Decision #77/08 - Type: Workers Compensation
Preamble
The appellant disagreed with the position taken by the Workers Compensation Board (“WCB”) Assessment Committee that his new firm was tied and associated with his father’s firm for the purpose of setting an assessment rate, and the WCB decision to assign his firm the rate of $24.27. He appealed to the Appeal Commission and a file review was held on June 5, 2008.Issue
Whether or not the firm should be tied and associated with another firm and assigned a rate of $24.27.Decision
That the firm should be tied and associated with another firm and assigned a rate of $24.27.Decision: Unanimous
Background
The appellant registered his new business with the WCB on February 14, 2008. Noted on the appellant’s “Registration Form” was that the appellant operated the business as self-employed and was employing approximately $30,000 for workers coverage for 2008. Regarding details of ownership, the appellant indicated that his firm was not associated with any other company within the province. The appellant’s description of business activities were listed as “installation of pre-cast concrete for floor systems and wall panels. These products are installed for condos, carwashes apartments etc.” The appellant further advised the WCB that he and his father interchange staff when he does not have enough work. In accordance with WCB Policy 35.20.10, the WCB assigned the firm a rate of $24.27.
On February 26, 2008, the appellant disagreed with the WCB’s decision to assign him the same rate and classification as his father’s company. The appellant noted that his father’s company performed regular concrete work such as pouring, forming, driveways, sidewalks, etc. His company hired cranes with an operator to lift and place pre-cast concrete for walls, balconies, floors, etc. Once the concrete is in place, he and his employees will grout, screw and weld big pieces in place. In other provinces, this work is classified as iron work. The appellant wanted the rate reduced to at least the new firm rate or reclassify him somewhere else so the rates would not be tied anymore.
The appellant’s appeal was denied by the WCB representative and unit supervisor. Both WCB staff confirmed that the firm was classified correctly and that the appellant’s firm was associated and tied as per WCB policy. The case was then referred to the Assessment Committee for further consideration.
On March 20, 2008, the Assessment Committee decided that the appellant’s rate would remain as is and that the file would be tied and associated with that of his father’s business. The Assessment Committee noted that the appellant had a concrete business and so did his father. When the registration took place, the appellant indicated that staff was shared between both firms. Both firms were located at the same address and had the same phone numbers. The appellant’s father’s file was under concrete work. The associated file had a rate of $24.27 for 2008 and the payroll for both files was below $250,000. The Assessment Committee’s rationale for the decision was, in part, as follows:
“…Had this employer’s file not been associated with his father’s, the cost of a new claim could place an unfair burden on all other employers paying into the system. In order for these firms not to be associated, WCB policy 35.20.10 only allows a firm individual experience rating based on the payroll of $250,000 or more reported to the WCB for one year.
The committee felt that, because of the exchange of staff between the two firm’s (sic) and the close relationship in business activities, these are considerable reasons for these employer’s (sic) to share the same experience as stated in the attached policy.
The fact that the firms do not operate autonomously was another reason the file could not stand alone for experience rating. Meaning, if there is no direct contact or influence by either party, the firms will be experience rated on their own. However, in this case the firms clearly exchange staff, use the same mailing address, phone, fax, etc., and belong in the same industry classification.”
On March 26, 2008, the appellant filed an Appeal of Assessment Decision to the Appeal Commission and a file review was arranged.
Reasons
The Appeal Commission is bound by The Workers Compensation Act and as well any policies passed by the Board of Directors. This includes the assessment process outlined in WCB Policy 35.20.10, and the ratings categories developed by the WCB which are then applied to eligible employers in Manitoba. This means that the Appeal Commission is required to use the criteria set out within each ratings category, when considering whether the appellant’s firm does or does not fit within a particular category.Appellant’s argument
The appellant argues that he and his father have different types of businesses. He is involved in the installation of pre-cast concrete, while his father’s business focuses on poured concrete. He argues that these are different types of business that would have different risks of injury. He notes that Workers Compensation Boards in other provinces characterize his business as “iron work” and not as “concrete work” and that similar consideration should be applied in Manitoba. This would have the effect of removing the tie and association of his business with his father’s business, and presumably provide his firm with a lower assessment rate.
Analysis
As noted in the background, the WCB has developed an industry sub-grouping called “concrete work” which contains a series of definitions (or criteria) of what types of businesses will be included in that sub-group. The panel finds that the appellant’s firm is correctly classified under “concrete work” (the same category as his father’s firm), based on the criteria used for this particular industry sub-group. Additionally, the panel finds that the two firms are “associated employers”, as defined in WCB Policy 35.20.10. In making these findings, the panel relies on the following evidence:
Dealing firstly with the issue of whether the appellant’s firm has been placed in the correct sub-grouping, the classification description used for Sub-Group 401-10 – Concrete Work states in part:
“..An employer in this sub-group would be involved in building forms, pouring concrete, (mostly ready-mix), and finishing the concrete for various projects…
Also, included in this sub-group would be:
…
· Erecting precast concrete. The precise concrete slabs or girders are put into place by cranes.”
The panel notes the appellant’s description of his firm’s activities in his WCB registration form was “Installation of pre-cast concrete for floor systems and wall panels. These products are installed for condos, carwashes, apartments, etc.” The panel finds that this wording clearly places the appellant’s business within this inclusion, and therefore finds that the appellant’s firm has been correctly classified under the Concrete Work sub-group.
As to the appellant’s argument that his business should be moved to another industry sub-grouping, the panel notes that the wording and definitions within the Concrete Work category are very specific, and clearly contemplate the very type of business that the appellant has undertaken. The panel does not have the jurisdiction to set aside these classifications in Manitoba or to implement in Manitoba a risk rating system or different industry sub-groupings that may be in use in another jurisdiction.
Having found that the appellant’s firm is correctly classified in the same sub-group as his father’s firm, the question then turns to whether the two firms are associated with each other, and whether their rates are thus “tied” to each other.
WCB Policy 35.20.10, Classification of Employers into Sub-Groups, states in part:
“This policy outlines when an employer will be classified under one sub-group or under more than one sub-group. It establishes criteria for determining when employers will be considered "associated" and whether they will be classified separately or together. It also establishes criteria on how the WCB will classify an employer whose business includes a non-compulsory component.
The Appeal Commission shall apply this policy to all appeals heard on or after October 1, 1994.
I. ASSOCIATED EMPLOYERS
CLASSIFIED AS ONE EMPLOYER
1. Associated employers will be classified as one employer for the purpose of assigning sub-groups. Associated employers may be assigned to more than one sub-group if they meet any of the criteria above. This will be done by determining whether each associated employer is a department for the purposes of this policy.
2. Two or more employers will be considered "associated" in any of the following circumstances:
a) one employer owns controlling interest (more than 50%) in the other employer; or
b) the employers are controlled by the same person or group of persons; or
c) the employers are controlled by individuals who are members of a family as defined under The Workers Compensation Act; or
d) the employers are controlled by groups of people that are members of the same family as defined under the Act.
INDEPENDENT EXPERIENCE RATING
3. Associated employers which have been assigned to the same sub-group may be permitted independent experience rating if they meet all the following criteria:
a) the employers operate autonomously; and
b) there is no interchange of personnel; and
c) each employer has an assessable payroll in excess of $250,000”
The panel has reviewed the evidence on file, and notes that the two businesses are owned by a father and son, thus meeting the “associated” criterion in 2(c). Section 3 of the policy does provide exceptions where associated firms can have independent experience ratings. However, in our review of the evidence, the appellant’s business does not meet the requirements of section 3. The evidence discloses that the two businesses do interchange their personnel, and the appellant’s assessable payroll is well below $250,000. Accordingly, the panel finds that the appellant’s firm falls within the “associated employer” definition in the policy, and his firm’s experience ratings remain “tied” to his father’s business.
The appellant’s appeal is therefore denied.
Panel Members
A. Scramstad, Presiding OfficerA. Finkel, Commissioner
M. Day, Commissioner
Recording Secretary, B. Kosc
A. Scramstad - Presiding Officer
Signed at Winnipeg this 8th day of July, 2008