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Classification of Employers and Independent Operators

99/08/24-01

THE WORKERS' COMPENSATION BOARD OF BRITISH COLUMBIA

RESOLUTION OF THE PANEL OF ADMINISTRATORS

Re: Classification of Employers and Independent Operators

WHEREAS:

Pursuant to Section 82 of the Workers Compensation Act, RSBC 1996, Chapter 492 and amendments thereto, the Panel of Administrators (the "Panel") must approve and superintend the policies and direction of the Workers’ Compensation Board (the "Board") including policies respecting compensation, assessment, rehabilitation and occupational safety and health and must:

82(A)(ii)   review and approve operating policies of the Board,
82(A)(iv)   develop policies to ensure adequate funding of the accident fund,
82(A)(v)   approve major programs and expenditures,
82(A)(vi)   plan for the future of the Board,

AND WHEREAS:

Pursuant to Bill 65 — 1999 — Labour Statutes Amendment Act, 1999 (the "Act"), Sections 36 and 37 of the Workers Compensation Act are repealed and the following substituted:

Accident Fund

36. The board must continue and maintain the accident fund for payment of the compensation, outlays and expenses under this Part and for payment of expenses incurred in administering the Workplace Act.

37(1) The following classes are established for the purpose of assessment in order to maintain the accident fund:

Class 1:
   Primary resource
Class 2:
   Manufacturing
Class 3:
   Construction
Class 4:
   Transportation and warehousing
Class 5:
   Trade
Class 6:
   Public services
Class 7:
   General services
Class 8
   Canadian Airlines International Ltd., Canadian Pacific Hotels Corporation, Canadian Pacific Railway Company, Cominco Ltd
Class 9:
   The Burlington Northern and Santa Fe Railway Company
Class 10:
   Air Canada, Canadian National Railway Company, Via Rail Canada Inc.
Class 11:
   British Columbia Assessment Authority, British Columbia Buildings Corporation, British Columbia Ferry Corporation, British Columbia Railway Company, Emergency Health Services Commission, Government of British Columbia, Workers' Compensation Board of British Columbia

    (2) The board may do one or more of the following:

    1. create new classes in addition to those referred to in subsection (1);
    2. consolidate or rearrange any existing class;
    3. assign an employer, independent operator or industry to one or more classes established by or under this section;
    4. withdraw from a class
      1. an employer, independent operator or industry,
      2. a part of the class, or
      3. a subclass or a part of a subclass,and transfer it to another class, or form it into a separate class.

    (3) If the board exercises authority under subsection (2), it may make the adjustment and disposition of the funds, reserves and accounts of the classes affected that the board considers just and expedient.

    (4) Without limiting subsection (2) or (3), for the purposes of transition in relation to the classes established by subsection (1) as enacted by Section 31 of the Labour Statutes Amendment Act, 1999, the board may

    1. assign or reassign employers, independent operators or industries to those classes as the board considers advisable, and
    2. make the adjustment and disposition of the funds, reserves and accounts of the pre-existing classes that the board considers advisable.

AND WHEREAS:

For the purpose of implementing the Act extensive consultation with stakeholders has occurred;

THE PANEL OF ADMINISTRATORS RESOLVES THAT:

      1. In the implementation of Section 37(4)(a) and (b) of the Act the following will apply:
        1. employers and independent operators will be classified into classification units on the basis of similarity of products produced, services provided, or processes used;
        2. classification units may be combined into industry groups on the basis of similarity of industrial activity and a reasonable expectation of similar cost rates in order to form industry groups that meet a minimum size as determined by the Board's actuary;
        3. industry groups may be combined into rate groups on the basis of similarity of cost rates, in order to form rate groups that meet a minimum size as determined by the Board's actuary;
        4. an industry group will be moved from a rate group to another if its cost rate varies for three consecutive years by more than 20 percent from the corresponding weighted average cost rate for the whole rate group;
        5. the current deposit classes will continue to form their own classes and be administered in the current manner;
        6. the monetary balance of any subclass in a deficit position on December 31, 1999 will be adjusted to zero dollars and zero cents and the deficit transferred to a general account to be paid by excess investment income over a period of five or more years. If not enough excess investment income is earned, the subclass deficits are to be paid by raising the aggregate base rate for all employers and independent operators;
        7. the monetary balance of any subclass in a surplus position on December 31, 1999 is to be credited back to employers who were active in that subclass on December 31, 1999 in the form of a credit to their account receivable and their assessments abated to the extent of the credit over a period of 5 or more years (the "Abatement Period"). The employer's assessment will be abated by no more than 50% in each year;
        8. notwithstanding (g) above the Assessment Department of the Board (the "Department") may credit an employer and abate their assessments immediately or over a period of less than 5 years if the employer's share of the subclass surplus is so small or such a small percentage of the employer's annual assessment that the Department considers it advisable to do so;
        9. the subclass surplus amounts that have not yet been credited to an employer's account are to continue to earn interest at the same rate as the rate group balances until the subclass surplus is completely credited. The interest earned is to be credited to employers in proportion to the share of the subclass surplus remaining to be credited to them;
        10. the subclass surplus will be credited to all employers who were active on December 31, 1999 in any subclass in a surplus position in a manner that takes into account both their payroll relative to the subclass payroll and their cost experience for the 5 year period of 1995 to 1999;
        11. if an employer receiving a share of a subclass surplus reorganizes in any way such that its experience rating transfers in accordance with Assessment Policy 30:50:50, the share of the surplus is to be also transferred to the reorganized employer;
        12. any share of the surplus that would be allocated to employers who cease to operate or exist during the Abatement Period is to be used to contribute to paying off the aggregate deficit. In the event the aggregate deficit is at a zero balance, these same surplus amounts will be transferred to the aggregate accident fund.

         

      2. The Department will, on an annual basis, submit to the Panel for approval the Classification and Rate List.
      3. A review and evaluation of the classification system will take place by the year 2005.
      4. This resolution constitutes a policy decision of the Panel of Administrators.

DATED at Richmond, British Columbia, September 21, 1999.

  By the Workers' Compensation Board
  DON COTT, CHAIR
PANEL OF ADMINISTRATORS