Canadian Payroll Reporter

2 Canadian HR Reporter, a Thomson Reuters business 2014 News December 2014 | CPR Reporting earnings a challenging area see BOARDS on page 4 from PAYROLL on page 1 assessment program services at the Workers Compensation Board of Manitoba, says filing by the deadline is especially impor- tant for boards that ask employ- ers to provide actual payroll for the previous year and an estimate for the coming year. "For example, in Manitoba, our rate model is based on es- timated payrolls. If you are not getting those to us on time and we have to put those numbers in, your rates are potentially being artificially set," he says. "It's important to us to ensure that the stakeholders maintain the integrity of the compensation system. In order to maintain that integrity, we have to have faith that the employers understand the historic compromise and are holding up their end of the bar- gain." The "historic compromise" is the foundation of the workers' compensation system in Canada. It is based on five tenets called the Meredith Principles. They are named after Justice William Meredith who, in 1910, was ap- pointed by the Ontario govern- ment to find a way to deal with the issue of workplace injuries. At that time, workers injured on the job had no financial pro- tection. They could sue their employers, if they could afford it, but if they were found to have played a role in the accident, the employer owed them nothing. If a worker won, it could result in bankruptcy for the employer. In 1913, Meredith produced his final report, which proposed a trade-off in which workers would lose the right to sue but be guaranteed income regardless of who was responsible for the ac- cident. The five principles stem- ming from his report are: •No-fault compensation, with both the employer and worker waiving their right to sue. •Security of payment, with a fund set up to ensure there is money for workers who need it. •Collective liability, under which all registered employers share in paying the total cost of the workers' compensation system through assessments (called premiums in some jurisdic- tions). •Independent administration, meaning the workers' compen- sation bodies operate separately from provincial governments. •Exclusive jurisdiction, meaning workers' compensation issues are dealt with only by workers' compensation bodies. Ontario passed legislation implementing Meredith's rec- ommendations in 1914. Over the years, all other provinces and ter- ritories in Canada did so as well. "The employers get that im- munity from lawsuit because of that compromise. If employers aren't reporting their payrolls properly and paying their fair share, then they're not really con- tributing to that historic com- promise," Wiebe says. Wiebe and Wilson are quick to say most employers do a good job of accurately reporting pay- roll on time; however, one of the most common errors is incorrect reporting for contractors, sub- contractors or casual labour. "Typically, the most common example is in the construction industry where they hire what they consider to be sub-con- tractors. They are paying them piecework or whatever. They don't believe they are workers. For our purposes, they are their workers and they have to report those earnings," Wiebe says. Some people take it for granted that when they hire a contractor or sub-contractor that they have their own coverage, says Wilson. Executive earnings Another common problem in- volves reporting the earnings of company executives. Boards may treat those earnings differ- ently so employers with multi- jurisdictional payrolls need to be aware of specific requirements. In Alberta, directors of cor- porations are not considered workers unless they have applied and been approved for optional coverage. As a result, directors' earnings are not included in as- sessable payroll. Shareholders, however, are treated differently. "If you've got a shareholder who is on your payroll, they should be included unless they are a director... If they are getting a T4, they need to be reported," Wilson says. In Manitoba, employers in- clude a director's earnings only if they have applied for optional coverage for the director and the board has approved it. Wiebe says misunderstanding can lead some employers to report the earnings twice. "They list the directors they want covered (for optional cov- erage). In some cases, they are T4ed workers. They say, 'We want the coverage for $80,000 because that is what they make,' but that... is also in their T4s they report, so they end up reporting that in the assessable payroll." In Ontario, directors' fees are included in assessable pay- roll if the Workplace Safety and Insurance Board considers the director to be an employee. If an employer is unsure, the board says it should contact them for advice. Another issue boards men- tioned was employers failing to report certain types of earnings. In Alberta, Wilson says some em- ployers fail to include honoraria and recorded tips and gratuities in their reported payroll. Ontario and P.E.I. workers' compensation bodies list taxable benefits as a common reporting problem. "Taxable benefits that form part of a worker's annual remu- neration are often overlooked or excluded from payroll report- ing. Employers should be mind- ful to include these amounts or seek clarification from WCB on the types of benefits to be re- ported," says Barbara Groome Wynne, senior communications co-ordinator at P.E.I.'s Workers Compensation Board. Sometimes problems arise be- cause payroll departments think they only have to report earnings that are included in box 14 on a T4, she says. Another common error cen- tres on the amount of earnings reported. Each year, every work- ers' compensation body in Can- ada sets a maximum assessable earnings amount. A number of boards say employers sometimes report payroll in excess of the maximum amount. In other cases, Wilson says, payroll departments mistakenly deduct a portion of a worker's earnings on a pro rata basis be- cause he has not been with the company for the entire year. Another issue with prora- tion concerns employers boards have assigned to more than one industry group for workers' compensation coverage. If an 2015 Maximum Assessable/Insurable Earnings The following workers' compensation maximum assessable/insurable earnings apply for 2015: Jurisdiction 2015 Maximum Alberta TBA British Columbia TBA Manitoba $121,000 New Brunswick $60,900 Newfoundland and Labrador $61,615 Northwest Territories $86,000 Nova Scotia $56,900 Nunavut $86,000 Ontario $85,200 Prince Edward Island $52,100 Quebec $70,000* Saskatchewan $65,130 Yukon TBA TBA = to be announced *According to CSST. Maximum may change once Revenu Québec fi nalizes it.

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