The Appeal CommissionThe Workers Compensation Act of Manitoba

Employer’s Position

The employer was represented at the hearing by its owner who made a submission on behalf of the employer and answered questions posed by the panel.

The owner explained that the employer was audited by the WCB and, through the audit, it was determined that the employer had underreported its payroll for a number of years. This resulted in a recalculation of its assessment premium and a determination that the employer owed an additional sum which included over/under interest and inadequate return penalty amounts.

After the audit, the employer noted that it’s assessment rate was based on its payroll estimate which was found by the audit to have been inaccurate. The employer asked what the impact would be on its assessment rate if the new accurate payroll information was used. WCB officials advised that with a bigger payroll and the same accident experience, the employer would be a better risk and would have been assigned a lower assessment rate. The employer was paying assessment at a higher rate because of the inaccurate information. The firm asked that it be reassessed for the years since it commenced operation using an assessment rate based upon the accurate payroll information.

The owner noted that the WCB used the revised payroll information produced through the audit to recalculate its assessment premium. The owner stated that it was not fair that the WCB would refuse to recalculate the employer’s assessment rate using the new payroll information. He stated:

“…And I’m saying I want to be fair. I want to pay for what I’m supposed to pay for, but at the same time, if I’m a good risk, I want to be viewed as a good risk and I want it to reflect my rate. That’s what I’m asking for.”

Analysis

The issue before the panel was whether the employer’s assessment rate should be recalculated retroactively using actual earnings confirmed by a WCB audit. The panel finds that the rate should not be recalculated.

The WCB’s authority to set rates is found in the following statutory provisions:

Subsection 60(2) provides that the board has exclusive jurisdiction to determine:

(o) the costs for the year for a class, sub-class, group, sub-group or undertaking;

Section 79 provides that the board shall assign each employer in an industry to an appropriate class, sub-class, group, or sub-group.

Subsection 80(1) provides that an employer shall furnish to the board an estimate of the amount of payroll of each undertaking in an industry for the purpose of assigning the employer to a class, sub-class, group or sub-group and making assessments.

Subsection 81(3) deals with how assessments are made. It provides that assessments may be made in such manner and form, and by such procedure, as the WCB may determine adequate and expedient.

In accordance with these statutory provisions, the WCB calculates the annual assessment rates using the rate setting model and recommends the average annual assessment rate for approval by the Board of Directors of the WCB. The Board, exercising the exclusive jurisdiction provided in subsection 60(2), approves the average annual assessment rate.

Assessment rate and assessment premium are different elements of the WCB funding process. The assessment rate is the rate at which the premium for coverage is calculated. It is an actuarially determined number which takes into account many factors including the size of the employer’s payroll and accident experience of the employer. Assessment rate calculations involving payroll are based upon payroll information provided by employers.

The assessment premium is the amount that the employer must pay to the WCB for coverage for a particular year. The premium is based upon the assessment rate assigned to the employer and varies according to the size of the annual payroll. While the premium can be calculated upon an estimate of payroll, the actual payroll is ultimately required for the calculation of the premium.