Decision #149/05 - Type: Workers Compensation

Preamble

An Appeal Panel hearing was held on August 4, 2005, at the request of the firm's controller. The Panel discussed this appeal on the same day.

Issue

Whether or not the employer must pay the reduced late filing penalty and associated late payment penalties.

Decision

That the employer is not required to pay the reduced late filing penalty and associated late payment penalties.

Decision: Unanimous

Background

On February 2, 2005, the Employer Services Division of the Workers Compensation Board (WCB) received the firm's WCB Quarterly Earnings Report (WQER) for the fourth quarter of 2004, 13 calendar days late. As a result, the WCB applied an assessment to the firm's account that included a 10% late filing penalty in the amount of $1,250.00.

In a letter to the WCB appealing the late filing penalty, the firm's controller indicated that she had sent the WCB report and remittance to their banking institution (i.e. a credit union) but, as a new employee, she was not aware that the credit union did not accept WCB remittances. As soon as she found out that the WCB had not received the remittance, she rectified the problem as quickly as she could. The controller indicated that the firm had a good record for filing and paying quarterly remittances in a timely fashion.

On February 14, 2005, the WCB advised the firm that it qualified for 50% reversal of the late filing penalty but did not qualify for 100% reversal as the WCB's definition of 'beyond the employer's control' was generally confined to serious illness or death. WCB Policy 35.40.10, Relief from Penalties and/or Interest Charges was referred to in the letter.

On February 17, 2005, the firm's controller wrote to the Assessment Committee and outlined her position that although the firm's payment and reports were "9 business days" late being received by the WCB, it was an inadvertent error and that the total penalty of $2,500.00 (2 companies x $1,250.00) was excessive in this situation.

In an e-mail message dated February 24, 2005, the controller noted that the WCB remittance for both companies had been issued on one cheque. The cheque was then couriered to the banking institution along with its daily deposit. The controller indicated that she did not recall the exact date but did remember sending it a couple of days prior to the due date, as she wanted to ensure that the payment was made on time. Through the WCB's Clearance Department email notification system, she was notified that the firm was in default. She then phoned the credit union and was told that they did not accept WCB remittances. The controller also commented that the WCB remittance form indicated that all financial institutions accepted payments, therefore, she did not check with the credit union to ensure they accepted remittances.

On April 19, 2005, the Assessment Committee confirmed that the employer was required to pay the late filing penalty. The Assessment Committee referred to WCB Policy 35.40.10 when rendering its decision. The Committee determined that 50% relief was appropriate as the employer did not have a recent history of late filing, had complied with the prescribed time and had cooperated with the WCB. The Committee did not grant 100% relief as the employer's reason for filing late did not meet the WCB's definition of 'beyond their control'. On April 29, 2005, the firm appealed the Assessment Committee's decision and an oral hearing was arranged.

Reasons

Employers, on occasion for whatever reason, do not submit their payroll returns within the prescribed time to the WCB. When such an event occurs, the WCB will levy late filing penalties or interest charges on the late payment of these accounts pursuant to section 86 of The Workers Compensation Act (the Act). However, this section also provides that the WCB may relieve an employer either in whole or in part from having to pay any penalties or interest charges, if it is satisfied that the failure to file "was excusable".

WCB policy 35.40.10 outlines the criteria under which all or a portion of the penalty or interest charges may be relieved. In the particular case at hand, the employer is seeking 100% relief of payment of the penalties assessed against it. According to the policy, "A default will generally be considered excusable and relief of up to 100% of the penalty amount may be provided where the cause of the default was beyond the control of the employer, the employer does not have a prior history of default, the employer has cooperated fully with the WCB, and the default does not extend beyond 60 calendar days".

At the hearing, the company's controller appeared on behalf of the employer. She testified that she did in fact courier the payroll report and remittance to the company's Credit Union on the 17th of the month in question and that this was her first WCB deposit for the employer. We found the controller to be a credible witness and we accept her evidence that she had couriered the required documents and payment to the Credit Union on the 17th as alleged and that she was not aware that the Credit Union did not process WCB assessment payments. She stated that she had relied on the note at the bottom of the WCB remittance form which states: "Payment made at any financial institution by the due date will ensure late payment penalties will not be applied."

The evidence further revealed that the employer's Credit Union inadvertently omitted to notify the company that it had been holding the WCB remittance for 12 days. This omission resulted in the WCB not receiving the report until 13 calendar days from the due date.

We find in accordance with the Act and WCB policy 35.40.10 that the default was excusable in that the cause of the default was beyond the control of the employer and therefore the employer should not be required to pay the reduced late filing penalty and associated late payment penalties. Accordingly, the employer's appeal is hereby allowed.

Panel Members

R. W. MacNeil, Presiding Officer
A. Finkel, Commissioner
M. Day, Commissioner

Recording Secretary, B. Miller

R.W. MacNeil - Presiding Officer
(on behalf of the panel)

Signed at Winnipeg this 13th day of September, 2005

Back