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Policy for Determining Administrative Penalty Amounts under Section 196 of the Workers Compensation Act

2000/01/21-04

THE WORKERS' COMPENSATION BOARD OF BRITISH COLUMBIA

RESOLUTION OF THE PANEL OF ADMINISTRATORS

RE: Policy for Determining Administrative Penalty Amounts under Section 196 of the Workers Compensation Act


WHEREAS:

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

AND WHEREAS:

The Workers Compensation (Occupational Health and Safety) Amendment Act, 1998 ("Bill 14"), which amends the occupational health and safety provisions of the Act, generally came into force on October 1, 1999;

AND WHEREAS:

Section 196 of the Act now provides for a system of administrative penalties that the Board may impose on employers if the Board considers that:

  1. an employer has failed to take sufficient precautions for the prevention of work related injuries or illnesses,
  2. an employer has not complied with Part 3 of the Act, the regulations or an applicable order, or
  3. a workplace or working conditions are not safe;

AND WHEREAS:

In mid-1999, the Panel approved policies to implement Bill 14, including policies with respect to the criteria and process for levying administrative penalties, and directed that the Bill 14 policies be incorporated into a new Prevention Manual;

AND WHEREAS:

Further work has been required to develop a policy with respect to determining the amounts for administrative penalties;

AND WHEREAS:

The Panel directed that, until a new administrative penalty amounts policy became effective, the "Recommended Schedule of Sanctions" ("Recommended Schedule of Sanctions") in Policy No. 1.4.1 of the Prevention Division Policy and Procedure Manual would apply to administrative penalties;

AND WHEREAS:

Work on a new policy for determining administrative penalty amounts under Section 196 has been completed and the results presented to the Panel;

THE PANEL OF ADMINISTRATORS RESOLVES THAT:

  1. The POLICY set out in the attached Item D12-196-6, RE: Administrative Penalties - Amount of the Penalty, (the "new POLICY") is approved and will be incorporated into the Prevention Manual.

  2. The new POLICY applies in respect of violations committed on or after May 1, 2000.

  3. The "Recommended Schedule of Sanctions" continues to apply in respect of violations committed prior to May 1, 2000.

  4. The new POLICY will be reviewed after it has been in effect for three years, and the Bureau and the Prevention Division will work together in the interim to develop the performance indicators and collect the data necessary to evaluate the effectiveness of penalty amounts when the review occurs.

  5. This resolution constitutes a policy decision of the Panel of Administrators.

  6. This resolution is effective May 1, 2000.

DATED at Richmond, British Columbia, March 16, 2000.

DON COTT, CHAIR
PANEL OF ADMINISTRATORS

 

By the Workers' Compensation Board

 
 


RE: Administrative Penalties -
Amount of Penalty 		ITEM: D12-196-6


1. Explanatory Notes

The Board is authorized to impose administrative penalties on employers for failure to comply with Part 3 of the Act and the regulations, and under certain other conditions. Section 196(6)(a) provides that the Board must not impose an administrative penalty where the employer proves that due diligence was exercised. Section 196(6)(b) provides that the Board must not impose an administrative penalty greater than $500,000. Commencing January 1, 2000, this maximum is subject to adjustment under Section 25(4) of the Act on January 1 and July 1 of each year.

The Act does not specify the amount of an administrative penalty that may be imposed in particular situations.

2. The Act

Section 196(6):

After considering any representations made by the employer under subsection (5) and any other information the board considers relevant, the board may, by order, impose an administrative penalty on the employer, subject to the limits that

  1. the employer is not liable to an administrative penalty if the employer proves that the employer exercised due diligence to prevent the failure, non-compliance or conditions to which the penalty relates, and
  2. the board must not impose an administrative penalty greater than $500,000.
POLICY

Amounts of administrative penalties will be determined under this POLICY. No administrative penalty will be levied where the employer proves that the employer exercised due diligence to prevent the failure, non-compliance or conditions to which the penalty relates.

1. "Basic amount" of the penalty
a. Tables for determining "basic amounts"

The following tables contain the guidelines used by the Board in determining the "basic amount" of an administrative penalty.

Category A Penalties -- Serious injury or illness or death; or high risk of serious injury or illness or death; or non-compliance was wilful or with reckless disregard
Assessable Payroll Range ($) Penalty Amount ($)
up to 500,000 2.5% of payroll, or 2,500, whichever is greater
500,001 - 1,000,000 12,500 + 2.25% of payroll over 500,000
1,000,001 - 1,500,000 23,750 + 2.0% of payroll over 1,000,000
1,500,001 - 2,000,000 33,750 + 1.75% of payroll over 1,500,000
2,000,001 - 2,500,000 42,500 + 1.5% of payroll over 2,000,000
2,500,001 - 3,000,000 50,000 + 1.25% of payroll over 2,500,000
3,000,001 - 3,500,001 56,250 + 1.0% of payroll over 3,000,000
3,500,001 - 4,000,000 61,250 + .75% of payroll over 3,500,000
4,000,001 - 4,500,000 65,000 + .5% of payroll over 4,000,000
4,500,001 - 5,000,000 67,500 + .25% of payroll over 4,500,000
over 5,000,000 68,250 + .125% of payroll over 5,000,000, or 75,000, whichever is less


Category B Penalties -- Any other violations

Assessable Payroll Range ($) Penalty Amount ($)
up to 500,000 1.0% of payroll, or 1,000, whichever is greater
500,001 - 1,000,000 5,000 + .36% of payroll over 500,000
1,000,001 - 1,500,000 6,800 + .32% of payroll over 1,000,000
1,500,001 - 2,000,000 8,400 + .28% of payroll over 1,500,000
2,000,001 - 2,500,000 9,800 + .24% of payroll over 2,000,000
2,500,001 - 3,000,000 11,000 +.2% of payroll over 2,500,000
3,000,001 - 3,500,001 12,000 +.16% of payroll over 3,000,000
3,500,001 - 4,000,000 12,800 +.12% of payroll over 3,500,000
4,000,001 - 4,500,000 13,400 +.08% of payroll over 4,000,000
4,500,001 - 5,000,000 13,800 +.04% of payroll over 4,500,000
over 5,000,000 14,000 +.02% of payroll over 5,000,000, or 15,000, whichever is less

The "basic amount" of the penalty will be determined on the basis of the employer's assessable payroll for the most recent full calendar year for which figures are available at the time the penalty notice is issued. The "payroll" for independent operators with personal optional protection is the amount for which they have purchased coverage.

b. Multi-site employers

Where a firm has more than one location, the Board may, in determining the "basic amount" of the penalty, use the assessable payroll at the location where the violation occurred, provided that:

  • the violation has resulted from an occupational health and safety failure at that location rather than a general "program failure" on the part of the employer, and
  • the employer provides the necessary payroll information for that location to the Board and cooperates in any audit that the Board considers necessary.

A "program failure" includes failure to:

  • effectively communicate with all locations regarding health and safety concerns;
  • provide adequate training to managers and others who implement site health and safety programs;
  • make local management accountable for health and safety performance; and
  • provide local management with sufficient resources for health and safety issues.
c. Variation factors

In each individual case, the "basic amount" of the penalty may be varied by up to 30%, having regard to the circumstances, including the following factors:

    1. nature of the violation;
    2. nature of the hazard created by the violation;
    3. degree of actual risk created by the violation;
    4. whether the employer knew about the situation giving rise to the violation;
    5. the extent of the measures undertaken by the employer to comply;
    6. the extent to which the behaviour of other workplace parties has contributed to the violation;
    7. employer history;
    8. whether the financial impact of the penalty would be unduly harsh in view of the employer's size; and
    9. any other factors relevant to the particular workplace.
2. Penalties up to $250,000

With the approval of the President or delegate, the Board may levy an administrative penalty up to $250,000 where:

  1. the employer has committed a high risk violation wilfully or with reckless disregard; and
  2. a worker has died or suffered serious permanent impairment as a result.
3. Penalties up to the Statutory Maximum

With the approval of the President or delegate, the Board may levy an administrative penalty up to the statutory maximum where:

  1. the employer has committed a high risk violation wilfully or with reckless disregard;
  2. multiple fatalities have occurred or a number of workers have suffered serious permanent impairment as a result of the violation; and
  3. there is evidence of a systemic disregard by the employer for worker safety, such as a history of serious repeated non-compliance.
4. Repeat penalties

Where a penalty notice is sent to an employer within three years of a decision imposing an additional assessment or a prior administrative penalty for the same violation, and the Board subsequently decides to levy the penalty, the penalty will be calculated as a "repeat penalty". This includes where, though a different section is cited, the violation is essentially the same, for example, citations of sections 8.11 and 20.22 of the OHS Regulation for failure to use safety headgear.

"Repeat penalties" will be calculated as follows:

  1. The "basic amount" for the current penalty, including any variation, will be calculated in accordance with 1. "Basic amount of the penalty" above.
  2. The "basic amount" for the current penalty, including any variation, will then be increased as follows:
Number of additional assessments or prior penalties imposed during three years preceding penalty notice Increase to "basic amount"
one x2
two x3
three x6
four x12
five x24

5. Recovery of costs saved through non-compliance

The amount of any costs saved or profit made by the employer through committing the violation shall, as far as is known, be added to the penalty amount determined under 1, 2, 3, or 4 above and forms part of the administrative penalty.

6. Statutory maximum

In no case will the Board levy an administrative penalty greater than the statutory maximum then in effect.

PRACTICE

There is no PRACTICE for this Item.

EFFECTIVE DATE: May 1, 2000
AUTHORITY: s. 196(6), Workers Compensation Act
CROSS REFERENCES: See also Administrative Penalties - Criteria for Imposing (Item D12-196-1), Administrative Penalties - Prior Violations and Orders (D12-196-3), Administrative Penalties - Decision (Item D12-196-5); Administrative Penalties - Due Diligence (Item D12-196-10)
HISTORY:  
APPLICATION: This policy applies to violations committed on and after May 1, 2000. Where repeat penalties are imposed, the number of administrative penalties or additional assessments imposed for violations committed prior to May 1, 2000 may be considered.