Big WSIB Changes Ahead for Employers

Ontario's Workplace Safety & Insurance Board (WSIB) has proposed a brand new system for funding our workers' compensation system that would change the way WSIB premiums are set and would eliminate the current process of giving surcharges and refunds.

This new system is said to come into effect by January 2019 and promises to be revenue neutral and the most significant change to the WSIB in decades. It would reduce the number of rate groups from over 200 to about 34 and eliminate the current NEER, CAD-7, and MAPP experience rating programs and replace them with one unified system. The updated reform proposal can be found here.

​Here are some of the key points you need to know. (Remember that details are subject to change since the WSIB's consultation process is ongoing):
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New ways to categorize employers:

• Currently, companies are categorized with similar businesses into one of 200+ rate groups (mining firms grouped together, retail stores grouped together).
• The new system will streamline the process and categorize businesses into one of 34 rate classes based upon NAICS codes (that is up from the original 22 classes proposed in 2015 that was adjusted due to stakeholder feedback).

Say goodbye to refunds and surcharges, say hello to 'risk bands':

• The WSIB will move away from 'predicting' expected claim costs for each employer and then allocating a refund or additional surcharge each September based on actual costs.
• The new system will assign a premium rate based on the collective experience of all the employers in their rate class and where the particular employer falls on the 'risk band' or range of premium rates within that rate class.
• Increases or decrease in claim costs for that employer will result in an increase/decrease in the next year's premium rather than a surcharge/refund of that year's premium.
• The range of premium rates within each rate class will be quite extensive, with up to 40-80 different risk bands in each class.  Regarding increases/decreases in premium rates, no employer will be able to be moved up or down more than three risk bands per year (capping any increase/decrease to +/- 15% in any one year). This will help protect employers from catastrophic claim costs in one year.
• Maximum risk band is not to exceed 3x the average premium rate for the rate class.

(Possibly the) End of multiple rate groups for one company:

• Currently, companies with business activities that cross into more than one rate group (i.e. company has both manufacturing and trucking divisions) can assign individual employees to different rate groups (which may have different premium rates) and receive NEER reports for each rate groups.
• The new system will establish a 'general rule' that assigns each employer to a single rate class based upon the company's predominant business activity. This change will simplify the administration of claims but will most likely result in premium increases for an employer who currently has a portion of its workforce in lower-cost rate groups (assuming that their predominant business activity is in a high-cost rate class). 
• The WSIB has responded to concerns from employer groups saying that "it is interested in further exploring some exceptions to this general rule for separate classification and multiple rates for a single employer, if an employer engages in more than one business activity, and a business activity is not dependent on the other activity(ies)." It is still unclear, but there may be some wiggle room in this general rule.

Exception for staffing agencies:

• An important exception to this 'general rule"'of one rate class per employer will be created for staffing or temp agencies.
• The WSIB is proposing that staffing/temp agencies will have separate WSIB accounts for each industry or rate class they serve, rather than one rate class for the firm itself.

Expansion of experience window to 6 years:

• Employers will remember that the WSIB previously expanded the NEER window from 3 to 4 years in 2010.  The new system would further expand the experience window for the unified system to 6 years of review.
• Initially, the WSIB proposed that all claims within that window would be treated equally when determining premium rates. After consulting with stakeholders, that has been changed to a formula that gives higher (two-thirds) weight to claims within the most recent three years and lower weight (one-third) to those in the previous three years. This should help employers see changes in their premium rates if they have recently implemented changes to their health & safety practices. The image below depicts this weighted formula:

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WSIB's Weighted 6 Year Experience Window

What about the Fatal Claim Adjustment Policy or other punitive measures?

• In 2008, the WSIB instituted the Fatal Claim Premium Adjustment policy, which essentially voided out any potential NEER refund on an employer who had a traumatic fatality claim in that year.
• The new system will not have refunds that could be voided, so the application of that policy as it now stands will not be feasible. However, the WSIB has proposed that such a company be assessed an amount consistent with the rolling five-year average of the cost of a claim to maintain the 'spirit' of that policy.
• The WSIB also says that it is open to a 'special surcharge"'for bad performers. When an employer has an accident history over several years that is consistently significantly worse than others in their rate class, they may be subject to an undetermined surcharge of some kind. 

What about SIEF?

• The WSIB's Secondary Injury Enhancement Fund (SIEF) provides employers with a discount on claim costs if it is determined that an employee's injury is caused or prolonged due to a pre-existing condition. It does not impact whether benefits are provided to the injured worker, it only provides cost relief to the employer.
• The outcry from stakeholders at the potential removal of the SIEF program has resulted in the WSIB's acknowledgement that some form of cost relief measure is necessary. The SIEF cost relief program will be kept as an interim measure until there is a better cost relief structure for employers to mitigate costs.

How will these changes be implemented?

• The WSIB plans to seek approval for the new framework proposal from its Board of Directors in late 2016. Implementation is planned for no earlier than January 1, 2019.
• The WSIB has committed to publishing a written policy framework one year prior to the implementation of the new system.  In the interim, it will prepare a transitional plan to support stakeholders through the implementation process. Exact details of how the transition will unfold are still unclear.
• Additional stakeholder discussions are occurring in 2016-2017. 
• Stakeholders have their opportunity to share further thoughts on the updated framework until March 2016. This can be done by providing a written response to the Consultation Secretariat (consultation_secretariat@wsib.on.ca). 

Want to learn more?

• Read more about the Updated Rate Framework here
• Seek additional information from active participants in the consultation process, including the ​Office of the Employer Advisor (OEA)
• Contact Clear Path President, Anna Aceto-Guerin or register for one of our upcoming Introduction to the WSIB and NEER Workshops, that will include an overview of proposed changes.

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