The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

The firm is appealing the decision made by the Workers Compensation Board (“WCB”) that they have been correctly classified under Classification Code 604-04 Automotive Body Shop. A hearing was held April 24, 2025 to consider the employer's appeal.

Issue

Whether or not the firm has been correctly classified under Classification Code 604-04 Automotive Body Shops.

Decision

The firm has not been correctly classified under Classification Code 604-04 Automotive Body Shop.

Background

On May 8, 2023, the firm contacted WCB Assessment Services to request a change to their business classification, noting an internal review indicated the firm aligned more with the 310-09 Manufacturing Vehicles classification code.

On June 9, 2023, the firm provided Assessment Services with further information on their business activities. The firm described their work as installing components to existing full-size cargo vans and mini vans to make them wheelchair accessible, primarily for commercial transportation providers. The firm also described that it installs components to full-size vans to produce mobile medical vehicles. The firm indicated that sales of these vans are its main source of revenue, and that their client base includes various listed community and commercial organizations.

The WCB advised the firm on July 7, 2023, after a review of the firm's classification, effective January 1, 2023, that the firm would be classified to 604-04, Automotive Body Shops. A further letter was sent to the firm on November 2, 2023, advising a review of classification 604-04 Automotive Body Shops had been completed and it was confirmed that the firm would be assigned that classification.

The firm submitted an Employer Request for Reconsideration on November 14, 2023, setting out the firm’s disagreement with the classification as assigned. The firm noted they do not do body work or any vehicle painting or repairs, they only deal with new chassis that require no body work, they have their own in-house lasers and press brakes and their products are designed and manufactured off their own drawings created by their in-house designers.

On January 4, 2024 the firm’s innovation team leader, SC, was interviewed by WCB and provided additional information about the firm’s operational processes and further details of the production of their wheelchair accessible vehicles and medical vans. SC advised that the firm was completing about four wheelchair accessible vehicles to every one medical van at that time, and that each wheelchair accessible vehicle took about three days to complete, while each medical van took about seven or eight business days to complete.

The WCB Reconsideration Committee considered the firm's reconsideration request on June 7, 2024 and determined the firm was correctly classified in the classification code 604-04, Automotive Body Shops. The committee noted there was no clear industry classification for the business activities of the firm, in which case, the committee had to determine which industry classification would be the best fit. Four industry classifications were considered, with the committee determining based on information from other firms within the classification that 604-04 Automotive Body Shops was the best fit for the firm.

The firm's representative filed an appeal with the Appeal Commission on August 14, 2024 and a hearing was arranged.

Reasons

Applicable Legislation and Policy

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

Section 79 of the Act provides that the board shall assign each employer in an included industry to an appropriate class, sub-class, group or sub-group, as determined by the board.

WCB Policy 35.20.10, Placement of Employers into Industry Classifications (the “Industry Classifications Policy”), sets out the principles for classification of employers. It states, in part, that: 

The placement of employers into Industry Classifications is consistent with and upholds the principle of collective liability. The purpose of grouping together employers with similar business activities and similar levels of risk is to assist in setting fair and equitable assessment rates that best reflect the collective liability of that group. …

An employer’s Industry Classification is determined by the employer’s predominant business operation. It is not affected by the legal structure of the business or the various occupations within the employer's operation. The placement into an Industry Classification within the WCB’s classification system follows a process which takes into accounts factors such as: 

• The employer’s business activity; 

• Operational and production processes; 

• Use of similar equipment; 

• End products or services; 

• Customer base: and 

• Competitors.

When there is no clear fit or similar Industry Classification, the WCB will use its judgment to classify the employer into the Industry Classification that has the best fit. In doing so, the WCB may review the occupations of workers in the business, business locations or other information to get a better understanding of the employer’s business activities in order to make a fair decision. When there is a requirement to use judgment, the WCB will give consideration to the fair treatment of other employers in the same industry.

The description of WCB Industry Classifications, Sub-Goup 604-04, Automotive Body Shops, is as follows:

Repair and painting automotive body components in cars, trucks, vans, or buses.

Includes: 

• Customizing or conversion of vehicles. 

• Repairing or replacing vinyl tops or body mouldings. 

• Filling, sanding, priming and painting vehicles.

Includes incidental glass replacement or rust-proofing.

Also includes incidental vehicle sales and towing services.

The description of WCB Industry Classifications, Sub-Group 310-09, Manufacturing Vehicles, is as follows:

Manufacturing vehicles, including: 

• Trailers 

• Truck boxes 

• Recreational Vehicles 

• Cars 

• Buses 

• Etc.

Incidental activities include: 

• Making frames/chassis 

• Building motors 

• Assembly 

• Paint/finish 

• Etc.

Employer’s Position

The employer was represented and provided a written submission in advance of the hearing. The employer’s position was that industry classification 604-04, Automotive Body Shops, is not the best fit based on the firm’s business activities, which “bear almost no resemblance to those of an automotive body shop that provides the service of repairing and restoring existing vehicles back to its original form and returning the vehicle to the original customer.”

The employer described that the firm “designs, installs, converts, manufactures parts and installs components into the interiors of new vehicles only”, and that it does no repair work to damaged or used vehicles. The employer notes that it has no competitors in the province and that the firm’s customer base is commercial and community organizations, unlike an automotive body shop. The firm, the employer argued, produces new, specialty vehicles, unlike an automotive body shop.

The employer argued that the firm’s operations and processes utilize different equipment, including a flat bed laser and press brake used for manufacturing components, than an automotive body shop and that different technicians and operators are required by the firm to operate the specialized equipment and to design and manufacture components.

The employer argued that the best fit for the firm’s industry classification is 310-09, Manufacturing Vehicles, having regard to the design and manufacturing components of the firm’s business activities. The evidence submitted by the employer for the hearing included confirmation of funding received by the firm from the National Research Council of Canada for Industrial Research Assistance, and from the Government of Manitoba to expand the operations of the firm, which was described in the press release announcing the funding as a “wheelchair-accessible vehicle and mobile medical van manufacturer”.

The employer also submitted as evidence three news articles in which the design and manufacturing aspects of the firm were highlighted.

The employer took issue with the Reconsideration Committee’s finding that the conversion and manufacturing of ambulances and firetrucks (also built from existing chassis) would align with the classification of Manufacturing Vehicles because they “require significant design and manufacturing to produce the end product” while the firm, they concluded “mainly installs 3rd party components into new vehicles” and “is not manufacturing a specialty vehicle but rather converting a new vehicle, by installing wheelchair accessible components to serve a specific purpose. For these reasons, the committee is of the opinion, the manufacturing classification is not the best fit [for the firm].”

The employer’s response to this finding was as follows:

This could not be further from the truth. In fact, the modifications are extensive as the firm designs, engineers and manufactures most of the components and accessories installed, which is integral to the complete vehicle that is later sold and delivered to its clients.

The employer argued that the firm’s work also produces a new, specialty vehicle for completely different use from the original product.

With respect to the level of risk undertaken, the employer argued that the firm’s positive claim experience differentiated it from other employers classified as Automotive Body Shops which have higher risk, hazards and claim costs as well as different work and equipment. The employer took the position that where there was overlap in the occupations of individuals employed by the firm and an automotive body shop (welders, for example), it was primarily because the occupations are common to a number of work places.

The employer described the firm as “an innovative manufacturer in the areas of health care and transportation by all levels of government and by their industry colleagues”, stressed that their products are the result of manufacture rather than conversion, and asked to be removed from the Automotive Body Repair classification.

Analysis

The issue before the panel is whether the employer’s operations are properly classified under category 604-04, Automotive Body Shops. The panel is not able to answer the question affirmatively, for the reasons that follow.

The Reconsideration Committee acknowledged in its decision, and the panel agrees, that there is no industry classification “clear fit” for the employer. The test to be applied by WCB in making the industry classification is therefore the “best fit”. Where judgment is required, consideration is to be given to the fair treatment of other employers in the same industry.

The business activity of the firm is the modification of existing vans to produce wheelchair accessible vans and medical vans. As noted by the Reconsideration Committee, the processes for producing the two products are different, with the medical vans requiring a significant build of the interior with custom fabricated components, manufactured in-house, while the wheelchair accessible vans require installation of some third-party components.

The Reconsideration Committee found that the main business of the firm was the conversion to wheelchair accessible vans. In support of this finding the Reconsideration Committee relied on the employer’s information that they were producing 4 wheelchair accessible vans to one medical van.

The Reconsideration Committee acknowledged that the process of producing medical vans was more extensive, writing in its decision that:

These builds require manufacturing of components and installation. Medical vans appear to be substantially different from the original vehicles, specifically in the interior. Additionally, the firm as noted plans to expand into the ambulance market. Should these builds begin to represent a majority of the firm’s work or meet the threshold for multiclass classification, a request to review of classification can be made to the WCB

The employer’s evidence before the panel at the time of the hearing was that the majority of their operations, 60%, relate to medical van production. This figure, the employer advised, takes into account design and engineering aspect of medical van production, including the in-house manufacture of components, as well as labour and installation.

The employer also gave evidence before the panel that they employ 9 engineers on staff, which supports their description of the firm’s significant design and manufacturing activities. They advised that the firm holds several patents for the components they manufacture. The employer indicated that the work performed on the original vehicle before sale by the firm doubles, if not triples, the value of the beginning product received by them.

The panel is satisfied that there is more to the work of the firm than installing third-party items in a pre-fabricated vehicle. The work undertaken by the firm includes a high degree of research and development and includes the design and installation of products which are manufactured “in house”. The level of modification to the vehicles, particularly the medical vans, and the value added from the time the vehicles are received by the firm is substantial, and not what one would normally find in a retail autobody business.

The panel is also satisfied that any similarity between the risks associated with the firm’s activities and those of Automotive Body Shops are largely incidental, given the lack of direct overlap between processes, equipment and employee responsibilities.

Based on the evidence before the panel, there is a unique manufacturing component to the firm’s business activities that would place the firm outside the industry classification of Automotive Body Shops.

Accordingly, the panel finds that the firm does not fit within the criteria of Automotive Body Shop as set out in Industry Classification 604-04. The panel takes no position on the appropriate categorization of the firm, as that question is not before it.

Panel Members

M. Murray, Presiding Officer
J. Peterson, Commissioner
M. Kernaghan, Commissioner

Recording Secretary, J. Lee

M. Murray - Presiding Officer
(on behalf of the panel)

Signed at Winnipeg this 29th day of May, 2025