Workers’ compensation board hopes threat of extra charges will help
Beginning next year, the Yukon’s workers’ compensation board will implement a new policy enabling it to levy super-assessments against employers with poor safety records.
The Workers’ Compensation Health and Safety Board (WCHSB) policy will take effect Jan. 1, 2016. A super-assessment is a payment over and above an employer’s regular yearly workers’ compensation assessment.
Its objective is to make individual employers more accountable for what they cost the territory’s workers’ compensation system in workplace injuries and illnesses, said Sheila Vanderbyl, a hearing officer and policy analyst with the WCHSB.
“To super-assess an employer is to say we are actually holding you accountable because your performance is driving the rates for everybody in your group.”
The new policy is part of the board’s focus on injury/illness prevention and is not a way to try to squeeze more money from employers, says Vanderbyl.
“Our goal is to never have to actually super-assess anybody,” she says.
“It will send a message, but our intention is to always, always push the prevention side and tell employers that this is the way out of this. Even if we target you for a super-assessment, they can get themselves out of it.”
The policy will apply to large employers in the territory that meet the following conditions:
•The employer’s claims costs in the most recent five full calendar years are more than three times that of the average for their rate group.
• The employer does not have sufficient practices and procedures to prevent workplace injuries, based on the board’s occupational health and safety criteria.
Large employers are those with an annual payroll that is more than six times the maximum assessable earnings. For 2015, the maximum assessable earnings amount is $84,837, meaning if the policy was implemented this year, it would only apply to employers with a payroll over about $500,000.
The board will analyze its claims cost data to look for employers that are at risk of a super-assessment. It expects to target three or four big employers per year that are getting close to the super-assessment threshold, says Vanderbyl.
Before levying the payment, the board will work with the employers to help it improve its safety practices.
“They will have a whole year to get themselves off a list before the levy is issued,” she says.
“When the policy goes live on Jan. 1, 2016, there will probably be some employers who are already in what we call the red zone, which is more than three times the average, but even those employers will still be given a year. It will never be a surprise.”
Workers’ compensation legislation has allowed for super-assessments since the 1960s but, until now, the board has not levied them. The change stems from legislative changes made seven years ago that brought in a new Workers’ Compensation Act, says Vanderbyl.
“Our big focus in 2008 with the new act that came in then was on prevention, return to work (and) obligation to re-employ, so basically shifting away from the concept of having a financial burden on the system to looking more at the human costs of injuries and disabilities.”
Calls for implementing a system to make employers more individually responsible came from employers, she says.
“When we did bring in the new act in ’08, we started having meetings with employers to tell them how they were doing. We basically told them what their claims costs were and how they compared in their industries and people started to realize that, ‘Hey, wait a minute. Buddy over here is affecting my rates. Because of their practices and their claims costs, they are driving my rates,’” she says.
“We were hearing from employer groups that they would like the compensation board to hold those employers accountable.”
No experience rating system
Unlike other workers’ compensation bodies, the Yukon board does not use an experience rating system when setting an employer’s assessment rate for coverage.
Instead, an assessment is based on the industry rate group and its estimated payroll for the year.
Boards that use experience rating include an employer’s individual claims cost history when setting an employer’s assessment/premium rate. Employers with higher claims costs pay higher rates, while those with lower claims costs can be eligible for a discount.
Some boards also levy a super-assessment against employers with poor safety records. In Alberta, for example, large employers that have reached the maximum surcharge for two or more consecutive years under the Workers’ Compensation Board’s experience rating plan can be charged a poor performance surcharge.
Vanderbyl says the Yukon tried using experience rating years ago, but the small size of the territory’s employer base made it difficult to implement. The territory has only 3,500 registered employers.
“The jurisdiction is so small, (it) had the potential to bankrupt employers because you could end up being the only employer in your (rate) group and if you had one devastating injury, you could be bankrupt,” she says.
“So (the board of directors) decided that in a jurisdiction this small, it’s better to stick with the collective liability and not try to assess everybody on their own individual performance.”
She says super-assessments encourage individual employer accountability without driving companies out of business.
“We’re not looking at hundreds of thousands of dollars. We’re looking at thousands or tens of thousands for a really large employer. It’s not a bankrupting type of levy. It’s just enough to say, ‘Hey you need to pay some of this back into the system because you are costing us way more than you are paying in,’” Vanderbyl says.
The amount an employer is charged will be based on the difference between the employer’s actual claims costs and three times its rate group average, multiplied by a factor that is based on the number of times the employer has been super-assessed.
For a first super-assessment, the factor will be 10 per cent. For each subsequent super-assessment, the factor will increase by 10 percentage points, up to 100 per cent.
Vanderbyl says she expects if an employer is going to get a super-assessment, the charge will come shortly after the employer files its annual payroll return at the end of February each year.
Meeting the threshold
A super-assessment in the Yukon would remain in effect until the employer’s claims costs are below the super-assessment threshold or the board considers the employer’s injury prevention practices and procedures to be adequate.
This means the employer must meet the minimum requirements of the territory’s occupational health and safety and workers’ compensation legislation, be free of penalties, fines or prosecutions pending against it at the time the board reconsiders the super-assessment and it must pass a safety management system review.
If the employer ends up back on the super-assessment list, the board will levy the charge at the level the employer was last at.
“You don’t go back to zero, so there is always a risk for employers who have been super-assessed,” says Vanderbyl.
“That is pretty good motivation and people will get the picture that we’re not out there to grab your money — we’re out there to save lives and to prevent disability because that’s our mandate.”