The Ontario Workplace Safety and Insurance Board (WSIB) is planning to transfer billions in so-called surplus monies into the pockets of employers. Supposedly, the aim of the move is to return a portion of almost $6 billion back into the economy. While this will most certainly be a boon to business, it’s a significant blow to injured workers across the province. This is because the surplus that the provincial government earmarked for business was largely generated through cuts to workers’ critical benefits. Ontario’s government is effectively redistributing billions of dollars from workers to bosses.
Last month, the minister of Labour, Training and Skills Development announced that when the WSIB accumulates 115 percent of its future expected costs, the government will permit the board to pay any excess money to certain employers across the province. The board chose this figure because it is the amount of money they need to have on hand to pay out all future benefits for existing workers’ compensation claims. The proposed amendment will also make it compulsory for the WSIB to return a portion of any surplus to employers if it is able to raise 125 percent of its expected costs.
The premiums employers pay to the WSIB, along with investments made by the board, fund the compensation system. So far, the province has been mum about the use to which the redistributed funds will be put. It looks likely, however, that the cash could be used to give employers premium reductions and holidays.
To fully understand the significance of this proposed amendment, a historical lens is needed. The roots of provincial workers’ compensation systems across Canada lie in a “historic compromise” reached at the turn of the twentieth century. In exchange for a public compensation system funded by employer premiums, workers gave up the right to sue their employers for workplace injuries.
Subsequently, the task of adjudicating how benefits would be paid out was left to an independent board — the WSIB. By collectively pooling liability for workplace injuries, employers were spared costly and drawn-out litigation for workplace injuries. Despite the significance of the compromise, workers have still historically gotten the short end of the stick when it comes to how the compensation system is administered.
Public Income Supports Are Not Private Insurance Programs
The surplus that the provincial government wants to return to employers is, in large part, due to the harsh austerity measures that the WSIB has implemented over the past two decades. In 1998, Ontario’s Conservative government introduced a slew of cuts to benefits. These cuts included a reduction in the benefits for lost wages a worker could claim — from 90 percent of their net earnings down to 85 percent. Chronic mental stress injuries were excluded from compensation.
In 2010, under a Liberal government, the board became fixated on the idea of getting rid of its unfunded liability. In the case of the WSIB, unfunded liability is the difference between the projected future costs of all the benefits for which injured workers are eligible and the amount of money the board has in its accounts. In 2011, the board’s unfunded liability amounted to $14.2 billion, but by 2018 the shortfall was eliminated. This meant that the board was fully funded — a triumph in financial thrift that came with significant consequences.
The notion that the compensation system must be fully funded is a concept imported straight from the for-profit insurance industry. This blurring of the line between the public and private sector is rooted in neoliberal thinking. It is ill-suited to a public income-support program like workers’ compensation, which should not operate like a private insurance program.
Workers’ compensation was originally established on a pay-as-you-go basis. It collected enough money to pay out expected claims for the year while maintaining a modest reserve fund for unexpected costs. Unlike private insurance companies, which can go out of business at any time, workers’ compensation will continue to exist as long as there is industry in the province.
The prevailing idea now, however, is that that the board should always have, at minimum, the full amount of all future payments in its financial reserves. This requires the board to either raise employer premiums or cut benefits to workers. But the same voices advocating the elimination of unfunded liability have also been ardent advocates for the reduction of employer premiums. Since 2016 alone, the rates on premiums have been reduced by 47.1 percent.
Saving Ounces on Cures for Pounds of Profit
The shift from a pay-as-you-go funding model to one of full funding has pitted employers’ financial interests against those of injured workers. Unfortunately, injured workers have lost the battle. The result is that the amount that the WSIB has paid to injured workers annually has decreased dramatically.
In 2010, the WSIB paid out $4.8 billion in benefits, as compared to $2.5 billion in 2020. This decrease is largely the result of practices and policies that make it harder for workers to access financial and health care benefits. For example, despite recognizing that chronic mental stress injuries warrant coverage through the workers’ compensation system, the WSIB has a dismal record of actually approving such claims — denying 94 percent of them.
Workers must show that the physical injuries they sustained on the job were a “significant contributor” to their impairment; but for chronic mental stress, workers must prove that their work was the “predominant cause.” Since everyone experiences a wide range of physical and mental pressures in their daily life, it may be easy to establish that a workplace injury is a significant factor in disability, but difficult to prove that workplace stress is a predominant cause of mental illness.
The board’s response to alarming clusters of occupational diseases across Ontario has also been dismal. If a worker develops cancer from exposure to carcinogens at work, they can face a lifetime of health complications and never be able to get back to work. In spite of the serious long-term effects of these kinds of workplace illnesses, the board has a high rate of denial for many occupational disease claims. The primary reason for this is that the board requires workers to meet very high benchmarks to prove that their illness was caused by exposure at work.
The problem is many occupational illnesses may take decades to fully manifest, making timely diagnoses difficult. Often, workers become aware of their illnesses long after the fact. They must then navigate complex systems to get the support they need — often wasting rehabilitation time substantiating work exposure from the past as the cause of illness. Some workers wait years to get benefits through the WSIB. They are forced to rely on the health care system and other sources of taxpayer-funded financial support when they should be compensated through the workers’ compensation system from the get-go.
The board has not invested enough resources to stop the practice of claim suppression. Often, employers use intimidation to actively dissuade workers from making WSIB claims. For instance, an employer might outright threaten someone’s job if they file a claim with the WSIB or will pressure a worker into telling the hospital that their injury happened at home, not at work. Employers will also convince workers to use their sick time without informing them of their rights under workers’ compensation laws. Fewer audits into claim suppression can mean that employers aren’t being punished for using such tactics.
While claim suppression is a difficult thing to quantify, it has been acknowledged as a real problem in reviews of the WSIB. The need for better auditing by the board is a pressing concern. Without a serious look under the hood, so to speak, the problem won’t be properly addressed. The result is that many workplace injuries go unreported — and uncompensated. The WSIB must direct additional resources to investigating and responding to claims of suppression. Otherwise, employers will continue to have financial incentives to suppress worker claims.
Experience ratings in part determine the WSIB’s calculations as to what premiums an employer must pay. In essence, an employer’s premium rate is based on its workers’ compensation claim costs. If an employer has fewer WSIB claims, they have lower claim costs. Lower claim costs mean lower premiums. To truly promote healthier and safer workplaces, the WSIB should scrap experience ratings as a way of calculating premiums — the use of such ratings increases claim suppression.
Workers’ compensation, which was the first piece of Canada’s social safety net, is an essential income support for workers across the country. Workers have increasingly borne the brunt of policies and cuts that reduce their access to important benefits and supports — employers, meanwhile, have been the recipients of significant financial breaks.
Bosses should not be dipping their beaks into Ontario’s current surplus. Instead, workers should receive redress for the historical harm WSIB policies have had on their lives — it is workers, after all, who created the surplus in the first place.