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FAQ - Mandatory Coverage in Construction

1. What is mandatory coverage in construction all about?
2. Who does the law affect?
3. Who is an independent operator?
4. What if I don’t meet the criteria of an independent operator?
5. I am a sole proprietor, or an executive officer in a corporation or a partner in a partnership in construction who has workers and I’ve already registered as an employer with the WSIB. How does the new law affect me?
6. Is there a separate rate for partners or executive officers?
7.What coverage will I get from WSIB that is different from private insurance?
8. Are there any exemptions?
9. If I have requested or qualify for the exemption from coverage or the separate rate, can i visit the construction site?
10. I typically only do home renovation work but occasionally I take on a commercial job. Do I still qualify for the home renovation exemption?
11. How much does coverage with the WSIB cost?
12. Is there a maximum to the amount of earnings that I have to report?
13. How often do I report and pay premiums?
14. What are insurable earnings and how do I calculate them?
15. Do I have to report the dividends I receive from my company?
16. Is there a tool that will help me calculate earnings?
17. What if my business has multiple rates/ business activities and at least one is a construction rate?
18. What if I operate a dump truck on a construction site?
19. What about home inspectors?
20. How do the new rules affect WSIB clearances?
21. What will happen if I do not register or get a clearance?

Q1. What is mandatory coverage in construction all about?

A. The Ontario government has changed the law to expand coverage in the construction sector.  The new rules began on January 1, 2013. WSIB coverage is mandatory for the following people who carry on a business in construction:

  • independent operators,
  • sole proprietors,
  • partners in partnerships and
  • executive officers in corporations.  

Q2. Who does the law affect?

A. The law made changes for nearly all independent operators, sole proprietors, executive officers in a corporation and partners in partnerships. Most of these people now have to have coverage and for some this means they have a requirement to register with the WSIB unless they are exempt.

The law does not change for people who work as employees of construction related firms.

Q3. Who is an independent operator?

A. The WSIB considers you an independent operator if you:

1.   are an individual who:

  • does not employ any workers, and
  • works as a contractor or subcontractor for more than one person during an eighteen (18) month period, and
  • reports as self-employed to a government agency (e.g. Canada Revenue Agency).

2.   are an executive officer of a corporation that:

  • does not employ any workers other than the individual, and
  • works as a contractor or subcontractor for more than one person during an eighteen (18) month period.

Independent operator status letters no longer apply in construction. See Policy 12-01-06 (16.8kb, PDF) Expanded Coverage in Construction

Q4. What if I don’t meet the criteria of an independent operator?

When an individual/contractor does not meet all the criteria of an independent operator (e.g. does not report to a government agency as self-employed and/or has not worked for more than one person during an eighteen (18) month period) and a principal hires that individual/contractor, it is the principal who is responsible for providing coverage and reporting their earnings under their account.

Q5. I am a sole proprietor, or an executive officer in a corporation or a partner in a partnership in construction who has workers and I’ve already registered as an employer with the WSIB. How does the new law affect me?

A. If you are one of the above and are already registered you must begin to include your own insurable earnings with your workers' earnings when you report premiums. Read details on insurable earnings in Policy 14-02-18 (18.8kb, PDF) and Administrative Practice Document – Insurable Earnings

Q6. Is there a separate rate for partners or executive officers?

Yes. Rate group 755-Non-Exempt Partner and Executive Officer in Construction was created to report earnings for individuals who are partners or executive officers and:

  • do not perform any construction work
  • are not the individual who has elected to be exempt

In order to get this separate rate, the partnership or corporation must request it by completing the Request for Rate Group 755, Non-Exempt Partner and Executive Officer in Construction form.

Sole proprietors and independent operators are not eligible for this rate.

Q7. What coverage will I get from WSIB that is different from private insurance?

A. We provide a no-fault insurance product that protects you from costly lawsuits and has predictable rates, tax-deductible premiums and reliable benefits. 

Benefits paid by the WSIB can be more comprehensive and cover a broader range of services than those included in most private insurance policies. 

Examples:

  • WSIB pays up to 85% net wage loss
  • Benefits include Loss of Retirement Income paid to injured workers from age 65
  • Special allowances paid to severely impaired workers including Independent Living Allowance 
  • Work reintegration and retraining services if needed
  • All necessary and appropriate health care costs are covered
  • Survivor benefits can include lump sum and monthly awards for spouses and dependent children, and all reasonable expenses paid for funeral and burial services

Q8. Are there any exemptions?

A. Yes. There are two exemptions. One exemption is for individuals, partnerships or corporations performing home renovation work exclusively and who:

  • work directly for the occupant or member of their family and
  • are paid directly by the occupant or member of their family

Home Renovators with workers must still cover their workers but are exempt from coverage for themselves when they meet the above criteria, however, they can still apply for Optional Insurance Coverage with WSIB.

The second exemption is for:

  • corporations and partnerships with workers
  • corporations without workers but with multiple executive officers
  • partnerships without workers

One executive officer or one partner may apply for an exemption; however, to qualify, the individual must not perform any construction work (periodic site visits are permitted). Only one person per company can be exempt.

If you are exempt from mandatory coverage, the WSIB does not consider you a worker. This means you are not entitled to any benefits under the WSIA in case of a work-related injury or occupational disease. Also, you do not pay premiums.  

For specific criteria for exemptions, see Policy 12-01-06 (16.8kb, PDF).

Q9. If I have requested or qualify for the exemption from coverage or the separate rate, can I visit the construction site?

Yes, however there are conditions related to the exemption and the separate 755 rate group concerning site visits.

If you are the one partner or executive officer exempt from coverage or reporting your earnings in rate group 755-Non-Exempt Partners and Executive Officers in Construction, you can visit the construction site so long as you do not perform any construction work when on site. Construction work refers to any manual work of a skilled or unskilled nature, the operation of equipment or machinery, or the direct on-site supervision of workers.

Q10. I typically only do home renovation work but occasionally I take on a commercial job. Do I still qualify for the home renovation exemption?

Not for the period (3-month minimum) in which you take on the non-exempt work.

If you only do home renovation work and are paid by the occupant or a member of their family you don't need coverage. 

However, when you take on even one non-home renovation contract, you no longer meet the criteria of exclusive home renovation work. 

This means you would need to register, report your earnings and pay premiums for coverage on both the home renovation and non-home renovation earnings for a minimum period of three months.

You may contact the WSIB to cancel coverage after the minimum period only if you stop doing any construction work other than exempt home renovation work.

Q11. How much does coverage with the WSIB cost?

A. The cost of coverage depends on earnings and your business activities. Visit our dedicated Bill 119 Mandatory Coverage website at needwsibcoverage.ca to find out more.

Q12. Is there a maximum to the amount of earnings that I have to report?

Yes: The WSIB sets an annual maximum amount that you have to report as insurable earnings each year. The annual maximum f or 2013 is $83,200. This means, for 2013, any earnings above $83,200 are not considered insurable and you do not have to report or pay premiums on this excess amount. 

Q13. How often do I report and pay premiums?

Your report and pay schedule may be monthly, quarterly, or annually, depending on your total insurable earnings. 

  • Annual insurable earnings lower than $300,000 - you may select your preferred frequency
  • Annual insurable earnings of $300,000 or more - you will report and pay monthly

WSIB Report & Pay Schedules

You can report and pay premiums online.

Annual

Reporting Period:

January 1 to December 31

Premium Remittance form sent:

March

Completed form & Payment are due by:

April 30

Each time your actual insurable earnings become higher than the estimated amount, you must contact the WSIB, within 10 calendar days, to update your estimate. Failure to do so can result in penalties and/or prosecution.

Quarterly

Reporting Period:

1st Quarter

Jan 1 to Mar 31

2nd Quarter

Apr 1 to Jun 30

3rd Quarter

Jul 1 to Sep 30

4th Quarter

Oct 1 to Dec 31

Premium Remittance form is sent:

March

June

September

December

Q14. What are insurable earnings and how do I calculate them?

Insurable earnings are the earnings used to calculate the premium you pay. For construction, how insurable earnings are calculated and reported depends on your business type.

Independent Operator (Sole proprietorships and single officer corporations without workers):

Your total “insurable earnings” is the sum of all of the actual earnings listed as “labour” on your invoices or contracts.

For more information on reporting frequency or what to base your estimate on,  read: Administrative Practice Document: Insurable Earnings in Construction (213.2kb, PDF)

Sole Proprietor with workers:

Sole proprietors must report their earnings throughout the year based on the reporting frequency of their WSIB account, as well as the earnings of their workers.

  • The sole proprietor can use the earnings amount reported as “Net Business Income” on Line 135 of theT1 General Canada Revenue Agency approved form) of the previous year as a guideline for the estimate. The estimate equals the net business income divided by the reporting frequency.
  • If the sole proprietorship has just started and has no previous information on which to base an estimate, they can use the minimum amount of 1/3 of maximum insurable earnings for the current year as an estimate.

For more information on reporting frequency or what to base your estimate on,  read: Administrative Practice Document: Insurable Earnings in Construction (213.2kb, PDF)

Partnership with or without workers:

A partnership must report its earnings throughout the year based on an estimated annual amount of insurable earnings for each partner.  If the partnership has workers it must also report the workers’ earnings.

  • The partnership can use a T2125 Statement of Business for Professional Activities (Canada Revenue Agency approved form) from the previous year as a guideline for the estimate. The estimate equals the T2125 earnings divided by the reporting frequency.
  • If the partnership has just started and has no previous information on which to base an estimate, they can use the minimum amount of 1/3 of maximum insurable earnings for the current year as an estimate.

For more information on reporting frequency or what to base your estimate on,  read: Administrative Practice Document: Insurable Earnings in Construction (213.2kb, PDF)

Executive Officer of a corporation i.e., President, Vice President etc.:

  • If a corporation pays its executive officers regular employment income throughout the year, the firm must report the actual earnings of those executive officers for each reporting period up to the annual maximum amount.  If the corporation has workers it must also report the workers’ earnings.
  • If the executive officers do not get regular employment income throughout the year, the corporation estimates and reports the annual insurable earnings it will pay to the executive officers divided by their reporting frequency.

For more information on reporting frequency or what to base your estimate on,  read: Administrative Practice Document: Insurable Earnings in Construction (213.2kb, PDF)

Q15. Do I have to report the dividends I receive from my company?

Yes, dividends paid by a Schedule 1 employer (the corporation) to an executive officer are considered insurable earnings as outlined in WSIB policy. See Policy 14-02-08 Determining Insurable Earnings in the Operational Policy Manual (OPM).

However, dividends paid by a holding company to an executive officer of a corporation are not insurable. To determine if your organization is considered a holding company by the WSIB, see Policy I-956-20 Holding Companies in the Employer Classification Manual (ECM).  

Please contact the Employer Service Centre if you have any questions.
 

Q16. Is there a tool that will help me calculate earnings?

Yes. The Insurable earnings and premium estimator for the construction industry will help you estimate the insurable earnings and premium amounts for your construction business.

Q17. What if my business has multiple rates/ business activities and at least one is a construction rate?

A. Mandatory coverage rules apply to any employer involved in construction that performs a business activity in a construction rate group (Class G).

Firms with more than one classification unit (CU) need to identify insurable earnings that are considered ”direct”  or “common.” This helps calculate their total insurable earnings amount. You can find an example of how to identify and allocate these earnings, and how to do a basic calculation in the Administrative Practice Document for Insurable Earnings (154.3kb, PDF) under the heading More Than One Classification Unit Assigned.

To be sure, we encourage you to contact us to review your specific circumstances.

Q18. What if I operate a dump truck on a construction site?

Individuals with no workers who are operating a dump truck to deliver and remove product from construction sites (such as gravel, fill or aggregated) must complete a trucking questionnaire in order to confirm their status as an independent operator in trucking.

Contractors/subcontractors that are independent operators and do not have a business activity in Class G do not fall under mandatory coverage and therefore are not required to register or provide a clearance.

Q19. What about home inspectors?

Currently, home inspectors are classified in our Employer Classification Manual under Rate Group 704-02 CU 4499-001: Testing, Inspection, and Related Services. To be exempt from coverage, the home inspector must exclusively do home inspections on an existing private residence where they are paid by, and work directly for, the occupant or potential occupant (or member of their family). However, home inspection work is not exempt when it is for potential purchasers or a member of their family, who do not intend to occupy the residence themselves.

Q20. How do the new rules affect WSIB clearances?

A. Both the principal and the contractor/subcontractor have obligations for clearances starting January 1, 2013.

  • Principals must get or require contractors to provide clearances before beginning any construction work.
  • Contractors must have WSIB coverage, report and pay their premiums on time so they are eligible for a clearance*.

*Exempt home renovation work does not require a clearance.

Q21. What will happen if I do not register or get a clearance?

A. You could miss work or lose a contract. The change to the law requires a clearance to be in place before any construction work starts. If you do not have a clearance, the principal may refuse you entry to the jobsite until you have one. To be eligible for a clearance, you must register, report your earnings and pay your premiums on time. Register with the WSIB now.

More questions?  

We’re here to help. Call us Monday to Friday, 7:30 a.m. to 5:00 p.m.

Toronto: 416-344-1000 or Toll Free: 1-800-387-0750

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