Decision #67/10 - Type: Workers Compensation

Preamble

The employer is appealing a decision that was made by the Assessment Committee of the Workers Compensation Board ("WCB") which determined that it was properly classified under "Professional/Business Offices - Compulsory" and "Designing, Decorating, Drafting" as well as the finding its compulsory coverage should be made retroactive to January 1, 2007. A file review was held on May 27, 2010 to consider the matter.

Issue

Whether or not the firm has been properly classified; and

Whether or not compulsory coverage should be made retroactive to January 1, 2007.

Decision

That the firm has been properly classified; and

That compulsory coverage should be made retroactive to January 1, 2007.

Decision: Unanimous

Background

On August 29, 2006, the employer spoke with a staff member at the WCB’s Assessment Services branch about an extension of coverage letter that he received which indicated that his firm was in the aviation industry and as a result of legislative changes, his firm would be required to register with the WCB as of January 1, 2007. The employer indicated that his firm was not in the aviation industry but was a photogrammetry service and that all aerial work was sub-contracted out. He stated that his workers were all indoors. The staff member advised the employer that the government decided to expand WCB coverage to several additional industries which, in addition to aviation, included the following: exploration and prospecting including assaying, archeology, environmental, geological, geophysical or mapping services and land surveying. The employer stated that he was not involved in any of these services and that the firm was a topographical photo-based mapping service.

In a letter dated December 8, 2009, a WCB assessments account representative advised the employer that the firm would be classified under industry code 202-08 Exploration, Prospecting, with rates of $1.73 for 2007 and $1.61 for the year 2008.

On December 9, 2008, the employer contacted the WCB after receiving the letter of December 8, 2009. The employer clarified his business activities as follows:

· They interpret aerial photographs and make topographic and photo maps;

· The aerial photographs are brought to them. They do not take the pictures;

· The technicians use a CAD program to make the maps;

· They were registered in Alberta under “map making” and their rate is $0.24 (per $100.00 of payroll);

· In Saskatchewan they are registered under “computerized drafting” and the rate is $0.15.

The WCB staff person called the employer back. She indicated that “Mapping Services” was under the classification of 202-08, Exploration and Prospecting.

On December 11, 2008, the employer appealed the above decision to the Assessment Committee. The employer indicated that classification 202-08 would indicate that its primary business was in the mining sector which was incorrect. He stated that the firm provides services to GIS (geographic information) and IT (information technology) departments, engineers, civil technologists and planners. He said the mining sector was a very small component of his clientele. He felt a more accurate classification of his firm would be CAD (computer aided drafting), GIS or IT. The employer indicated that it had small branch offices in Saskatoon and Calgary (under classification of Computerized Drafting and Map Making Services) and the rate per $100 of payroll was $0.15 and $0.24. He stated that these rates were in sharp contrast to the Manitoba rates of $1.61 - $1.73 per $100 of payroll.

On January 27, 2009, the Assessment Committee re-classified the firm to industry sub-group 903-13 “Professional/Business Offices – Compulsory” for 2007 and 2008, and Industry Sub-group 704-08 “Designing, Decorating, Drafting”, effective January 1, 2009. The rationale for the decision was outlined as follows:

“The appellant states that his operations are restricted to an office environment where someone else brings aerial photos to him at which time his staff will operate computer programs to analyze the photography. As the Regulations do not specifically exclude these activities from compulsory coverage the firm is required to register retroactive to January 1, 2007, under industry sub-group 903-13 “Professional, Business Offices.” This voluntary-coverage classification was re-classified to 704-08 effective January 1, 2009.”

On February 9, 2009, the firm was provided with a copy of the Assessment Committee’s decision dated January 27, 2009 and was advised of the following:

“This classification applies only in circumstances where no field work is done by your workers, or by sub-contracted workers whom the WCB deems to be your workers for purposes of coverage under the Act. If your business activities change in the future, please contact the WCB…”.

In the lowest possible risk category, your industry’s 2009 range of rates is between $0.14 at the low end and to $0.72 at the upper limit.”

On February 12, 2009, a WCB staff member called the employer to obtain workers’ earnings for the years 2007 and 2008 under the rate codes of 903-13 and 704-08.

On February 24, 2009, the employer outlined concerns about the rate code outlined in the February 12, 2009 letter as well as the requirement to make their registration retroactive to January 2007.

In a decision dated March 12, 2009, the employer was advised of the following:

“Based on the description of your business activities, the WCB has placed your firm in the lowest risk category, at New Firm Rates of $0.24 and $0.23/$100 for 2007 and 2008, respectively. Your firm is assessed at $0.23/$100 for 2009, as well. Your business operations were assigned to Industry Sub-Group 903-13 “Professional, Business Offices” under compulsory coverage for 2007 and 2008, since your business activities were not excluded under the Excluded Industries, Employers and Workers Regulation (MR 196/2005) and must therefore have been covered.”

“…The Act tells us that your firm is not excluded from requirements to register and pay premiums, and we have assigned you to the industry sub-group based on what we know (and learned) about your activities. As well, when the WCB identifies any business operation which should have been registered in prior years the board has jurisdiction and authority to require retroactive report of assessable workers’ earnings, and the payment of premiums as would have been payable in those prior years.”

In a further letter dated September 17, 2009, the firm was advised that no change would be made to the Assessment Committee’s decision of January 27, 2009. On October 2, 2009, the employer appealed the decision to make their coverage retroactive to 2007 as well as the classification of its business and a file review was arranged.

Reasons

Applicable Legislation and Policy

The Appeal Commission and its panels are bound by The Workers Compensation Act (the “Act”), regulations and policies of the Board of Directors.

Part I of the Act establishes the compensation system and the rights of workers and employers under the system. Section 2 of the Act provides that Part I applies to all employers and all workers in all industries in Manitoba except for those excluded by regulation. Thus the Act operates under an exclusionary coverage model which means that WCB coverage is mandatory, unless specifically excluded.

The following sections of the Act are relevant to the payment of assessments by employers:

Payroll estimates and certified copies

80(1) An employer shall, on becoming an

employer and at such other times as the board may

require, furnish to the board an estimate of the amount

of the payroll of each undertaking in an industry for the

following year, with such other information required by

the board for the purpose of

(a) assigning the employer or undertaking of the

employer to a class, sub-class, group or sub-group;

and

(b) making assessments under this Act;

and the employer shall, at the close of each year, and at

such other times as the board may require, furnish

certified copies of the payroll.

Continuing liability of employer

80(7) Where, for any reason, an employer liable

to assessment is not assessed in any year, he is

nevertheless liable to pay to the board the amount for

which he should have been assessed; and payment of

that amount may be enforced in the same manner as the

payment of an assessment may be enforced.

Employer’s Position

The employer’s submission noted that the firm had been a Manitoba business since March 1995 and when it first started operations, it was not required to be registered with the WCB. Although the legislation changed in 2007, an appropriate classification for the firm was not established until February of 2009. In addition, the firm was not informed of the new requirement for it to be registered until late in 2008. It was submitted that in the circumstances, it would only be fair that the registration for the firm be retroactive to January 1, 2009, not January 1, 2007.

With respect to the classification of the firm, it was submitted that the firm serviced clients in numerous industries, of which the mining industry was just one. The firm also did work in urban planning, engineering, land development and management. It was noted that the land development industry is excluded from WCB coverage and that the firm provided its services more to the land development industry than it did to “exploration and prospecting” and even “design and decorating.” It was submitted that based on an industry classification of “land development,” the panel could potentially find that the firm may in fact be excluded from WCB coverage.

Analysis

The first issue before the panel is whether or not the firm has been properly classified. In order for the employer’s appeal to be successful, the panel must find that the classifications of “Professional/Business Offices – Compulsory” (for 2007 and 2008), and “Designing, Decorating, Drafting” (for 2009 onwards) do not accurately reflect the work being done by the firm’s employees. We are not able to make that finding.

In the panel’s opinion, the classifications assigned by the WCB accurately reflect the type of work and risk involved with the firm’s business activities. The firm’s employees work in an office environment, and the assigned classifications reflect the lowest possible risk category. The panel also notes that the firm’s assessed rate of $0.23/$100 is comparable to the rates the firm pays for WCB premiums for its similar operations in Saskatchewan ($0.15/$100) and Alberta ($0.24/$100).

The panel considered the firm’s argument that as a significant proportion of its services were provided to clients in land development, it should be classified in that industry. We do not accept this argument. Just as the classification of “Exploration and Prospecting” did not properly reflect the firm’s work, “Land Development” does not either. The firm is a map-making company whose workers perform their jobs in an office environment. We find that the classifications of “Professional/Business Offices – Compulsory” for 2007 and 2008, and “Designing, Decorating, Drafting” for 2009 onwards are appropriate.

The second issue before the panel is whether or not compulsory coverage should be made retroactive to January 1, 2007. In considering this appeal, the panel reviewed the provisions of the Act and WCB policies. The panel notes that subsection 80(1) of the Act imposes a mandatory duty on employers to furnish payroll information. Subsection 80(7) of the Act compels employers to pay all amounts for which the employer should have been assessed, regardless of whether or not the assessment was issued in a given year. This would include retroactive assessments. The Act and the WCB policies do not give either the WCB or the Appeal Commission the discretion or capacity to waive the requirement to furnish payroll information for all years during which the employer falls under the scope of the Act nor to provide relief to an employer from its obligation to pay the assessment for that year. Accordingly, the panel finds that the compulsory coverage must be made retroactive to January 1, 2007.

The panel also notes that even if we did have the discretion to relieve an employer of a retroactive assessment, we do not entirely agree with the firm’s submission that it was not informed of the new requirement for it to be registered until late in 2008. The file indicates that there were communications between the WCB and the firm in 2006 regarding the expansion of coverage. While it is true that there was a long period of time when the file languished and the WCB was late in setting up the firm’s account, it is not accurate to say that the firm had no notice of the upcoming changes for 2007.

We also note that despite the fact that the firm did not know its workers had WCB coverage in 2007 and 2008, there is no time limit on filing a claim for benefits and its workers are still able to submit a claim if they did suffer a work-related injury during that period of time.

For the foregoing reasons, the employer’s appeal is dismissed.

Panel Members

L. Choy, Presiding Officer
A. Finkel, Commissioner
P. Walker, Commissioner

Recording Secretary, B. Kosc

L. Choy - Presiding Officer

Signed at Winnipeg this 22nd day of July, 2010

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