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Are you at risk on January 1, 2014? Hiring a contractor and the Workplace Safety and Insurance Act

Darrell Gold | The Legal Corner | 2013-12-04

Darrell Gold

This article has been contributed by Darrell Gold LLB with Robins Appleby & Taub LLP.

Starting January 1, 2013, almost everyone in the construction industry needed a Workplace Safety and Insurance Board (“WSIB“)  clearance number pursuant to Bill 119 “Mandatory Coverage in Construction”’ that amended the Workplace Safety and Insurance Act 1997 (“Act”).

If a property owner or property manager hires contractors, a clearance number must be obtained from the contractor to minimize exposure to liability if a worker is injured. On January 1, 2014, the WSIB will start to enforce mandatory coverage and prosecuting those who are not in compliance.

Below is important information from the WSIB website[1] that a property owner and manager must be aware of before hiring contractors. 

What is the WSIB: It is an independent trust agency that administers compensation and no-fault insurance for Ontario workplaces. It provides wage loss benefits, medical coverage and help getting back to work for injured workers. It provides workplace insurance, which means different things to workers and to employers. For employers it means: If a work-related injury occurs, the employer generally does not need to worry about being sued by his/her covered workers.

Who does the WSIB Cover: The Act determines who is covered by the WSIB. If the type of work is covered under the Act, then the hiring party is covered by the WSIB.

What is ‘Mandatory Coverage in Construction?: As of January 1st, 2013, the Ontario Government made a change to the Act, making it mandatory for most workers in the “construction industry” to have coverage with the WSIB. That means they have to register and receive a clearance number.

What Is the “Construction Industry”? “Construction” refers to any of the business activities listed in Class G in the WSIB Employer Classification Manual.  These include: Electrical and Incidental Construction Services, Mechanical and Sheet Metal Work, Inside Finishing, Industrial, Commercial, and Institutional Construction, Roofing, Form Work and Demolition, Homebuilding, Siding and Outside Finishing and more.

Who is considered the “Hiring Party”: Anyone who purchases construction services from a contractor or subcontractor is considered the hiring party. This means owners, property managers, landlords and general contractors – including those who are not in the construction industry. Examples of a hiring party include:  A general contractor hiring a sub-contractor to help on a construction job. A restaurant owner hiring a construction company to do renovations on their restaurant. A landlord hiring a contractor to build a new garage on a rental property. A municipality, university or other institution hiring a contractor/subcontractor to do construction work.

Why is a Clearance Number Important: A clearance number proves that the business hired is properly covered by the WSIB and the hiring party is not liable for any unpaid premiums that the contractor/subcontractor should have paid to the WSIB for coverage.

How can You tell if a Clearance Number is Valid: You can go to the WSIB website to request a clearance number. To check on the status of a clearance number, use the site’s online clearance number service where you can enter the clearance number and their system will let you know whether or not it’s valid.

What Happens if the Contractor Does Not Get a Clearance Number, or the Clearance Number is No Longer Valid: As of January 1, 2013, doing non-exempt construction work without a valid clearance number is an offence under the Act. These offences will be prosecuted as of January 1, 2014.

If construction work goes ahead without a clearance number, then the hiring company and the contractor/unregistered business are committing an offence and, effective January 1, 2014, face fines and serious penalties. The maximum fine for a conviction of an offence under the WSIA is $100,000.[2]

The unregistered business will need to pay back premiums. The unregistered business will not be able to provide a clearance number to prove that they have coverage and are clear to work. Without a clearance number, the company that hired the unregistered business may not give access to the job site. This means that any employer who does Class G – Construction work needs to be registered with the WSIB for coverage for themselves, as well as any workers they may already have covered, with some exceptions as the WSIB is not mandatory for all businesses in Ontario (e.g. Home Renovators) but it is for most. Companies that don’t have to be covered can choose to be covered by the WSIB. The hiring party could also be liable to pay any unpaid premiums or other fees owed to the WSIB that the contractor should have paid on the work it was hired to do.

Home Renovators Exemption: Occupants of private residences (and their family members) who hire contractors to do home renovation work are not required to get a clearance number.

A contractor will qualify for the home renovation exemption and will not be required to have WSIB coverage if: The business only performs home renovation work 100% of the time. The business only works on existing private residences. The business is hired and paid by the occupant or a member of their family. This means that if a contractor is hired by a property owner or a landlord (someone who owns the house but does not live in it e.g.: is renting it out, fixing it up to sell, or is building a new home), this work is not considered exempt home renovation work under the Act, and is not exempt. This exemption applies to independent operators, sole proprietors, partners in a partnership or executive officers in a corporation. However, if the business employs workers, it must register with the WSIB and have coverage for its workers.

The Lessons:  1.Before hiring a contractor, you must determine if he/she/it needs and has a valid clearance number.  2. If so, then during the work you should check on the WSIB site to make sure the certificate number remains valid.  3. The hiring party should have a written contract with its contractor that provides for a clearance certificate with a valid clearance certificate number at the commencement of the work, during the work and at the end of the work. 

Disclaimer: This article is for general information purposes only and not intended as or to be relied upon for legal advice. Consult with a lawyer for your unique situation.

[*If there is a general real estate or leasing related question you would like to see addressed in a future article in “The Legal Corner”, please contact me directly by e-mail at dgold@robapp.com with your suggestion. Not all requests can be accommodated.] 

 

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Darrell Gold

About the Author ()

Darrell is a partner at Robins Appleby LLP and is responsible for the leasing component of its Real Estate Group. He has extensive experience and expertise in all aspects of commercial, retail, office and industrial leasing, lease enforcement and dispute resolution on behalf of landlords, tenants and property and asset managers. As well, his practice includes acquisitions and dispositions of commercial real estate and general commercial contracts. Author’s website: https://www.robinsappleby.com

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