The Clinic’s position has long been that the experience rating system is ineffective in improving health and safety, and encourages claims suppression. Until eliminated, submission recommends that temporary employment agencies move to their new applicable premium rate established by the WSIB.
IWC Community Legal Clinic
June 29, 2022
WSIB Consultation Secretariat
200 Front Street West
Toronto, Ontario M5V 311
Sent by email to:email@example.com
Dear Consultation Staff,
Re: Temporary Employment Agency Rate Setting Consultation
The Injured Workers Community Legal Clinic is a legal aid clinic with a province-wide mandate. We have specialized in the area of workers’ compensation since 1969. As a legal aid clinic, our services are provided to people with little or no income for no charge. In addition to legal advice and representation, our mandate includes community development, public legal education and participation in law and policy reform.
It is our clinic’s position that experience rating (basing premiums on claims and costs) is ineffective. There is no evidence to support the presumption that experience rating will lead to improved health and safety. There is a great deal of evidence that experience rating leads to claims suppression and that this is a major problem for the WSIB. We support the elimination of experience rating and a move to a flat rate system like that of Employment Insurance and OHIP.
Until then, Temporary Employment Agencies (TEA) should move directly to their applicable premium rate; there is no reason to defer the transition. The WSIB already committed significant resources to establish a new rate setting framework that more accurately reflects the TEA industry. More specifically, the WSIB planned to assign all TEAs the class rate of each class to which they supply labour as their starting rate. As a result, premium rates for TEAs would increase and become more aligned with the businesses in which their employees perform work.
We would submit that the WSIB should not backpedal on the rate setting framework in which TEA premium rates would increase and become more aligned with the businesses for which they supply labour. The intent of the new framework was to remove the financial incentives businesses have in hiring TEAs to perform more dangerous and risky work in order to control their claim costs and keep premiums low. Any modifications made based on the recommendations from the TEA industry will contradict the purpose of this process and put workers at greater risk of injury and illness.
Temporary Employment Agencies
While the working conditions of TEA workers is outside the scope of this consultation, it is important to consider the impacts TEAs have had in the reconfiguration of labour markets. It is common knowledge that TEA workers often perform the most dangerous work for low wages and no benefits with few protections. Furthermore, the proliferation of TEAs has increased the prevalence of precarious work and contributed to a downward pressure on working conditions and compensation in the general workforce. Workers’ compensation boards have played a role in this because there is a financial incentive for employers to avoid workers compensation costs for injuries by outsourcing dangerous work.
In relation to health and safety, studies have shown that TEA workers are at greater risk of occupational disease and accidents when compared to permanent workers. 1 These workers often have less training and experience performing the work and little familiarity with the workplaces in which they perform work. Based on these negative outcomes, we demand that the WSIB not reward TEAs by maintaining their artificially low premium rates in comparison to their client employers.
A report from 2012, which was financed by the WSIB, found that experience-rating rules have fostered the growth of the TEA industry in which employers outsource workplace injury risk. 2 With experience rating, client employers are looking to aggressively manage claim costs. One way to do that is to hire cheap labour through a TEA. If a TEA worker is injured while performing work for a client employer, the TEA’s premiums are impacted, not the client employer’s. This creates a market to outsource dangerous and heavy work to TEAs so client employers can avoid liability with the WSIB and ensure their premiums remain low.
It should also be noted that TEAs cannot manage their client employer’s health and safety, which means that TEA workers are left in more vulnerable positions (lack of training). If TEA workers attempt to assert their legal rights, they will sometimes be blacklisted by the client employer, removed from the workplace and replaced by an uninjured worker. Because TEA workers are in a precarious state, they often do not even attempt to assert their rights because they are living paycheque to paycheque. This all leads to increased and prolonged workplace injuries.
The main point of contention and the reason why the WSIB established this consultation relates to premium rates. As stated, TEAs are concerned that their premium rates will increase under the new framework. Again, this was the whole point in establishing the new rate framework.
With that being said, some context is required when discussing premium rates. When reviewing the historical data, it is clear that average WSIB premium rates have been in freefall since the 1990s. The average premium rate per $100 of insurable earnings was $3.17 in 1990. By 2016, the average premium rate declined to $2.59. And since 2016, the average premium rate has dropped to $1.30, which marks a 50% decline in just 6 years. On top of that, the WSIB announced a refund of up to $1.5 billion for eligible employers in 2022 as a result of the so-called surplus, which was achieved on the backs of injured workers. Ultimately, it is likely that even if premium ratesfor TEAs are increased, they will still be lower on average than they were in 2016.
At the end of the day, the WSIB should not have a rate setting system that financially rewards an industry that exacerbates precarious work and puts workers at greater risk of injury.
The injured worker community’s longstanding position is that the WSIB’s experience rating system should be abolished and replaced by a simple flat rate system, similar to that of Employment Insurance and OHIP. This would reduce aggressive claims management by employers and reduce the problem of claims suppression.
We support the 2014 amendment to the Workplace Safety and Insurance Act (WSIA) contained in Bill 18, which gives the government the power to make a regulation so that the liability for workplace accidents and illnesses would be held by the client employer, not the TEA. In effect, this would reduce and/or eliminate the financial incentive for client employers to outsource dangerous work to TEAs.
However, as the scope of this consultation is narrow in focus and under the purview of the WSIB, we would reiterate that the WSIB should not defer any longer the new rate setting framework in which rates for TEAs will be increased and more aligned with the rates of their clients’ classes. In short, this will reduce needless workplace injuries and illnesses.
Thank you for reviewing our submission. Should you have any questions, please contact me via email (firstname.lastname@example.org) or by phone (416-461-2411 Ext 34).
INJURED WORKERS’ COMMUNITY LEGAL CLINIC
Per: Chris GraweyFootnotes:
- MacEachen, Ellen, et ai, “Workers’ Compensation experience-rating rules and the danger to workers’ safety in the temporary work agency sector”. Policy and Practice in Health and Safety. Page 79.
- Ibid, pages 77-78.