Employer Premium Adjustments

Document sections:| Policy | Purpose | Guidelines | References | Appendix to 14-02-06: Employer Premium Adjustments |

Policy

The WSIB makes debit or credit premium adjustments to employer accounts

• from the notification date back to January 1 of the second prior year, or
• from the notification date back to the actual date that the change giving rise to the adjustment took place if the change occurred after January 1 of the second prior year

The exceptions to the two-year rule are

• provisional premiums
• lack of full disclosure
• offences or fraud
• classification changes

NOTE

The rule for each exception is outlined below under Guidelines.

To ensure that this policy is applicable with respect to registration non-compliance it must be read in conjunction with 14-02-15, Voluntary Registration which takes precedence if applicable.

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Purpose

The purpose of this policy is to outline how the WSIB adjusts premiums to an employer's account. 

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Guidelines

Definitions

"current year" is the year of the notification date.

The first "prior year" is the calendar year immediately preceding the current year. The second prior year is the calendar year immediately preceding the first prior year.

Exception rules

Provisional premiums

The WSIB may make premium adjustments to an employer account to correct provisional premiums in any prior year in which a provisional premium was issued.

Lack of full disclosure

At its discretion, where the WSIB is satisfied that there has been a lack of full disclosure in an employer’s account on any premium related issue requiring a correction, the WSIB may make premium debit adjustments only for up to five prior calendar years when employers

• provide incomplete or inaccurate information to the WSIB, or
• otherwise delay, withhold, or fail to fully disclose relevant information, or
• fail to act on information provided to them by the WSIB that directly affects their premium, or
• declares themselves to be exempted from compulsory coverage in construction under 'home renovation work' or 'partner or executive officer' while performing construction work that is not eligible for the exemption, or
• report the insurable earnings to the separate construction rate group - 755, Non-Exempt Partners and Executive Officers in Construction, for individuals who are not eligible for the separate rate group.

Offences or fraud

The WSIB may make premium debit adjustments to an employer's account beyond five years or in any year, if it has been determined that the employer has committed

• a fraudulent act, or
• an offence under the Act.

Classification changes

For classification changes not involving provisional premiums, lack of full disclosure, and offences or fraud, premium adjustments are limited to January 1 of the current year.

The WSIB considers classification change as a change to an employer's account that results in the addition or deletion of a Classification Unit (CU) unless the change falls under one of the other Exception rules.

When premium adjustments are made

The WSIB makes premium adjustments to an employer’s account when

• an employer notifies the WSIB of a premium issue requiring an adjustment, or
• the WSIB discovers the need for an adjustment.

What gets adjusted?

An adjustment to an employer’s premium is made due to a correction in

• classification
• insurable earnings, including
  • status decisions (worker or not) for executive officers
  • status decisions (worker or independent operator) for contractors
  • optional insurance
  • earnings of non-registered employers
• interest charges
• non-compliance penalties
• earnings reported under separate construction rate group - 755, Non-Exempt Partners and Executive Officers in Construction.

Premium adjustment results in a credit or a debit to an account as a consequence of applying any adjustment rule.

An adjustment to current-year reported premiums is subject to year-end reconciliation for the current year.

Employers requesting a premium adjustment

Employers requesting a premium adjustment must make their request to the WSIB in writing. Their correspondence should

• clearly identify the premium issue requiring an adjustment, and
• specify their reasons for requesting the adjustment, e.g. why they believe there was a mistake made in the calculation of their premium, their classification, or other charges applied to their account, etc.

Notification dates

For WSIB’s operating areas other than Employer Audit, the notification date for a premium adjustment is the receipt date of a request from an employer or an employer representative with valid authorization, or the date of a site visit documented in the employer's file.

For WSIB’s audit area the notification date for a premium adjustment is the date of the audit visit indicated on the Notice of Audit visit.

The notification date for a given account sets the notification date for all other accounts whose WSIB liabilities are linked to that account under a common registered employer.

New registered employers

For new registered employers, insurance premiums are paid to the WSIB from the date an employer hires its first worker. Relief may be provided under the terms of 14-02-15, Voluntary Registration.

NOTE

Failure to register with the WSIB is a debt owed for prior premiums not paid and, therefore, does not involve adjusting an employer’s premium.

Application date

This policy applies to all adjustments with a notification date on or after January 1, 2013.

Document history

This document replaces 14-02-06 dated November 3, 2008.

This document was previously published as:

14-02-06 dated October 29, 2007

14-02-06 dated January 3, 2006

14-02-06 dated October 12, 2004

14-02-06 dated August 18, 2000

08-01-09 dated June 04, 1997.

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References

Legislative authority

Workplace Safety and Insurance Act, 1997, as amended

Sections 12.2, 88(4), 96(2) and 159(2)

Minute

Administrative

#14, December 18, 2012, Page 499

 

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Appendix to 14-02-06: Employer Premium Adjustments

Examples re: insurable earnings

Example 1

For four years (2002-2005), IRMA Corporation overpaid its premium by failing to deduct excess earnings for workers who earn above the WSIB annual insurable earnings ceiling. On February 20, 2006, IRMA Corp. discovers the problem and notifies the WSIB.

The notification date establishes 2006 as the current year, 2005 as the first prior year and 2004 as the second prior year. IRMA has not yet filed its 2005 year-end reconciliation. The WSIB begins its review of the payroll records with the reconciled second prior year (2004) and completes the review upon receipt of the year-end reconciliation for the first prior year (2005). The WSIB processes the credit adjustment for two prior years (2004 and 2005) and notifies the employer on June 24, 2006.

The WSIB confirms the correct method of calculating excess earnings for the current year 2006 with the employer. The WSIB also advises the employer of the requirement to revise its reporting of insurable earnings for 2006 accordingly.

Example 2

The WSIB sends a Notice of Audit Visit to Pilma Ltd. stating that a WSIB auditor will visit the employer on November 20, 2005. The firm requests a postponement of the visit until January 10, 2006 and the WSIB auditor agrees. The WSIB auditor visits the firm on January 10 and discovers that Pilma has under-reported insurable earnings back to January 1, 2000 because the firm has miscalculated the contractors' earnings.

The notification date establishes 2005 as the current year, 2004 as the first prior year and 2003 as the second prior year. During the audit review of the payroll records for the two prior years, the WSIB auditor advises Pilma on how to report contractors' earnings as the firm prepares the 2005 year-end reconciliation. Pilma files its 2005 reconciliation with the WSIB auditor, who adds 2005 as a reconciled year under audit and includes the reconciled difference from the 2005 reconciliation in the audit adjustment. The debit adjustment is processed for the two prior years (2003 and 2004) and the employer is notified on April 10, 2006.

Example 3

Golden Manufacturing has two product lines at one plant: metal pails classified in CU 3042-000 (Metal Closure and Container Operations, RG 389-01), and metal bolts classified in CU 3053-000 (Industrial Fasteners, RG 393-03). The firm maintains segregated payrolls for the two activities and reports earnings under the two CUs.

During a visit to Golden Manufacturing on June 15, 2006, a WSIB decision-maker notices that the firm has significantly reduced the manufacture of pails in 2004 and 2005, while the manufacture of bolts has increased. The reconciled insurable earnings reported to the WSIB for 2004 and 2005 under each CU have remained relatively constant. The WSIB decision-maker examines the records and finds that the firm has over-reported earnings for the pails classified in CU 3042-000, and under-reported earnings for the bolts classified in CU 3053-000.

The notification date sets the current year as 2006, and the two prior years as 2005 and 2004. The WSIB decision-maker recalculates the insurable earnings reported under each CU for 2004 and 2005, processes the adjustments for those years and notifies the employer on July 24, 2006. The WSIB decision-maker also advises Golden of the requirement to revise its insurable earnings for 2006 accordingly.

Example 4 re: common earnings

Daily Temp is a temp agency that supplies workers to clients who need clerical and non-clerical labour. The firm therefore reports the direct insurable earnings of the workers it supplies to do clerical labour under CU 7711-001 (Supply of Clerical Labour, RG 956-45), and reports the direct insurable earnings of the workers it supplies to do non-clerical labour under CU 7712-001 (Supply of Non-clerical Labour, RG 929-01).

During an audit in May 2008 the auditor notes that Daily Temp has been reporting all its in-house administrative support staff under the CU for the supply of clerical labour (CU 956-45) rather than pro-rating these common insurable earnings across both CUs, as required by OPM 14-02-08 (Determining Insurable Earnings). The auditor calculates the correct pro-ration and re-allocates the common earnings to both CUs effective January 1, 2006.

Examples re: classificaton changes

Example 5

On September 3, 2006, the WSIB receives a letter from ABC Corporation requesting a classification change. The firm believes that it has been incorrectly classified in CU 4561-000 (General Freight Trucking, RG 570-01) since 1996, and requests reclassification into CU 4842-000 (Courier Service Operations, RG 577-03). The WSIB decision-maker investigates and agrees to the request.

The notification date sets the current year as 2006. Classification changes apply to the current year only. The WSIB decision-maker reclassifies the firm's operation in CU 4842-000 effective January 1, 2006, processes a credit adjustment for the 2006 reported earnings and notifies the firm on January 10, 2007.

Example 6

The WSIB issues a Notice of Audit Visit to Prime Packers stating that a visit will take place on March 10, 2006. On that day the WSIB auditor finds that the firm has been misclassified under CU 1012-000 (Poultry Operations, RG 210 - 01) since the beginning of 2001. The WSIB auditor determines that the correct classification for this firm's operations is CU 1011-001 (Meat and Meat Products, RG 207 - 01). The WSIB auditor also finds errors in the reconciled insurable earnings for 2004.

The notification date sets 2006 as the current year. Classification changes apply only to the current year. The WSIB auditor reclassifies the firm's operations in CU 1011-001 effective January 1, 2006, and instructs the employer to report earnings under the new CU. The investigation into the reconciled insurable earnings for 2004 takes several months. When the investigation is complete, the WSIB auditor processes the debit adjustment resulting from the 2006 classification change, and a credit adjustment for the 2004 corrected reconciled earnings. The WSIB auditor notifies the firm of both adjustments on August 10, 2006.

Example 7 re: accounts for associated firms

A WSIB decision-maker visits Deluxe Sales, a wholesaler of cooking equipment classified in CU 5431-099 (Household Furnishings, Wholesale, RG 636-22), on May 20, 2006. The WSIB decision-maker discovers that a significant percentage of Deluxe's sales come from wholesaling cooking utensils manufactured by Glover Products, classified in CU 3049-000 (Other Stamped and Pressed Metal Product Operations, RG 390-01). 

Upon investigation, the WSIB decision-maker finds that Deluxe and Glover are associated, but neither firm has declared the association. Deluxe has been selling Glover products since 2002, in addition to products manufactured by non-associated firms. Deluxe is able to segregate its payroll between the wholesaling of Glover products, and the wholesaling of product from non-associated manufacturers. The WSIB decision-maker also investigates Glover's business activity to ensure it is correctly classified.

The notification date sets the current year as 2006. Deluxe and Glover are associated and Deluxe's wholesaling of Glover products is ancillary to Glover's manufacturing activity. The two employers are therefore considered to be one employer for classification purposes, and Deluxe's payroll for the wholesale of Glover products must be reclassified in CU 3049-000 (Other Stamped and Pressed Metal Product Operations). This is a classification change requiring the addition of a CU to Deluxe's account, and is therefore effective January 1, 2006. Deluxe's payroll for the two prior years (2005 and 2004) remains classified in CU 5431-099 overall.

Example 8 re: notification dates for multiple accounts linked under one employer

A WSIB auditor sends a Notice of Audit Visit to the head office account of HiTech Manufacturing stating that a visit will take place on November 10, 2005. From a review of the firm information available to the WSIB, the WSIB auditor knows that HiTech has three additional accounts, each corresponding to a separate HiTech division and classified in three separate CUs. HiTech is the registered employer for all four accounts, and the liability for the divisional accounts is linked to the head office account. The firm had previously notified the WSIB that the payroll records for all accounts are located at the head office, which provides ancillary administrative support to all the divisions.

The WSIB auditor visits the head office on November 10, 2005 and finds that the reconciled insurable earnings for one division have been incorrectly reported since 2002, and that the business activity carried on at the same division may be incorrectly classified. The WSIB auditor arranges to visit the division at its separate location on January 15, 2006. Upon investigation the WSIB auditor confirms that the division must be reclassified.

The notification date sets the current year as 2005. The Notice of Audit Visit setting November 10, 2005 as the notification date applies to all divisions linked to the head office account registered as HiTech Manufacturing. After the investigation, the WSIB auditor returns to the head office on March 15, 2006, reclassifies the division account effective January 1, 2005, and corrects the insurable earnings for the prior years 2004 and 2003.

All insurable earnings for the head office account are common earnings pro-rated over the direct earnings in the CUs that apply to the division accounts. The change to the reconciled insurable earnings on the division account for 2003 and 2004 also requires a change to the pro-ration that applies to the head office account for 2003 and 2004.

The classification change to the division account requires deleting a CU and adding another CU. Therefore the classification change was not part of the correction for 2003 and 2004. However, as of January 1, 2005, the CUs on the head office account are changed because of the reclassification of the division account which requires the WSIB auditor to revise the 2005 reported premiums for the head office account. The WSIB auditor processes all the adjustments for all accounts and notifies the employer on April 20, 2006.

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