The Appeal CommissionThe Workers Compensation Act of Manitoba

Applicable legislation/ WCB Assessment Material

Prior to January 1, 2006, subsection 1(3) of The Workers Compensation Act (WCB) provided that members of the family of an employer or director of a corporation who works for the corporation and live with the employer or director were not workers.

This subsection was amended by Bill 25 that became effective January 1, 2006. This subsection no longer provides that resident members of family of a director, proprietor or partner are automatically excluded as workers under the Act, as was the case prior to January 1, 2006. The result is that resident members of the family are considered workers of the corporation.

Audit Procedure Manual

Section 2 reads “ if an individual is T 4’d he/she will be deemed to be a worker.”

WCB brochure “Changes to Workers Compensation What you need to know”

This document was forwarded to employers in December 2005 and reported on the numerous changes to the Act as of January 1, 2006. The section dealing with resident family members reads “Family members of the business who live with the owner and work for the business are considered to be workers and are covered by WCB. Resident family members include a spouse, partner or child.”

2006 WCB Completion guide

Page 1 notes that resident members of family are covered as workers and their earnings must be included in the Annual Earnings Report.

The Employer’s Appeal:

The employer argues that family members should not be considered workers under the WCB. They submitted they were totally unaware of changes to WCB Bill 25. They also requested the panel consider the following points:

• To date, the firm has had an impeccable record with WCB with no penalties being assessed;
• No claims were filed by the family members in question during the time frame under consideration;
• The family members have all been retroactive to 2005, appointed as directors of the company; and would have been done sooner if they had been aware of changes contemplated by Bill 25.
• “As a small business owner, I simply do not have the resources to ensure that all correspondence, particularly what appears to be routine correspondence from the WCB, is given anything other than a cursory review.”
• There was no intent to defraud or mislead WCB.

Analysis

For this appeal to be successful, the panel must decide the firm is not required under the Act or policies to pay the additional assessment or that there is discretion to excuse the assessment. The panel was not able to make either finding. The panel finds the firm underreported the resident family member earnings in 2006 and is therefore required to pay the additional assessment on these earnings.

The panel reviewed the submission of the employer along with the entire assessment file in coming to its determination. The 2007 audit result confirmed the firm correctly reported its 2005 assessable earnings but misreported the resident family members earnings for 2006. The employer is appealing the additional 2006 assessment increase.

The March 2007 audit does not list the additional family members as directors. Later in 2007, they were listed as directors due to a change listed with the companies’ branch. The panel finds that their status as directors cannot be retroactively applied for assessment purposes unless the audit was in error. The panel is satisfied the audit was conducted with the appropriate company records available to it at that time and does not find the audit to be in error. The panel notes the family members are now listed as directors and would come under the provisions of subsection 1(3) regarding exclusion from the Act. The panel finds, however, as of January 2006 they were not directors and the provisions of Bill 25 apply. As a result of Bill 25, family members working for the firm are covered workers; and thus are subject to assessment as of January 2006. Neither the Act nor policies provide any discretion in this regard.