We were recently surprised to find that not-for-profit organizations with optional Workplace Safety and Insurance Board ("WSIB") coverage must pay a sizable fee in order to withdraw from the plan. This departure fee came into effect in December, 1997 and is calculated regardless of an organization’s previous WSIB claims experience. Even organizations with no prior claims under the plan will be levied a substantial fee on cancellation of coverage.

Background

The Workplace Safety & Insurance Act ("WSIA") took over from the Workers’ Compensation Act ("WCA") on January 1, 1998. Coverage under the WSIA is compulsory for many industries in Ontario. It is not, however, compulsory for childcare centres and most not-for-profit organizations. Still, many organizations have chosen to opt for voluntary coverage under Schedule 1 of the WSIA.

Under the WCA, organizations were able to terminate coverage, typically at December 31 of a year, provided sufficient notice was given and all premiums for the final year were paid. In December, 1997 the WSIB adopted the following policy with little publicity:

"Effective immediately all eligible employers who cancel their application coverage under Schedule 1 of the Act [ed. note: voluntary coverage] will be charged a supplementary premium for the final year of coverage.

The supplementary premium will be calculated to ensure the amount realized is sufficient to meet all remaining financial obligations, including the employer’s share of the unfunded liability for the class or classes of which it is a part."

Impact

An organization canceling voluntary coverage will have to pay out its pro-rata share of the unfunded obligations of all organizations in its class covered under the WSIB policy at the date of cancellation. We are aware of two childcare centres currently attempting to cancel WSIB coverage that are being assessed departure fees of approximately $2,000 and $4,000. These centres have 40 and 60 children respectively.

We are surprised that there was no public announcement of this significant change in WSIB policy. We suggest that all not-for-profit organizations with voluntary WSIB coverage call their WSIB representative to determine if the departure fee applies to them and, if so, how much it would be at the end of a particular year. Based on our discussions with affected organizations and the WSIB we understand that there is no process to plea for a waiver of this uncontracted-for departure fee. As with so many changes in social policy in Ontario in the last few years, the only solution may be a political one.

If you are thinking of obtaining disability coverage for your employees you should carefully consider all your options, including private and WSIB coverage. Costs to be weighed against benefits should include the future departure fee.