Safety, insurance, and the law: part Two in our insurance series seeks toclarify the grey areas around independent operators and WCB liability

Canadian Forest Industries, Mar 2003 by Belanger, Charles, Janveaux, Luc

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The WSIB board puts great emphasis on one aspect of the organizational test, that is, whether the individual or the principal holds the forestry license. In general, if the principal is in possession of a forestry license and hires subcontractors without employees, they will automatically be considered as workers. However, when a ruling for an independent trucker as opposed to other categories of forestry workers is requested, the WSIB probably will rule that the individual is an independent operator. Most trucker rulings requested result in a decision by the WSIB board in favour of independent operator status. In addition, the WSIB has indicated that conventional and mechanical forestry operators who are not considered employers probably will be ruled as workers.

If the test determines that an individual is an independent operator as ruled by the Board, he or she is not automatically covered for WSIB purposes and has the option of opening an account with WSIB for voluntary coverage. If the test determines that an individual is a worker, the employer or principal is legally responsible for the person's WSIB coverage. Ignorance or busy schedules are no excuses here either, since the WSIB states that until a decision is reached, "the company hiring is required to pay premiums to the WSIB based on the individual's earnings." The flowchart above was developed to clarify the hiring process as it relates to WSIB.

By hiring subcontractors without obtaining a WSIB ruling immediately, a company leaves itself exposed to risk if an accident should occur within that time frame. Every subcontractor is regarded differently and assumptions should not be made as to their status. For example, if an employer hires independent truckers for their operation, all must get a ruling from the Board. If one trucker did not fill a questionnaire to determine his status and were to incur an injury, whether the accident happened on the job site or en route, the employer would be responsible. The fact that other truckers filled out the questionnaire and were ruled to be independent operators does not automatically apply to future operators.

Snowball Effect

If an independent operator or subcontractor hires his own workers/helpers, they are considered employers and must be registered with WSIB. If a subcontractor hires workers and is not registered with the WSIB, "the principal may be held responsible for the operator's premiums and the cost of any injury" (WSIB). Also, if the subcontractor is registered and does not pay his premiums, the principal probably will be held responsible for these premiums as well. In short, it is the responsibility of the principal to ensure that all subcontractors working for the company are registered and in good standing with the WSIB. To do so, the principal must request a WSIB clearance certificate confirming that an employer is registered and has met his/her reporting and payment obligations.

The penalties for not knowing the process and requirements set by WSIB can be significant. According to one Ontario WSIB forestry account manager, if an individual is ruled to be a worker and earnings are not reported, the auditor would charge the principal retroactive for two years plus the current portion of premiums. If the auditor found that there was evasion, he/she could charge the company for the previous five years plus the current portion of premiums.