The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

The appellant firm’s legal counsel filed an appeal with the Appeal Commission concerning a decision that was made by the Assessment Committee of the Workers Compensation Board (WCB) which determined that the appellant firm was a compulsory firm under The Workers Compensation Act (the Act). The firm’s legal representative was of the opinion that the appellant firm’s business fell within “Farm-related services” under section 36 of the Excluded Industries regulation, and should not be assessed. A file review was held on December 8, 2008 to consider the matter.

Issue

Whether or not the employer should be considered a compulsory firm under the Act.

Decision

That the employer should be considered a compulsory firm under the Act.

Decision: Unanimous

Background

In October 2007, a worker was injured while in the employ of the appellant firm and a claim was filed with the WCB. Following an investigation by the WCB’s Assessment Services Branch, it was determined that the worker’s employer (the appellant firm) was not registered with the WCB.

Subsequently, a WCB staff representative spoke with the owner of the appellant firm who indicated that his business activities were custom manure spreading, which involved pumping manure from lagoons and then spreading it onto farmers’ fields. During the investigation, the owner advised that he did not want WCB coverage and declined to provide payroll information.

On November 5, 2007, the appellant firm was advised by the WCB that it considered the firm to be in a compulsory industry requiring registration under the Act, the firm would be formally registered, and an arbitrary assessment was then made under section 80(6) of the Act. The WCB determined that the firm should be classified under the industry classification “Scavenge Removal Snow,” which included the removal of hazardous waste and feed lot cleaning.

On June 13, 2008, a WCB assessment representative spoke with the appellant firm’s owner to determine what the firm’s main business was. She advised that if the firm was only involved in the spreading of fertilizer/manure, this would be an exempt industry. However, if it also removed waste from lagoons, it would fall within Sub-Group 501-03. The owner advised the WCB that according to his lawyer, he was not required to register as he was spreading fertilizer for farmers. He only had family members working for him and he did not think he had to cover them.

In correspondence to the WCB dated July 14, 2008, the appellant’s lawyer stated:

“We write to you as legal counsel for [appellant firm] with respect to your invoice dated June 17, 2008. It is our view that our client is an exempt business, as the business is primarily involved in spreading fertilizer. Therefore, on behalf of our client, we want to appeal that assessment.”

Prior to considering the appeal, the Assessment Committee performed a Manitoba Companies Branch search. It determined that the injured worker was not a director of the firm.

The Assessment Committee issued a decision on July 24, 2008, stating that the firm is required to maintain a registration with the WCB, and that based on the definition of a “worker” in the Act, only directors of a corporation are exempt from being classified as workers. The decision confirmed that the firm was correctly classified under the industry classification “Scavenge Removal Snow” which included removal of hazardous waste and feed lot cleaning. The Committee found that the employer was properly classified based on the activities of cleaning lagoons, then spreading manure.

As a rationale for its decision, the Assessment Committee stated that the appellant firm’s primary activity was the cleaning of lagoons – “removal of waste” and was not exempt from any industry listed under the Act. The spreading of manure on farmer’s fields was the secondary part of the cleaning of the lagoons. The fact that the firm was performing services for the farming industry does not exempt the appellant firm from maintaining coverage for its workers. The cleaning of lagoons can be performed for a municipality or town as well as for farmers. Subsection 1(3) and 60(2) of the Act were referred to in the decision.

On September 17, 2008, legal counsel for the appellant firm appealed the Assessment Committee’s decision to the Appeal Commission and a file review was arranged. On December 1, 2008, legal counsel provided the appeal panel with his submission regarding the issue under appeal.

Reasons

Applicable Legislation and Policy

The Appeal Commission and its panels are bound by the Act, regulations and policies of the Board of Directors.

Section 2 of the Act provides that Part I of the Act applies to all employers and all workers in all industries in Manitoba except for those excluded by regulation. Part I of the act establishes the compensation system and the rights of workers and employers under the system.

Manitoba Regulation 196/2005, Excluded Industries, Employers and Workers Regulation (the Regulation) provides that industries, employers and workers listed in Schedule A are excluded from Part I.

The WCB’s Board of Directors made WCB Policy 35.20.10, Classification of Employers into Sub Groups. The relevant sub-group is Subgroup 501-03, Scavenge Removal Snow, which states, in part:

Activities Included in Sub-Group:

The employers in the classification are involved in scavenging or garbage removal, or snow and ice removal from streets, commercial or residential properties…

Firms involved in soil remediation should be in this sub-group. Soil remediation is the process of cleaning or removing contaminated soil from a site.

Also included in this classification are the following:…

• Feed lot cleaning…
• Removal of hazardous waste. For example, employers pumping hog manure out of a sewage lagoon and then spread/spray manure over farmers’ fields.

The Regulation 196/2005, lists exempted industries under the Act (where employers are not required to register under the Act). The relevant exemption for this case deals with farm-related services, described as:

36. Provision of farm-related services, including aerial chemical applications, chemical spraying, custom harvesting, fertilizer spreading, farm contracting, haying and threshing, land clearing; provision of agricultural management services; provision of agrology and agronomy services.

Appellant Firm’s Position

Legal counsel for the appellant firm set out their arguments in a written submission. The firm’s business is described as follows:

“The employer is the operator of a family run business. All of the directors and virtually all of the employees are related. The business encompasses a number of different aspects. The manure management business is a major part of the employees’ activities. This part of the business includes cleaning out feed lots, pumping out lagoons, and spreading the manure on fields as fertilizer. However, another significant part of the business is the livestock operation, which involves raising cattle in a “cow-calf” production.

Counsel notes that all employees are paid by the incorporated manuring company, but that they do also cross over into the other farming areas. This is for ease of record-keeping. He also notes that the employees work through the winter, even though environmental regulations prohibit the spreading of manure during the winter months.

Counsel argues that the manure management aspect of the employer’s operation is a purely farm-related service and is an exempt industry under section 36 of the Regulation. He states that this applies both to the spreading of fertilizer and to the pumping out of lagoons. He suggests that the sub-group classification system should only be used as a general guideline, but that the regulation should be given greater deference.

Analysis

The issue before the panel is whether the firm should be considered a compulsory firm under the Act. The panel found it should be.

It is the panel’s view that there are differences between the activities described as “farm-related services” under Section 36 of the Regulation and those described under Sub-Group 501-03 of the WCB’s classification system. The farm-related services contemplate a limited exemption, for the provision of fertilizer spreading to fields. This is an essential component for crop production and a naturally incidental part of a farming operation. Sub-group 501-03 deals generally with scavenging services. The panel notes from its reading of Sub-group 501-03 that the WCB has carefully examined certain “dual purpose” operations taking place on a farming property. Two specific potential agricultural applications have been identified as being more related to “scavenge” than to “farm-related services”: “feed lot cleaning” and “removal of hazardous waste. For example, employers pumping hog manure out of a sewage lagoon and then spread/spray manure over farmers’ fields.” The panel notes that the wording of this sub-group appears to contemplate or respond to a significant industry that has developed in Manitoba regarding the cleaning of lagoons and spreading of the byproducts onto farmers’ fields. A September 25, 2008 submission from the chair of the Assessment Committee notes that this is a significant industry grouping; approximately 60 employers are now registered as doing these particular activities.

The panel notes that the file evidence and the submission of the employer’s representative both note that the manure management business is a major part of the employer’s business, the firm’s name actually incorporates the work “manuring” into its title, and the firm acknowledges that it does in fact source its fertilizer by cleaning out lagoons. The panel therefore finds, on a balance of probabilities, that the firm’s activities are correctly classified under industry Subgroup 501-03, “Scavenge Removal Snow.”

Accordingly, the firm should be considered a compulsory firm under the Act. The employer’s appeal is therefore denied.

 

Panel Members

A. Scramstad, Presiding Officer
A. Finkel, Commissioner
M. Day, Commissioner

Recording Secretary, B. Kosc

A. Scramstad - Presiding Officer

Signed at Winnipeg this 14th day of January, 2009