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Full coverage, full independence

In late January, the Ontario Workplace Safety and Insurance Board (formerly the Workers' Compensation Board or WCB) issued a consultation paper entitled "Coverage Under the WSIA."The paper is short an...

In late January, the Ontario Workplace Safety and Insurance Board (formerly the Workers’ Compensation Board or WCB) issued a consultation paper entitled “Coverage Under the WSIA.”

The paper is short and to the point. One of the key issues identified in the paper is the status of independent contractors with regard to coverage.

It is reasonable to presume that misgivings over a lack of workplace safety and insurance coverage for independent operators is the main concern. As such, it should be understood the present policy is in jeopardy and will likely not survive.

The elimination of independent operator status through a sweeping policy declaration is a plausible result. Remember, the majority of independent operators in trucking fall within the definition of “worker.”

That is, unless a definitive legal solution governing the treatment of independent operators in the Ontario trucking industry with reference to workplace safety and insurance coverage is found.

In my view, such a solution must respect the mutual interests of the OTA board, the province’s carriers and independent operators to ensure that several conditions are met.

First, all workers in the Ontario trucking industry are covered under the workplace safety and insurance scheme.

Second, premiums are paid to avoid the emergence of an uninsured liability.

And third, the business independence of O/Os is preserved.

This is not a new issue. It has received senior policy attention on numerous occasions over the last 25 years, and yet, a definitive solution that respects both the independence of O/Os and the policy preference of full coverage for independent operators has never been achieved.

The first Board policy expression of the employment status of owner/operators in the Ontario trucking industry occurred in 1976. Before then, carriers were not reporting O/O wages and truckers were not routinely reporting to the WCB.

At time of accident or audit, WCB would hold the owner/operator was actually a worker in terms of the Act. A large uninsured liability was therefore present and individual carriers were always at risk of being assessed back WCB premiums.

In the labor intensive trucking industry, carriers using uninsured O/Os had a competitive advantage.

In 1976, WCB and OTA struck a generally satisfactory agreement allowing carriers to pay for O/O coverage through the carrier’s account and charge back the costs to the trucker.

This approach served the mutual interests of the parties, ensuring coverage and premium payment while preserving the business independence of the O/O. Board policy insisted on O/O coverage satisfying the objective of full coverage.

This arrangement began to erode by the late-1980s when the newly established Workers’ Compensation Appeals Tribunal questioned its legality.

It held O/Os in the truck transportation business usually fit the statutory definition of “worker” under the Act, and employers were prohibited from charging back workers’ compensation premiums.

Unlawful coverage

In addition, if O/Os were truly independent then it would be unlawful for the WCB to force coverage through the 1976 arrangement. In 1991, the Board responded through a global policy overhaul and the introduction of what was referred to as the “organizational test.”

Carrier and O/O groups were vocal in opposition to the organizational test as it essentially eliminated the category of “independent operator” in the truck transportation business.

Almost every O/O was considered a “worker.” Carriers were directly accountable for these costs. O/Os were concerned the determination they were employees would threaten their status as independent small businesses before Labour Canada, Revenue Canada and other offices. This threw the industry into chaos. Many of the problems of the pre-1976 arrangement returned.

In 1993 the policy was re-visited and re-worked. For trucking, unlike the other industries, the presumption changed for O/Os from one of worker to one of independent status. This solution was superior to the universal application of the organizational test.

However, while carriers had contractual control over whether or not an O/O secured coverage, WCB still retained no legal ability to compel coverage. Each individual O/O retained the discretion to secure coverage. The objective of full coverage conflicted with the over-arching policy objective of freedom of contract.

OTA said at the time: “A fundamental underpinning of the agreement is a commitment to strongly encourage WCB coverage for O/Os If the industry does not deliver on this voluntarily, then the WCB could decide to review the agreement or examine other alternatives.”

Alas, this is where we are today.

As workers’ compensation falls within provincial jurisdiction, each province and territory has individual jurisdiction over these matters.

Not surprisingly, an examination of Canadian workers’ compensation legislation reveals a complex labyrinth of differing statutory and policy approaches. No single approach to the determination of the employment status of O/Os exists.

Most workers’ compensation schemes fall short of providing a comprehensive solution that satisfies the workers’ compensation policy objective of coverage and allows for the preservation of the business independence of O/Os.

Saskatchewan stands apart

Saskatchewan, where a legislative solution is very reminiscent of the 1976 Agreement between the WSIB and OTA may be the exception. It’s deemed that independent operators are workers for purposes of the Act and allows the carrier to charge back the coverage.

While the proper status designation remains important, (workers still are distinct from independent operators), in Saskatchewan both classes of individuals are subject to mandatory coverage. The question is simply, “Who pays?”

For workers, the employer remains responsible for the insurance coverage, whereas for independent operators, the principal is the first payer, who is then enabled to secure reimbursement from the independent operator.

The policy objectives – full coverage and full independence – are attained.Of course there are a host of important issues that arise.

How and at what level will an O/Os earnings be determined for establishing minimum coverage and premiums?

The issue of compensated work will need to be clarified – Does WSIB insurance provide 24/7 coverage?

How should O/Os be incorporated from a near perspective?

How will the WSIB improve its service?

Moreover, this arrangement will not eliminate the need for extended private coverage. As to whether mandatory coverage is, can or should be a matter of choice as between WSIB coverage versus private coverage, I believe one day that issue will be heard, but not as part of the current process.

David Bradley is president of the Ontario Trucking Association and chief executive officer of the Canadian Trucking Alliance.

Truck News

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Truck News is Canada's leading trucking newspaper - news and information for trucking companies, owner/operators, truck drivers and logistics professionals working in the Canadian trucking industry.
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