Can WSIB Increase Benefits and Employer Hold Premiums? 

Our provincial government has proposed to increase loss of earnings (LOE) benefits paid to injured and sick workers by the Workplace Safety and Insurance Board (WSIB) from the current level of 85% of net pre-injury earnings to 90% of net.  To pass this increase into law, the government will have to introduce a Bill in the legislature to amends the section of the Workplace Safety and Insurance Act that prescribes LOE benefits.  We expect such an amendment will be made in an upcoming omnibus Bill or more likely in the 2023 Budget Bill. 

At a high level, the employer premium rate is made up of two components, the cost of new injuries (CNI) and administrative costs.  LOE benefits paid make up a very significant portion of the CNI, around $1 billion while total administrative costs are less than $600 million.   

The WSIB is optimistic that it can maintains employers’ premium rates at the current levels even after the increase in LOE is passed into law by cutting administrative costs.  Every effort is being undertaken by the WSIB to reduce its administrative costs.  Through the pandemic, most of the WSIB’s staff worked highly productively from home and this will very likely continue in the post-pandemic world, reducing the organization’s long-term need for office space at both its headquarters in downtown Toronto and at its regional facilities.  Also, the WSIB will be moving its head office from downtown Toronto to London, Ontario, a lower cost environment, further reducing administrative costs.  These cost savings as well as other measures that are being taken are expected by the WSIB to offset the 5.9% increase in the increase in LOE benefits. 

In quantifying the total amount of the increase in the cost of new injuries caused by the proposed increase in LOE benefits and the total amount of administrative costs savings that have to be found to offset the increased amount of LOE benefits, the WSIB notes that only 20% of workplace injuries and illnesses require LOE benefits to be paid and of them 90% are back on the job within three months. 

Employers believe that all workers who become injured or ill as a result of workplace causes must be treated fairly.  So the question that underlies this discussion is, “What is the fair amount with which to compensate a worker who has become sick or injured because of workplace causes?”  Over the years the level of LOE benefits paid by our provincial compensation agency has changed as circumstances changed as follows: 55% of gross in 1914; 66 2/3% of gross in 1920; 75% of gross in 1950; 90% of net in 1985; and 85% of net in 1998.  The amount of the benefit should be sufficient to restore injured or sick workers to financial positions similar to their pre-injury states so there is the best opportunity for a successful recovery.  And, there must not be overcompensation because, as studies have shown, that serves as a disincentive to return-to-work, lengthens claims durations and increases costs to the system. 

There are several fundamental principles of workers compensation schemes that should be considered in this discussion. First, the loss of earnings benefit is an income replacement benefit for workers who become sick or injured due to workplace causes.  LOE benefits are in place to make sick or injured workers financially whole while they recover and progress towards returning to the workplace.  Additional compensation is in place in the form of non-economic loss benefits (NEL) in the system to make up for other types of loss and suffering.   

Another fundamental principle is that today’s employers must pay the full cost of today’s claims.  There should be no opportunity for today’s employers to pass on the costs of today’s claims to a future generation of employers.  We’ve seen that movie.  It was called the Elimination of the Unfunded Liability when employers in the period of about 2012 to 2018 paid off a $14+ billion debt left to them by employers from decades before.  Never again!   

Employers’ representatives who are knowledgeable in workers compensation are united in their view that the proposed increase in loss of earnings benefits paid by the WSIB to workers who become injured or sick as a result of workplace causes will produce unnecessary overcompensation which will result in longer claims durations, increased costs, higher premium rates and a loss of economic competitiveness for businesses in Ontario.

COCA will be exploring the issue further and making our case to our provincial government.