A. INTRODUCTION
As of January 1, 2013, the Government of Ontario made
coverage under the Workplace Safety and Insurance Act, 1997 (“WSIA”) mandatory for most workers in the construction industry. These
important changes will affect all charities and not-for-profits which engage
contractors for construction work in Ontario. Although the new rules for
construction work were in place as of January 1, 2013, actual enforcement of
these rules only commenced as of January 1, 2014. This Bulletin reviews the
legislative requirements now in force, which are mandatory for any charity or
not-for-profit which hires contractors to carry out construction work.
B. WSIB CLEARANCE CERTIFICATES
Under the WSIA, covered workers who are injured in a work
related accident or develop a work related illness are entitled to statutory
benefits, including income replacement and coverage for health care costs. In
order to enhance coverage for workers in the construction industry, new rules
came into effect as of January 1, 2013, which expanded the participants in the
construction industry that are required to have WSIA coverage. These
participants now include not only the construction workers who were previously
covered, but also independent operators, soles proprietors, partners in
construction partnerships and executive officers in construction corporations,
which are all deemed “workers” under the legislation. Therefore, these new
rules affect both small and large construction businesses. The new rules,
though, do not apply to home renovation work, which is an exemption under the
legislation.
The Workplace Safety and Insurance Board (“WSIB”), which
is the administrative body that oversees the WSIA, interprets the term “construction
work” very broadly to include not only building construction and renovation,
but also electrical work, roofing, siding and inside and outside finishing,
office furniture installation, among other construction related activities.
The WSIB’s classification of construction services is set out in its employment
classification manual, which can be accessed at the WSIB website at http://www.wsib.on.ca/en/community/WSIB.
C. WSIB CLEARANCE CERTIFICATES
For charities and not-for-profits, the practical legal
implication arising from these changes is that these organizations must obtain
a WSIB clearance certificate from the contractor or the subcontractor before
any construction work begins. A clearance certificate is a document issued by
the WSIB confirming that the contractor/subcontractor is registered with the
WSIB and is in good standing with respect to payment of its WSIB premiums. The
legal obligation to obtain a clearance certificate is both on the hiring party
(i.e. the charity or not-for-profit) and the contractor. If there is no
clearance certificate, no construction work can be performed. Once a
certificate is obtained, the WSIB will waive its right to hold the hiring party
liable for the contractor’s unpaid WSIB premiums and any other amount owing to
the WSIB for the duration of the certificate. If the hiring party does not
obtain this certificate and the contractor owes payments to the WSIB, then the
hiring party may be held liable for the unpaid premiums and any other amounts.
The clearance certificate must also be valid for the
duration of the work. Since a clearance certificate is valid for ninety days
from the date of issuance, if any work extends beyond the ninety day period,
the certificate must be renewed.
If a hiring party or contractor/sub-contractor does not comply with the WSIA,
such as by failing to satisfy the requirements of a clearance certificate in
construction, it is an offence under the WSIA. The penalties for a
conviction under the WSIA are: $25,000, or imprisonment up to 6 months,
or both (for individuals), and a $100,000 fine (for corporations).
The WSIB has allowed the construction industry one year to adapt to these new
rules. However, as prosecutions may commence as of January 1, 2014, the
consequences for non-compliance will be serious. For charities and
not-for-profits, this means if a contractor is hired to do construction work
from January 1, 2014 on, a clearance certificate is required. Charities and
not-for-profits cannot rely on the contractor’s verbal assurances – the
certificate must be obtained.
D. CONCLUSION
The message for charities and not-for-profits hiring
contractors for construction work in Ontario is clear, insist on a valid WSIB
clearance certificate prior to any work being commenced on your premises. If the charity or not-for-profit directly hires any subcontractor to carry out a portion of the work, insist on a clearance certificate from the sub-contractor as well. If the contractor/subcontractor does not comply, or takes
the position that WSIB coverage is not necessary, do not hire the contractor,
as doing so will expose the charity or not-for-profit to potential significant
statutory penalties.