Workplace Safety and Insurance Board Fee Increases

 The Corporate Services Committee recommends the adoption of the following report (June 10, 1998) from the Executive Director of Human Resources:

 Purpose:

 This report addresses a new Workplace Safety and Insurance Board (formerly Workers' Compensation Board) funding policy, which imposes significant financial obligations on the City of Toronto, and suggests a response to the policy change.

 Funding Sources, Financial Implications and Impact Statement:

 The change in workers' compensation policy to require Schedule 2 employers, such as the City of Toronto, to financially support the operation of the safe workplace associations will cost the city an estimated $441,000.00 per year. This cost is part of a substantial increase in Workplace Safety and Insurance Board (WSIB) administration fees, from 14.5 percent to 19.5 percent. The total increase in administration fees payable by the city for 1998 will be $1,046,000.00, based on current workers' compensation experience.

 Recommendations:

 It is recommended that:

 (1)Council advise the Workplace Safety and Insurance Board of the City of Toronto's opposition to the change in funding policy to require Schedule 2 employers to financially support the safe workplace associations;

 (2)Council support the efforts of the Association of Municipalities of Ontario (AMO) to have this policy rescinded; and

 (3)Council advise the Workplace Safety and Insurance Board of the City of Toronto's objection to the imposition of a significant administration fee increase, and the lack of advance notice of this increase.

 Council Reference/Background/History:

 This matter has not previously been before Council. Councillor King, through her involvement with AMO, has requested information on the impact of these changes on the City of Toronto.

 Discussion:

 In February, 1998, the City was advised that the Workplace Safety and Insurance Board's administration fee had increased from the 1997 rate of 14.51 percent to 19.49 percent for 1998 workers' compensation costs. Based on current workers' compensation cost experience, this 34 percent increase will cost the City of Toronto an additional unbudgeted $1,046,000.00 in 1998 and brings the total administration fees paid annually to the WSIB up to $4,100,000.00. The WSIB attributes the increase to the following changes:

 (a)real increases in WSIB administrative costs;

 (b)legislative changes which transfer costs from the Ministry of Labour to the WSIB, which is in turn transferring these costs to employers; and

 (c)a fundamental change in Schedule 2 funding policy, such that the WSIB is now requiring Schedule 2 employers to help fund the Safe Workplace Associations, or SWA.

 This latter change is particularly problematic as it will result in a new administrative cost of $441,000.00 per year to support safety associations. This change in policy applies the collective liability principles of Schedule 1 to the traditionally self-insured Schedule 2, without allowing Schedule 2 employers, such as the city, to reap any of the benefits of collective liability. Because there is insufficient justification for this change in policy, and given the magnitude of the cost involved, it is recommended that the city challenge this change in WSIB policy.

 As a self-insured employer, the city has recognized the importance of reducing and controlling injury costs and has invested in internal occupational health, safety, claims management and rehabilitation programs, which have been successful in both preventing injuries and minimizing their impact. Internal resources and expertise are substantially greater than that available through the safe workplace association assigned to the city. It is unlikely that the Safe Workplace Association will be able to respond to the increase in demand for its services from Schedule 2 employers in general. It is not expected to be able to meet the needs of the city in a timely, focused manner. While it is recognized that the Safe Workplace Associations provide a useful service for small employers, because it is not needed by the City of Toronto we are in result subsidizing other employers.

 Another concern is that the WSIB provided no warning of the significant increase in 1998 administration fees, resulting in no opportunity to budget for the increase. This contrasts sharply with the treatment accorded Schedule 1 employers, (primarily businesses, rather than government), whose

assessment rates are buffered against any rapid increases.

 Various representatives of the Schedule 2 employer community have already formed a coalition to lobby against these WSIB changes. Groups involved include the Schedule 2 Employers Group, the Municipal WSIB Users Group, the Ontario Municipal Human Resource Association, the Ontario Municipal Health and Safety Representatives Association and the Association of Municipalities of Ontario. City staff are actively involved in these efforts. In support of the coalition's initiatives, individual Schedule 2 employers are being asked to express their views to the WSIB. It is therefore recommended that the City of Toronto advise the WSIB that the city actively opposes the administration fee increase, particularly that portion of it which will be used to fund the Safe Workplace Associations, and that the city support AMO's efforts to have the safe workplace association funding policy rescinded.

Conclusion:

 The WSIB has acted unilaterally in imposing significant new fee increases on Schedule 2 employers. The City of Toronto should state its opposition to these fee increases to senior WSIB officials, and should support the efforts of the Association of Municipalities of Ontario to have the safe workplace association funding policy revoked.

 Contact Name:

 Alison Anderson

Director, Employment Services,

Human Resources

392-5028