November 10, 2004

All Ontario firms to be audited, expert warns

WSIB will come calling



All Ontario companies can expect to be audited by the Workplace Safety and Insurance Board (WSIB) within the next two years, says Philip Bender, a lawyer specializing in workplace safety and insurance law.

“In the coming months, you are going to hear more about these audits,” Bender said at a Toronto conference on trends in labour and employment law last week.

“The (WSIB) has recently started an initiative to audit every employer in Ontario. So somebody will be coming to your door to audit your company,” Bender said.

The WSIB is “starting with the construction and manufacturing sectors and will be moving on from there. If you’re in these sectors, you can expect (the WSIB) within the next eight months to a year,” Bender told the 18th annual Employers’ Conference, organized by the Toronto law firm Stringer, Brisbin, Humphrey.

Philip Bender

Bender said a combination of factors are behind the WSIB’s plan to audit all Ontario employers.

The province has a budget deficit of approximately $5.6 billion and the Ontario government is concerned about the loss of tax revenues to the underground economy. Minister of Labour Chris Bentley has said publicly the underground economy costs Ontario an estimated $500 million annually in lost tax revenues.

For its part, the WSIB wants to ensure that all companies and workers legally required to be registered with the board are, in fact, registered.

Furthermore, the WSIB will be examining employers’ business activities to ensure both companies and their employees are properly classified.

There are more than 150 rate groups within the WSIB system, each subdivided into eight or nine classifications. Bender said the WSIB has recently made changes to its classification system and now wants to ensure companies are properly classified and the board, in turn, is receiving the correct premiums.

“Also, there is an initiative to reduce the number of workplace injuries in Ontario by 20 per cent within the next four years, that’s the WSIB’s goal,” Bender said.

“If they come to do an audit, they will be looking to see if your company has maintained proper health and safety records, whether the company is properly classified and whether you are properly recording your payroll” with respect to WSIB classifications, he said.

“Generally, they are going to be reviewing the current year, plus the two prior years. However, if they find discrepancies, they may decide to go back five years.”

Bender stressed that WSIB audits are not surprise visits. Employers can expect to be notified several weeks in advance.

WSIB auditors will want to access payroll records, financial and income statements, contracts and invoices, records of subcontractors, Canada Revenue Agency contractor reports and health and safety records, along with other documents and files.

“They expect the company to have all the materials prepared and ready to review when they arrive,” Bender said.

In addition to its plans for province-wide employer audits, the WSIB and the Canada Revenue Agency recently announced a joint agreement to share information between the two organizations.

Known as an interagency agreement, this agreement allows the two organizations to share and compare information received from Ontario companies.

“What they are sharing information about is which companies report to one but do not report to the other,” Bender said.

“The Canada Revenue Agency will provide (the WSIB) with information on a company that is reporting earnings on their tax returns, but does not appear to be registered with the WSIB.”

In such cases, employers can expect to receive a letter from the WSIB asking them to confirm they’re registration status, or to begin the registration process.

Bender said if a company does not respond to this letter, the WSIB will register the employer based on the information it has received from the Canada RevenueAgency, and assess premiums accordingly.

“It may be that a company falls under a classification that is not required to register with the WSIB, but the WSIB won’t know that if you don’t contact them,” Bender said.

“So don’t ignore those letters. First of all, you need to identify whether you need to be registered, whether you are in one of the mandatory classification units or one of the ‘by-application’ classification units. Then you should contact the board and provide them with the information necessary for them to determine whether you need to be registered or not.”

Bender said there is benefit to voluntarily contacting the WSIB to determine if your company should be registered with them.

“If necessary, they will assess (premiums) for the two prior years. But if you do not contact the board and try to avoid your responsibilities, the board will come after you and in all likelihood will be assessing you for five years. So potentially you save three years worth of premiums,” Bender said.

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