Navigating Ontario’s WSIB New Rate Framework for Temporary Staffing Agencies

Navigating Ontario’s WSIB New Rate Framework for Temporary Staffing Agencies

One of the greatest ongoing challenges employers face is staying abreast of legislative changes from province to province, state to state, or country to country. Falling behind the times on compliance issues can result in fines, penalties and negative PR for the employer brand. As a back-office service provider dedicated to the staffing industry, our role is to help clients navigate the nuances of employment laws of the jurisdictions in which they do business. In this blog we take a closer look at the upcoming workers’ compensation changes in Ontario, Canada, as set forth by the Workplace Safety and Insurance Board .

The Ontario WSIB has announced a new rate framework, and roll-out is set to take effect on January 1, 2020. The WSIB’s new system will feature a standardized classification system for businesses, placing focus on their previous claims experience. Additionally, the new system aims to help businesses with long-term planning by projecting future expected rates for companies. The end goal for the WSIB is to ensure that they are providing more transparency around how classifications and premium rates are adjusted. The new rate framework will replace NEER, CAD-7, and MAP, allowing these programs to complete through the 2020 calendar year.

 

Features of the WSIB New Rate Framework

 

A Simpler Classification System: The WSIB’s new rate framework focuses heavily on simplifying its classification system. Included in the new rate framework is a plan for adopting the North American Industry Classification System (NAICS), a system which has already been adopted by many other Canadian agencies. NAICS is being adopted by the WSIB specifically for the purpose of streamlining classifications, bringing their total employer classifications down from 155 to 34 classes.

Temporary employment agencies (TEAs) will follow an adjusted model, where experience prior to January 1, 2020 is eliminated. TEAs will be assigned the base rate for which each of their client companies fall into.

Improved Employer Premium Rate Stability: The new rate framework is also designed to provide improved premium rate stability to employers. In addition to annual rates, employers will be able to access their projected premium rates in advance. While not set in stone, premium rate estimates will provide insight into the direction that premium rates are headed on a company-by-company basis. This gives employers a heads up and gives them advanced notice to prepare for potential rate changes in the future.

Two-Step Approach Facilitates Shared Liability and Fair Rates: One of the biggest changes in the WSIB’s new rate framework is their new two-step approach to adjusting premium rates for business. This new approach provides increased transparency in the rate-setting process and an increase in fairness for employers.
The two steps in employer premium rate setting under the WSIB’s new rate framework include:

  • Step 1: Setting an average rate for each employer class. This rate will be based on the risk profile of the industry as a whole. This means shared liability among employers in the same class. In the new system, all companies have a shared responsibility to maintain the collective insurance fund for their class.
  • Step 2: Evaluate how the employer’s specific claim history compares to other companies in their class. An individual employer’s rate will still reflect their own claims experience and risk. Companies with a history of claims present a higher risk, and therefore, can expect to pay higher premiums than their counterparts.
  • This new system will help to ensure that companies are paying a fair rate that is reflective of their individual experience and their industry as well.
    Some of the factors that will be considered when setting employer premium rates include:

  • Insurable earnings
  • Cost of claims
  • The number of total claims over a six-year period
    The WSIB has also stated that companies with less than one year of experience will receive the average rate for their class. TEAs will also receive the average rate for their class until a new history is built.

    Ease of Administration: Ultimately, the goal of the new rate framework was to make premium rates more predictable, facilitating easier administration. The WSIB wanted to avoid situations where employers felt blindsided or had little time to prepare to drastic rate changes year-to-year. With the adoption of NAICS classifications and risk banding, the system will provide more transparency and premium rates that represent a more accurate depiction of risk within industries and individual companies.

    New Rate Framework: A Step in the Right Direction

    The Ontario WSIB’s new rate framework is a step in the right direction, providing transparency, stability, and predictability to employers and bringing them in line with changes in other provinces throughout Canada. While these changes have been received positively by a majority of businesses, there will be challenges that come with navigating them and putting business processes in place to effectively integrate the new rate framework system.

    If your business needs help navigating the new changes within Ontario’s WSIB, please contact us today!

     

    Key ideas presented in this blog are provided Stacey Jones, President of People 2.0’s Global Staffing Support Division .