The submission proposes legislative amendments to Schedule 6 of Bill 27, Working for Workers Act, 2021, on the WSIB’s distribution of ‘surplus’ funds. Recommendations focus on the need to 1) incorporate in the formula for determining a surplus position an assessment first of gaps and inadequacies in services and programs, prioritizing restitution to injured workers for cuts that went to eliminate the unfunded liability; 2) address properly claims suppression so employers are not rewarded for under-reporting or unsafe workplaces …
November 17, 2021
Standing Committee on Social Policy
99 Wellesley Street West
Room 1405, Whitney Block Queen’s Park
Toronto, ON M7A 1A2
RE: Submission of Injured Workers Community Legal Clinic Regarding Bill 27
Injured Workers Community Legal Clinic has been providing free representation and services to injured workers regarding workers’ compensation matters for over 50 years. We are making submissions with respect to the government’s proposed Bill 27, dubbed the “Working for Workers Act”, because in our view, this legislation is not working for injured workers at all. We are extremely disappointed that the government would combine a huge cash giveaway to employers (Schedule 6) with some small, though important, worker protections (contained within other Schedules of the Act).
This Bill is doing injured workers a great disservice, and we urge the Committee to reject the portions of the Bill regarding the workers’ compensation system (namely, Schedule 6), or to, at the very least, amend the Bill to include consideration of injured workers. Specific suggested amendments to the Bill are contained within this submission.
As part of this submission, we are enclosing our submissions to the Ministry of Labour dated August 10, 2021 regarding the surplus distribution model being codified in this Bill. Our August submissions provide further detail and context to our position, which is being outlined and supplemented here.
The Unfunded Liability was Eliminated on the Backs of Injured Workers
As you know, Schedule 6 of Bill 27 proposes that when the Workplace Safety and Insurance Board (WSIB) reaches 115% funding, the WSIB “may” distribute this surplus among Schedule 1 employers, and at 125% funding, this distribution would be mandatory.
We are very concerned that the WSIB has reached levels of funding which would make the topic of surplus distribution even remotely relevant. When the government first directed the WSIB to work toward “full funding”, it directed the WSIB to do so by 2027. The fact that the WSIB reached what it considers to be full funding by 2018 should be a matter of deep concern rather than pride. The way that the WSIB was able to amass such a huge amount of money in the bank (approximately $40 billion) was on the backs of injured workers. Before the government or the WSIB even consider claiming to be in a surplus position and propose paying out funds to employers, injured workers need to be provided with full and fair compensation, in compliance with their legal rights and as promised by the historic compromise and founding principles of the workers compensation system.
Restitution for Injured Workers
Essentially, we do not believe that the WSIB would be in or near a significant surplus position if it properly addressed outstanding obligations and made appropriate corrections to adequately fund a full and fair workers’ compensation system. Our enclosed August 10, 2021 letter to the Ministry of Labour provides more detailed reasons for our recommendations, but in summary, before any legitimate “surplus position” is possible, there needs to be adjustments to the following obligations to injured workers:
- Loss of Earnings: no more deeming, restore LOE rate to at least 90%, full inflation indexing (including retroactivity);
- Loss of Retirement Income: restore to 10% contribution;
- Mental Stress Injuries: criteria needs to be adjusted so that approval rate is more on par with physical injuries, and paid out accordingly;
- Occupational Disease: needs to be properly funded, and Demers Report fully implemented (see submissions of the ODRA);
- Listen to worker’s treating physicians and end the over-application of “Better At Work” principles that are used to reduce and eliminate compensation benefits;
- NEL awards: more generously rated and base amount legislatively increased;
- Claims Suppression Audits: need to be adequately funded to be able to do many more, and increased training provided to front line staff to identify cases;
- Special pandemic help for injured workers as demanded by the Ontario Network of Injured Workers’ Groups (ONIWG)
- Arm’s length funding for ONIWG to support more equal participation of injured workers in the evolution and management of the workers’ compensation system
- Other priorities, to be determined through adequate consultation with all stakeholders.
In other words, inadequacies of the workers’ compensation system need to be addressed before any “surplus distribution” to employers is considered. It is incumbent on the WSIB to identify any gaps in services and liabilities before considering itself in a surplus position, so that those needs can be met before taking money out of the system through employer discounts. Therefore, we recommend that a consultation is always necessary before the WSIB considers any surplus distribution. This step should be incorporated into the “formula” for determining whether the Board can properly consider itself in a surplus position (the proposed additions to section 100). As already stated, this is necessary in order to avoid the creation of new unfunded liabilities when the Tribunal, Court, or political will reverses decisions or expand entitlements to recognize historic injustices.
In order to be able to address outstanding obligations and inadequacies of the system with available funds, any surplus distribution provisions must prioritize the distribution of funds to programs and services for the benefit of injured workers – not only employers (the proposed section 97.1). Schedule 6 of Bill 27 is otherwise inexcusably one sided and pandering to employer interests and not “working for workers” at all.
Double Rewards for Suppressing Claims
In addition to our concern regarding the premature and one-sided nature of this surplus distribution legislation, we are also very concerned with the power (yet lack of direction) given to the WSIB regarding how any potential surplus should be distributed amongst employers. The proposed legislation provides that money be distributed among Schedule 1 employers “having regard to such criteria as may be prescribed and such other factors as the Board considers appropriate.” We heard from the Minister of Labour at the start of these hearings that the government’s alleged intention is to “reward safe employers”. However, the current system uses “claims experience” (i.e. claims cost) as a proxy for “safety”, which is inherently problematic and contrary to research and real world data. Employers pay premiums based on their cost experience, but if they coerce their workers not to claim or reduce compensation costs, bad actors win.
The current rate setting system does not address (and in fact unintentionally encourages) the problem of claims suppression and under-reporting. This includes both legal and illegal means taken by employers to reduce claims costs by under-reporting and misrepresenting the circumstances surrounding a workplace injury. Its existence has been documented in many studies, although it is, by its very nature, extremely difficult to measure definitively. A 2013 Report commissioned by the WSIB indicated that “20% is a plausible estimate of the proportion of likely compensable, work-related injuries or illnesses for which workers do not submit claims.” (note1). Other studies (including very recent ones) have suggested that workplace injuries are under-reported in the range of 40-60+%. (note 2)
The current Bill gives the WSIB the power to judge who is an employer with a “good” record in the context of surplus redistribution. But the WSIB has no handle on claims suppression, so a “good” employer could be a “bad” or illegal employer. If the system makes employers pay premiums according to the number of claims and cost to the WSIB, there is a proven incentive for employers to avoid those costs. An Act designed to protect workers should ensure this does not happen, and offer protection from these types of actions.
WSIB audits can detect claims suppression. For example, they can compare first aid reports to WSIB claims and ask questions, and fines can result. The problem is that there are too few audits, which is a huge problem for the credibility of the system, identified in the recent Speer-Dykeman Operational Review. Specifically, recommendation 16 of the 2020 WSIB Operational Review includes the following statement: “it is important that, as the new framework is implemented, the WSIB maintain sufficient staffing and resources to protect a statistically relevant number of annual audits. It is beyond the capacity of the review to judge the number of annual audits. But it should be a much higher than planned for the foreseeable future in order to ensure that number of audits is statistically relevant and, in turn, can provide a credible basis to make judgements about the system’s performance. This will be key in ensuring that the new rate framework does not contribute to higher rates of claims suppression.”
In other words, the WSIB system cannot be credible if it does not monitor activity that suppresses the number of WSIB claims. The lack of sufficient WSIB audits for claims suppression is problematic for many reasons, and should be addressed in this Bill because it will otherwise produce unintended perversions in payments to employers. If the WSIB relies on its current approach to identifying “good” and “bad” employers, the surplus redistribution to employers (which we oppose) could end up rewarding employers who in fact engage in claims suppression or have unsafe workplaces. These employers would in fact be rewarded twice – first through the rate setting model, and then again in the surplus distribution model. Without sufficient and significant audits to identify under-reporting and claims suppression, the WSIB would never know who is who in terms of claim suppression, and the distinction between good and bad apples is nullified.
If the government truly intends for this surplus to be used to improve the health and safety of workplaces, then surplus funds should be used to support health and safety programs through the WSIB (e.g. WorkWell Audits, loans and grants for safety improvements, increased compliance measures/inspections, etc) and existing partners (e.g. OHCOW, Health & Safety Associations, Workers Health and Safety Centre, etc.).
The surplus, which should go to injured workers as restitution, is otherwise going back to employers without regard or knowledge of claims suppression. Employers are being rewarded once through the current rate setting process which rewards low claims costs, and with this proposed legislation be rewarded again through surplus distribution. If this government truly cared about health and safety, it should amend this Bill to require a statistically significant number of audits and allow surpluses to also be distributed for other purposes such as increased audits, improved health and safety programs, as well as to injured workers who deserve justice.
Select Suggested Legislative Amendments
The following is not a complete list of legislative changes that would be needed in order to implement our recommendations, but they are an important start, and ones we believe must be addressed immediately.
- Include Injured Workers in Surplus Distribution
We do not believe that a surplus distribution law is necessary at all. However, should the government insist on enacting such a provision, we insist that injured workers be added as potential beneficiaries of available WSIB funds.The proposed section 97.1 should prioritize injured workers through investments in benefits and programs which assist them, and not only permit the distribution of funds to Schedule 1 employers. A further subsection should also be added requiring consultation with stakeholders to identify any obligations or needs of the workers’ compensation system that should be met before any distribution is approved.An assessment of the outstanding obligations or inadequacies of the workers compensation system should also be a consideration contemplated in the proposed section 100 (f.3) and/or (f.5), which address the Board’s ability to prescribe the criteria and method of calculating the sufficiency ratio (in other words, whether the WSIB can determine itself to be in a surplus position would require an analysis of system inadequacies).
- Inspections / Claims Suppression
In order to help address recommendation 16 of the Speer-Dykeman Review and to help combat the impact of under-reporting and claims suppression on calculating surpluses and surplus distribution, we propose the addition of the following two sections into the Act:Section 161(4) The Board shall evaluate the prevalence of claims suppression by conducting sufficient workplace audits every year to ensure the purposes of this Act are achieved.
161(5) The Board shall report its audit results to the Ministry of Labour.
- Eliminate deeming
In order to ensure injured workers are appropriately compensated for their lost earnings and money is not divested from the system and given to employers before injured workers are given their fair due, we implore you to eliminate the practice of deeming / determining. This can be done by passing Bill 119, Respecting Injured Workers Act, which would add the following provision to the Act:Section 43 (4.1) The Board shall not determine the following to be earnings that the worker is able to earn in suitable and available employment or business:
1. Earnings from an employment that the worker is not employed in, unless the worker, without good cause, failed to accept the employment after it was offered to the worker.
2. Earnings from a business that the worker does not carry on.
Other Pressing Legislative Changes
Related to the issue of claims suppression and being able to adequately assess employers for the purposes of both rate setting and surplus distribution, an order in council should be signed immediately to bring into effect section 83.4 of the WSIA, which would bring in joint and several liability with temporary help agencies / recruiters and accident employers.
Another important outstanding issue is the expansion WSIB coverage to other industries. A consultation already took place with respect to expanding coverage to include Developmental Support Workers, however no Bill has actually been proposed yet to implement those recommendations. Pushing forward that issue and expanding workers compensation coverage (and the other recommendations within this submission) would have been a better use of this Committee’s time than legislating money back to employers, and more accurately described as “working for workers”.
Conclusion
Injured workers’ benefits have been reduced by billions of dollars in the name of addressing the unfunded liability, and now that the unfunded liability has been abolished, the government is consulting on how to give the profits to employers. There is an important piece of the puzzle missing, and that is reparations and ensuring proper benefits for injured workers.
We, as a society, should not be engaging in an exercise of balancing corporate profit against full compensation for injured workers. In order to avoid helping businesses at the expense of injured workers, the proposed legislation needs to be amended to include the need to consult stakeholders on outstanding inadequacies of the system before allocating available funds, and potential allocations need to be allowed and prioritized for programs and services that benefit injured workers.
We sincerely hope our recommendations will be taken into account and amendments to this Bill will be made. Injured workers deserve to be included, and we would be pleased to discuss our submissions and proposed amendments further if helpful.
Sincerely,
INJURED WORKERS COMMUNITY LEGAL CLINIC
Per:
Kathrin Furniss
Note 1. Prism Economics and Analysis. (2013). Workplace injury claim suppression: Final report. Toronto: Prism. (Prepared for Ontario’s Workplace Safety and Insurance Board) at p. 3.
Note 2. See, for example, Mustard, C. (2021). What can hospital emergency records tell us about the incidence of work- related traumatic injuries in Ontario? Toronto: Institute for Work & Health (presentation June 8, 2021). Available at: https://www.iwh.on.ca/sites/iwh/files/iwh/presentations/iwh_speaker_series_2021-06- 07_mustard.pdf. Another recent study about under-reporting: Nadalin, V. & Smith, P. (2020). “Examining the impact of occupational health and safety vulnerability on injury claim reporting in three Canadian provinces.” American Journal of Industrial Medicine, 63(5), 435-441. Available at: https://onlinelibrary.wiley.com/doi/full/10.1002/ajim.23094
(Appended: IWC submission re WSIB Insurance Fund Surplus Distribution Model Consultation, Aug. 10, 2021)