Canadian Workers Compensation

March 27, 2017

Summary: With companies moving across the border to Canada, some complicated workers compensation issues arise. There are several differences between the Canadian and American workers compensation systems. Those differences are outlined in the following article.

Topics Covered:
Similarities and Differences
Convention
Funding
Cost Drivers
WSIB
Employer Schedules
Roles and Responsibilities
Employers Beware
Department Contacts

Similarities and Differences between the United States and Canadian Workers' Compensation Systems

Similarly to the way that workers compensation claims are handled in the United States, on a state-wide basis, Canada has several worker compensation boards (WCB) that are responsible for workers compensation in federal, provincial, and territorial jurisdictions throughout the country. The WCBs provide insurance for workplace injuries and illnesses. The driving difference between the Canadian system and the U.S. system is the stark contrast between the dominance of the competitive market in the U.S., and the public administration model that has held fast and kept costs down in our neighboring country. The Canadian system is remote from the government and is sheltered from political influence, allowing even the Minister responsible only minimal powers. Unlike the U.S. system, the Canadian system does not allow for self-insurance.

Convention

In the U.S., workers compensation coverage is mandatory for most employers in almost every state, with a few exceptions. Most states allow mutual and stock insurance companies to compete to write workers compensation coverage, ending up with a largely competitive private insurance market. In Canada, industries that require workers compensation coverage can only receive that coverage through a WCB. A few U.S. states are called monopolistic states and employ a similar method for workers compensation claims. Ohio, North Dakota, and Washington are all three monopolistic states with similar composition to the Canadian system.

Funding

The Canadian insurance programs are funded by the employers that require the coverage and not the provincial governments with which they are associated, while the U.S. monopolistic systems may fall back on federal funds and taxpayer money if funds run low. Each employer pays into the system at a rate based upon payroll, industry sector, and history of injuries in the workplace.

The first responsibility of the WCB after receiving a claim is to review the incident and determine benefits entitlement. This process is analogous to the compensability decision in U.S. workers compensation decisions.

Cost Drivers

Unlike the U.S., where cost is driven mainly by medical benefits, in Canada the loss of earnings benefits and wage loss benefits are the primary cost drivers. This is likely because of the publically funded nature of the Canadian healthcare system. Features of the Canadian system are that it has fewer administrative costs and minimal over-utilization of the system, two things that the U.S. system is lacking.

WSIB

The Canadian Workplace Safety and Insurance Board (WSIB) is an independent trust agency that handles compensation and no-fault insurance. The WSIB takes care of claims and ensures a swift claim process for the employee. It also helps and supports employees returning to work after an injury or illness. The WSIB is entirely funded by employers. Although the WSIB is based out of Ontario, all of the WCB's mentioned in the Departments Contacts section are partners in the Association of Workers' Compensation Boards of America.

Employer Schedules

Canadian employers fit into two schedules, which are governed by the Workplace Safety and Insurance Board.

Schedule 1 employers are not individually liable to pay benefits directly to workers or their survivors under the insurance plan. (Workplace Safety and Insurance Act s.88(2)) Employers included in Schedule 1 must contribute to the insurance fund. The insurance fund is comprised of annual premiums paid by the Schedule 1 employers. The amount each Schedule 1 employer is asked to contribute is determined based on business activity and total payroll.

Schedule 2 employers are compulsorily covered through a system of individual liability. If a workplace injury or illness occurs, Schedule 2 employers must individually pay the total costs of benefits for their injured employees. (Workplace Safety and Insurance Act s.90(1)) In order to cover costs incurred by a Schedule 2 employer, the WSIB may ask for a deposit from the employer.

Specifics for employer schedule designation can be found on the WSIB website.

Second Injury Fund

The WSIB employs a Second Injury and Enhancement Fund that is paid for by Schedule 1 employers. Schedule 1 employers comprise most private sector employers and some public sector employers. Schedule 1 employers pay into the SIEF because it generally will help to reduce claims costs that qualify by about 50 percent.

Experience Rating

The purpose of an experience rating in workers compensation is to ensure that employers are being charged a premium that accurately reflects the risks they represent. Industry groups are compared within themselves, and each individual employer's loss experience is compared as well. In Canada, employer's experience ratings are taken very seriously in an effort to keep healthcare costs down and to equitably distribute the cost of work-related injury and illness across employers.

Maximum Assessable/Insurable Earnings for 2015

Maximum assessable/insurable earnings refer to the maximum annual earnings on which a premium is calculated for each worker of a covered employer. Benefits for a person who was injured at work are calculated based on the maximum assessable earnings of the province where the claim is brought.

Province	Maximum Assessable/Insurable Earnings
Manitoba	$121,000
Alberta	$95,300
Northwest Territories and Nunavut	$86,000
Yukon	$84,837
British Columbia	$78,600
Saskatchewan	$65,130
Newfoundland and Labrador	$61,615
New Brunswick	$60,900
Prince Edward Island	$52,100
Ontario	$85,200
Quebec	$70,000
Nova Scotia	$56,800

Assessments and Premiums

Since the WCBs are funded by employers and not the government, in order to maintain sufficient funding the employers are charged a certain amount per $100 of their payroll. The amount paid is called the “assessment rate.” Not all employers pay into workers compensation. For information regarding this please refer to individual province's worker compensation legislation.

The money collected from employers for workers compensation goes into a fund known as the accident fund. The money in the accident fund generally goes toward providing wage loss benefits to the injured employee, providing medical aid and rehabilitation to the injured employee, and the administration of the WCB.

Generally each employer is asked to pay an average assessment rate, but not all employers pay that average rate. Sometimes, individual employers have different rates that are based on differences in industry or class or the experience (or lack thereof) that an employer has dealing with workers compensation cases.

Roles and Responsibilities

The workers compensation legislation (generally known as the Workers' Compensation Act) outlines the roles and responsibilities of the worker, employer, and WCB when an injury or illness occurs in the workplace. Federal government employees are governed under the Federal Government Employees Compensation Act (GECA). Although they may change from province to province, and between the two acts, the general responsibilities are as such:

The worker must

·report the illness or injury to the employer.

·diminish further loss.

·cooperate with the employer if modified duties are offered, so long as they are suitable alternatives.

The employers must

·immediately provide first aid and arrange (and pay for) transport for medical treatment if necessary.

·pay full wages and benefits for the shift on which the injury or illness occurred.

·investigate the incident and document the steps taken to correct any issues discovered through the process of investigation.

·report the injury or illness to the WCB.*

·provide accurate information.

·provide an offer of suitable, modified work to allow for early and safe return to work.

The WCB must

·review all reported incidents and determine benefit entitlements.

·issue medical benefits and loss earnings/wages benefits wherever applicable.

·arrange specialist appointments and independent medical examinations.

·interpret and enforce workers compensation legislation.

·review evidence and make decisions on any appeals that are initiated by an appropriate party.

Employers are generally required to report a work-related accident or illness within seventy-two hours of learning that the worker requires professional medical treatment, learning that the worker is absent from the next shift of regular work, the worker earns less than regular pay for regular work (has hours reduced), or requires modified work at less than regular pay.

Employers Beware

Cost Drivers

Employer working under the WCB system should make sure to offer modified duties to a worker at the onset of a workers compensation claim. It is important to have a regular and proactive program in place to help employees return to work immediately. Such programs, immediately offering modified duties to recovering employees, will help immensely in cost-control efforts by employers.

Workers Compensation Fraud

Despite the employee friendly, helpful nature of Canadian workers compensation there are still employees that attempt to defraud the insurance system. Numbers for the amount of workers compensation fraud that occurs in Canada are scarce, but experts estimate that the statistics track with those projected in the U.S. costing employers millions of dollars each year.

Department Contacts

Federal Workers' Compensation Service (FWCS)

Employment and Social Development Canada (ESDC) [previously HRDCC]

Ottowa, ON, K1A 0J2

Alberta

Workers' Compensation Board of Alberta

9912 – 107 Street

PO Box 2415

Edmonton AB T5J 2S5

British Columbia

WorkSafeBC (Workers' Compensation Board of British Columbia)

6951 Westminster Highway