By Olivia D’Orazio
Many of the WSIB’s proposed changes, which will impact every business in Ontario, are an effort to move the current system closer to the more commonly used North American Industry Classification System (NAICS).
The most obvious difference is the number of rate groups, which the WSIB plans to shrink to between 22 and 32 – from the 155 that it currently has. What’s more, employers will no longer be able to spread their employees across many rate groups, and will instead pay a single rate across the company, as determined by the one industry group that carries the most payroll.
“Payroll isn’t always reflective of your main operations,” says Michele Bruton, senior WCB financial analyst for Isthmus Legal, adding that WSIB still hasn’t decided if payroll will be based on full-time equivalent hours or dollar amount, though it’s likely going to be the latter.
That distinction is going to be especially complicated if a company employs workers from different industries with significantly different salaries.
“If your business is multifaceted, right now you can have five or 10 rate groups that are tailored to the specific tasks of your employees,” says Sandeep Jindal, legal counsel for Isthmus Legal. “You’re now only going to be allowed one classification.
“(Under the new system) you may be paying premiums on your receptionist based on the risk of a roofer, even though he or she will never be exposed to that risk.”
WSIB said this change will help it abandon the practice of multi-rating. While the board won’t necessarily increase rates, it will remove employers’ eligibility for lower rates among the different classes.
“You can bet that’s going to be litigated,” Jindal says.
But sitting through court battles isn’t going to be the greatest challenge facing employers. Change management is going to be a crucial part of the process.
“Any big system that you’re going to change is going to have huge change management problems both at the macro level and at the individual employer level,” Jindal says. “This will take years for this change to work its way through. It’s going to be messy and uncertain until it settles.”