverage.
  • If you hire a contractor who is required to be registered with WorkSafe NB, you may not be assessed for their coverage. As the principal, you may be considered liable for any unpaid premiums that a registered contractor may have. However, you may be able to deduct the cost of the assessment from the contractor.

It's best to contact WorkSafeNB for a Clearance Certificate before starting the contract. A homeowner could be liable for a business' unpaid premiums or assessments if the contractor does not carry their own Clearance Certificate. The Clearance Certificate will let you know if the contractor is in good standing with WorkSafeNB. Doing so will also help you know if they have any outstanding premiums due.

Contact WorkSafeNB Toll-Free: 1-800-222-9775

Newfoundland and Labrador

The Workplace Health, Safety & Compensation Commission of Newfoundland and Labrador (WHSCC) is under jurisdiction to determine who qualifies as a worker or an independent operator. If individuals you hire are considered your workers, you are required to pay for any necessary assessments, and report contract labour assessments for your project. All businesses must be registered with WHSCC

If the WHSCC determines an individual to be an independent operator, assessment charges will not apply to you. Independent operators will not be covered by mandatory WCI, but they can apply for personal coverage options. Without any WCI coverage, a worker is able to take legal action against you if there is a workplace injury. It's best to contact the WHSCC to understand your contractor's WCI coverage before moving forward with them.

Homeowners are considered the principal (employer) of contract workers, and may be held liable for the contractor's WHSCC assessments. Homeowners are held liable for insuring workers who are not registered with WHCSS. The principal may be liable to cover unpaid premiums if their worker is not in good standing with the WHSCC.

Any uninsured worker is able to sue a homeowner if they get into a workplace injury. Making sure that you've hired an insured worker can save you from a potential legal headache. For this reason, it's always recommended that you check with WHSCC if your contractor is in good standing with the WCHSS. If the company or contractor is neither in good standing, nor registered with WHCSS, the principal is able to withhold payment for the assessment amount for the labour of the contract due to WHCSS.

Contact the WHSCC Toll-Free: 1-800-563-9000

NWT / Nunavut

All businesses and employers must register with Workers' Safety and Compensation Commission (WSCC). It is very important that you ask any contractor for proof of their registration with the WSCC before you hire them. Both homeowners and contractors are held jointly liable for unpaid assessments to the WSCC. WIC coverage is mandatory for workers in the Northwest Territories and Nunavut.

Before you begin any project, contact the WSCC and request a Letter of Good Standing. This letter will ensure that the contractor or subcontractor is registered and in good standing with the WSCC. Additionally, homeowners must request a Final Clearance Letter from the WSCC once the contract is complete, and before the final payment is made out to the contractor. The Final Clearance Letter releases your liability with the contractor. This letter also helps homeowners withhold final payments if the contractor is not in good standing with the WSCC when the project is over. It protects homeowners from paying their contractor's unpaid premiums to the WSCC. Homeowners do not need to pay contractors until they have received the Final Clearance Letter.

Before you begin any home renovations, make sure to contact the WSCC to see if you are classified as an employer. In the NWT and Nunavut, you may be considered an employer if you supervise family or friends performing work on your property. If the WSCC considers you an employer, you must register with the WSCC, otherwise you may face penalties and legal charges.

Contact the WSCC Toll-Free: 1-800-661-0792

Nova Scotia

Employers in the construction industry must provide their workers with mandatory WCI. However, this mandatory coverage applies to companies with three or more workers. Employers who have less than three people involved in their business are not subject to this rule. These workers include permanent, full-time, part-time, casual, contractors, and subcontractors. For example, a business that includes the employer and one other employee is exempt from mandatory WCI coverage. Proprietors, officers, and partners are not covered under mandatory WCI. There are optional coverage plans available for those who do not fall under mandatory WCI.

It's best to contact the WCB NS to receive a Letter of Good Standing and a Clearance Letter for the contractor you consider hiring, in case they've defaulted on their premiums. The homeowner may be subject to compensate for any unpaid premiums.

Contact WCB NS Toll-Free: 1-800-870-3331 (Mainland), 1-800-880-0003 (Sydney)

Ontario

All businesses must register with The Workplace Safety and Insurance Board Ontario (WSIB). WSIB changed some regulations in 2013. Currently, WCI is mandatory for workers in the construction business, including partners, independent operators, sole proprietors, or executive officers in corporations who are working labourers as well. The moment a business hires an employee, they must cover the employee's WCI. WCI coverage for employees is not based on the type of contract (commercial or residential) that a business is hired to complete.

Business owners are not included in the mandatory WCI coverage WSIB demands for employees. If you hire the owner of the company without any of their employees, the owner is exempt from having personal WCI.

Homeowners are not obligated to provide WCI coverage for anyone they hire. However, receiving a Clearance Certificate from WSIB notifies homeowners about any unpaid premiums that their contractors may not have paid to the WSIB.

Contact the WSIB Toll-Free: 1-800-387-5540

PEI

Every business must register with the Prince Edward Island WCB. Most businesses in PEI are required to have WCI coverage for one or more employees. WCI covers full-time, part-time, contract, or family members on payroll. The Worker's Compensation Act does not automatically cover employers of businesses, individual operators, business directors, or executive officers of corporations. Optional insurance can be purchased by these individuals.

You must notify the WCB within seven days of hiring any contractor in PEI.

As a homeowner, you should ask the PEI WCB for a Letter of Clearance before you hire any contractors. This letter will confirm that the contractor is in good standing with the PEI WCB. If they are not, you may be liable for any premiums the contractor owes to the PEI WCB.

An uninsured proprietor can take legal action against a homeowner in the case of a workplace injury.

Contact the WSB PEI Toll-Free: 1-800-237-5049

Quebec

All employers with at least one employee must register with the Quebec WCB. The Act Respecting Industrial Accidents and Occupational Diseases (AIAOD) demands that all workers are covered by their employers under WIC in the event of a workplace injury. Workers that are automatically protected include apprentices, full and part-time workers, and contract workers. Personal coverage may be purchased for proprietors, executive officers, sole owners (unless they have at least one worker).

It is recommended that homeowners contact the Standards Commission, Equity, Health and Safety (CNESST) regarding the contractors they hire. Depending on the circumstance, homeowners may have to provide WCI for the contractor they plan on hiring. CNESST also recommends that homeowners obtain a Letter of Good Standing to ensure that the contractor hired has fully paid their premiums to CNESST.

Contact CNESST: 1-844-838-0808

Saskatchewan

Employers who hire employees in Saskatchewan are obligated to register with the Saskatchewan WCB. It is also mandatory that their workers are covered under WCI. So long as employers collect employee wages, they must obtain coverage for those employees. Employees cannot get personal coverage in Saskatchewan, as employers register with the WCB.

It is recommended that homeowners check with the WCB to make sure that any sub-contractor or contractor hired has paid their premiums before they are paid for their work. You may request a Letter of Good Standing, and a Letter of Clearance before a contractor begins their work. Homeowners may be liable for any unpaid premiums their contractor owes to the WCB.

Contact Saskatchewan WCB Toll-Free: 1-800-667-7590

Yukon

It is mandatory that employers register with the Yukon Workers' Compensation Health & Safety Board (YWCHSB) and pay their assessments. The YWCHSB determines if a person is a worker for an employer or a sole proprietor. WCI is mandatory for workers, and workers will be covered once they start working for their employer. Employers must register with YWCHB within 10 days of hiring their first employee. Directors of incorporated companies are considered workers under YWCHSB, however, they can apply for WCI exemption if they meet the criteria of a Non-Working Director . Coverage is optional for sole proprietors in contract services.

It is advised that any principal requests a Letter of Good Standing from the YWCHSB to help them gauge if their contractor has paid their premiums fully, or is properly registered under YWCHSB. If a contractor has defaulted on their premiums or is not registered, the principal may be liable for their outstanding premiums. Making sure that a contractor is in good standing with YWCHSB protects homeowners from law suits in case of workplace injury.

Contact YWCHSB Toll-free: 1-800-661-0443

All information published in this article was collected from each provincial Workers' Compensation Board (WCB) resource website, and from provincial WCB representatives through direct communication. The information provided in this publication represents the facts as TrustedPros has understood them, according to the information provided to us during the research period. Rules and regulations may change after the date of this publication. We encourage all businesses and consumers to contact their local WCBs to confirm the latest rules and regulations, and to confirm additional requirements subject to particulars that apply to their specific situation.

Posted by: Nicole Silver
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