Worker’s Compensation Agreements
Res #: 31-03A
Responses Received: No
Departments: Saskatchewan Labour
WHEREAS, Section 156 of The Workers Compensation Act orders any amount of Workers Compensation premiums unpaid for thirty days to be entered on the tax roll as if it were taxes; and
WHEREAS, some of the Workers Compensation Assessments are unpaid due to an appeal or alleged unfair assessment; and
WHEREAS, any amounts so entered on the tax roll become collectable on a pro-rated basis, as is with school, hail and municipal taxes; and
WHEREAS, the exorbitant amount of assessments, some in excess of $300,000 result in Workers Compensation receiving almost all of the amounts collected on any such tax accounts, and when uncollected, result in prohibitive and unjustifiable amounts for municipal tax enforcement; and
WHEREAS, individuals and agencies can collect unpaid accounts through a claim process, unrelated to property taxes;
THEREFORE BE IT RESOLVED, that SARM lobby the Provincial Government to amend or delete Section 156 of The Workers Compensation Act thereby removing the onus from municipalities for collection of Workers Compensation Assessments.
Response from the Honourable Deb Higgins, Minister of Labour:
The Workers' Compensation Act enables the Workers' Compensation Board (WCB) to issue tax certificates to municipalities to recover overdue workers' compensation premiums that have not been paid by employers who are situated in their municipality. However, the WCB uses this tool only as a last resort when other collection methods fail.
The use of tax certificates is very limited, considering that approximately 33,000 employers are registered with the WCB. In 2002, only 30 tax certificates were issued and of those only four were sent to members of SARM. The remaining tax certificates were issued to members of the Saskatchewan Association of Urban Municipalities. There is a view among SARM members that some of the overdue premiums are unpaid because of an appeal or alleged unfair assessment. The WCB is not aware of a situation where a tax certificate has been issued against an overdue account that is under appeal, or where an alleged unfair assessment was levied. However, occasionally, assessment appeals are lodged after a tax certificate has been issued to a municipality.
Your members also raised concerns that overdue premiums entered on a municipality's tax roll become collectable on a pro-rated basis. Overdue WCB premiums collected under a tax certificate are not pro-rated. Rather, the oldest outstanding balance on a tax roll is paid first. For example, if a school or municipal tax is the longest standing balance on a municipal tax roll, it is paid before an outstanding workers' compensation assessment.
Some of your members also suggested that tax certificates are used by the WCB to recover "exhorbitant" unpaid assessments. There is only one instance where an outstanding assessment of $300,000 was issued to a municipality as a tax certificate. In the event that overdue premiums are collected under a tax certificate, The Workers' Compensation Act enables the municipality to add and retain a 5% fee-for service, which can be a positive gain for the municipality. The WCB is obliged by law to protect its assets – including recovering overdue premiums.
Saskatchewan employers remit millions of dollars in premiums annually to the WCB as participants in the no-fault, collective liability workers' compensation system. Collection difficulties typically affect about 3% of annual WCB premiums, or about $5-6 million. In the absence on an effective collection process, the WCB would forego millions of dollars in premiums, which would undoubtedly affect the premium levels of the vast majority of employers, including municipalities, who pay premiums promptly.
I also wish to address SARM's view that unpaid employer premiums could be collected through a claim process unrelated to property taxes. Using a claim process would rank the WCB as a unsecured creditor and would severely restrict its ability to fully recover overdue employer premiums. As I mentioned earlier, uncollected premiums would put upward pressure on premium costs for responsible employers who remit their WCB premiums on time.
Letter Sent From SARM, May 1, 2003, to Honourable Deb Higgins:
Thank you for your letter of April 9, 2003, in which you responded to a resolution regarding workers' compensation assessments passed at the 2003 SARM Annual Convention. We believe the property tax system should not be used for this type of activity and see no reason why any outstanding premiums cannot be collected by another method. Although the number of tax certificates issued is not high, they cause difficulties for municipalities.
I must clarify one issue regarding how payments are entered on a municipality's tax roll. Section 366 of The Rural Municipality Act, 1989 states that the partial payments are applies to arrears first, as you point out, and apportioned between the municipality and any other taxing authorities on whose behalf the municipality levies tax based on the amount of taxes owed by the person. If there is a large assessment placed on a property, the majority of any payment will go to the Workers' Compensation Board, rather than the municipality of school division.
You mentioned that a municipality could add and retain a 5% fee-for-service. If this was done it would not be paid from the assessment placed on the taxes but an additional amount that would have to be collected from the ratepayer, which would put the municipality in an awkward position. Any payment dispute is between the WCB and the individual or business, and has nothing to do with the municipality.
We request that you reconsider the matter and use other methods to collect outstanding premiums.
Response from Honourable Deb Higgins, Minister of Labour, May 21, 2003:
Thank you for your letter of May 1, 2003, regarding the Workers' Compensation Board's (WCB) ability to collect overdue workers' compensation premiums by issuing tax certificates to municipalities. I appreciate you reiterating SARM's views on this issue. As I have suggested in previous correspondence, tax certificates are issued to municipalities on a very limited basis and only as a last resort when other collection methods fail. Without effective methods by which the WCB can collect overdue premiums, the WCB would forego millions of dollars, which would undoubtedly affect the premium levels of many employers who pay them promptly.
Every four years, the government appoints a Workers' Compensation Act Committee of Review (COR) to review and report on matters relating to The Workers' Compensation Act, its regulations and the administration of the Act. The COR process is a valuable one because it gives injured workers, the business community and other interested parties an opportunity to come forward with their experiences and to provide input into the workers' compensation system.
The most recent COR, which took place in 2001, heard from dozens of individuals and organizations through written submissions or presentations at public meetings. In its report to the government, the COR made 48 recommendations, many of which have been implemented through amendments to The Workers' Compensation Act or through changes to the WCB's policies and procedures. The concerns SARM raises regarding the issuance of tax certificates to municipalities are noted. Nevertheless, any change to alter the WCB's ability to collect overdue premiums through this method would require an amendment to The Workers' Compensation Act.
Therefore, I encourage SARM to share its position on the issue when the next COR is established. Again, thank you for informing me of SARM's views on this matter.