Why would I want to be covered by Workers Compensation?
Workers Comp provides loss of income benefits to an employee injured on the job site. The usual benefit provided by WComp is based on your actual income. The normal percentage is 85% of your income prior to your injury.
Many small contractors do not have group insurance, or unemployment insurance so a serious injury could leave them without an income for an extended period of time.
WComp is mandatory in many industries. This makes it necessary for all employers to insure that WComp is covering all employees on the job. Failing to enroll in WComp simply means you will be fined, pay the premiums you would have paid anyway, and possibly even be charged with summary or criminal charges.
Any employee who is covered by WComp is not able to sue his employer for his injuries. If you are the employer then you realize how important it is to have people working on a project covered by WComp and unable to come back on you through the courts.
Many small contractors are not incorporated so if they are sued by an employee they could loose everything they own, especially if they do not have Liability Insurance. So, even if you are unable to secure a WComp number but work in a mandatory industry your employees will still be covered and as a result be unable to sue you.
Small contractors may find it is more difficult to get contracts if you don't have a WComp #.
General contractors may choose not to hire contractors who do not qualify for WComp. The reasons vary. If this is affecting you and you are being refused a WComp # incorporating may be the only solution. Of course, you will have additional costs associated with being incorporated but there are tax advantages that come along with it.
Can Small Contractors enroll in Workers Compensation?
That depends. WComp sets the rules in each province. Generally speaking, small contractors are not easily granted a WComp number unless they are incorporated. The reason being is WComp is likely to want the employer to pay the premiums for their workers and a large majority of small contractors are viewed as employees in the eyes of WComp. Even if you hire temporary employees you may still be denied a WComp number. You must apply in order to determine your eligibility.
This creates a significant problem for small contractors that rely on homeowners and farmers for a bigger percentage of their income. They do not have income protection through Wcomp for the time they work in the exempt industries such as homeowner's and farmers who have not voluntarily enrolled.
If I can't get a WComp #, am I covered for injuries on the job site?
Again, that depends. Most industries are required to participate in WComp and they are required to cover all workers on their job site and in there place of business. So even though you do not have a WComp # you would be covered while working at non-exempt job sites. The business you are working for would pay the premiums.
Most businesses that you do contract work for are no different than any other business. Retailers, offices, automobile repair garages, and so on, are usually required to have WComp. Injured while working on their property you will be covered.
If I don't have a WComp # when would I not be covered?
You would likely not be covered while working for a homeowner or a farmer. These are exempt industries. That does not mean that a homeowner or farmer won't have workers compensation because they can voluntarily enroll. Many farmers do so, but it is rare to have a homeowner enroll unless they do so because they hire domestic servants or are building their own home without a general contractor. The reason they do so is to avoid the risk of a law suite from an injured employee.
How is it different when I am Incorporated?
When you are Incorporated you are likely going to be required to enroll in WComp. The corporation is required to pay the premiums for all it's employees (which includes other contractors without a WComp#).
You are an employee of the corporation and because of that the corporation would pay premium to cover you. However, as a director of your company, you are allowed to choose if you will be covered under Wcomp. You can opt out. You need to check with WComp to determine this.
All other employees and contractors will automatically be covered when working for you on your job site. You will be required to pay their premiums.
If you hire a contractor you can contact WComp to determine if he has a WComp # and if his account is in good standing. If the account is in good standing you would not be required to pay his premium. Of course, you must record the confirmation from WComp and track it. You must file an annual return and include the wages of all employees and contractors that you have not secured a confirmation of coverage for.
When you first apply to WComp you will estimate the amount of annual wages and pay half the premiums up front. At the end of the year you will be billed the remaining premium based on the reported wages paid.
Registered in one province and working in another.
Don't forget that your WComp may only apply in the province that you are registered in. If you are like most contractors around the Lloydminster area, you probably work in both provinces. This can create some challenges and confusion. If your home province is Alberta and you have a Wcomp # in Alberta but do work in Saskatchewan on a regular basis you have to apply to Saskatchewan WComp for coverage. If you are granted a number in Saskatchewan then you would pay a premium based on the work you perform in Saskatchewan. If you are not granted a number in Saskatchewan then you must include the wages you pay in Saskatchewan on your premium report in Alberta.
Worker's Compensation was created to protect business from the risk of law suites originating from injured employees. Our economy is heavily influenced by small business. A healthy small business environment is essential. Investment in small business was certainly hampered by the inherent risks of hiring employees. Banks limited there lending and investors limited their venture capital in light of the uncertainty. To eliminate the risk, and encourage investment and lending, Workers Compensation was born.
The premiums, it was decided, needed to be paid by the employer since it was the employer that benefited most from the new act.
It was seen as a benefit for employees as well. Without Worker's Comp an injured employee would have to seek compensation in court. Not everyone could afford to hire a lawyer to seek a settlement. When they did it often took months and years to reach a settlement. The stress and uncertainty only compounded the problem for the injured employee.
The employee, however, would not be able to sue the employer for any injuries related to his occupation.
The employee would give up all rights to seek damages from his employer if he were injured on the job regardless of the nature and cause of the accident.
The idea of the employer making the employee pay the premium for Workers Compensation is prohibited and in some provinces strictly adhered to.
Many small contractors are confused by some of the rules pertaining to Workers Compensation due to Workers Compensation's mandate to make sure the premium is paid by the employer. Many small contractors are turned down by Worker's Compensation because the burden of paying the premiums ends up being the employee and not the employer which violates the mandate of WComp.
LINKS
Workers Compensation Of Saskatchewan
Workers Compensation of Alberta
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