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Employer incentive debate continues

By Michelle Morra
| www.cos-mag.com

For over a decade, injured worker groups have met several times with the Workplace Safety and Insurance Board (WSIB) to raise concerns about Ontario’s experience rating system. Introduced in the 80s as an incentive for employers to provide a healthy and safe workplace, the program has in many cases had the opposite effect according to its critics.For over a decade, injured worker groups have met several times with the Workplace Safety and Insurance Board (WSIB) to raise concerns about Ontario’s experience rating system. Introduced in the 80s as an incentive for employers to provide a healthy and safe workplace, the program has in many cases had the opposite effect according to its critics.

What finally prompted an official response was a series of articles in the Toronto Star newspaper early this year. The Star investigation revealed that many of the companies receiving financial rebates through the WSIB’s program are the same companies where a worker was killed on the job in the same year.

WSIB chair Steve Mahoney, who says he wasn’t aware such a thing was happening, put an immediate moratorium on rebates to those companies and launched a formal review of the Experience Rating System in the spring of 2008.  [a target="_blank" href="http://www.cos-mag.com/index.php/component/option,com_seyret/Itemid,110/id,39/task,videodirectlink/"]

[Watch: Steve Mahoney discusses Experience Rating System]

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The WSIB, which makes a million decisions a year, was somehow missing out on key information about companies investigated by the government’s enforcement branch. The Ministry of Labour wasn’t getting the message across to the WSIB about companies that had been fined for endangering workers.

Mahoney acknowledges the problem. “If the ministry fines a company $3,000 and then they get a cheque from us for $5,000, that’s no good, and I understand that,” he says. “That’s not part of the review. That’s part of the immediate action I took when this problem became apparent to me.”

He says he has improved lines of communication, and that WSIB and MOL agree that they need a good two-way dialogue, particularly in the areas of the judicial departments.

But these measures cover just the tip of the iceberg, says Marion Endicott, an injured worker advocate. “It doesn’t deal with the huge rest of the problem.”

The numbers game

A committee worked all summer, meeting weekly to discuss progress on the review. Members of the WSIB are on the committee, and actuarial company Morneau Sobeco is leading the review. The WSIB has issued a draft of its report and plans to solicit input and feedback from both employers and labour.

Mahoney says the study has looked at other compensation boards in Canada, and that most have some form of incentive program. But experience rating isn’t just about incentives.

Ontario’s employer incentive program has two components: a reward component in the form of a rebate cheque or reduced premiums as an incentive for companies with good safety record, and a penalty component in the form of a hefty surcharge employers must pay the WSIB if their safety record is bad.

Endicott says the surcharge goes against the whole premise of Canada’s workers compensation law, which dates back to 1915. By gaining compensation, employees lost their right to sue. “This surcharge,” she says, “is kind of getting close to suing. Employers are required to pay huge amounts of money.”

And that, she explains, often leads to dishonest reporting, or depriving injured workers of time off. Employers get a warning, and if they “do things right,” the surcharge might turn into a rebate. “Doing things right doesn’t mean any improvements in health and safety,” she says. “It means getting workers off benefits.”

She says that the current system pressures employers to mistreat employees, by controlling claims in three ways: encourage workers not to report injuries; get workers back to work as fast as possible to avoid a “lost-time injury” in the stats; or aggressively fight claims.


Proving there’s even a problem has been difficult, says Endicott, because studies suggest the system works. But those studies have only been looking at the numbers of no lost-time claims. “Until you really break through that, you don’t know what’s really happening.”

The Ministry of Labour uses “no lost-time incidents” as a measure of severity, which means companies where workers take appropriate time off work to heal are considered hazardous workplaces and get inspected by the ministry.

“The companies that are doing the worst harm are the ones that are escaping the inspections,” Endicott says.

Mahoney admits there’s not much of a human element to those decisions. “Part of the issue here with experience rating is that it is strictly a numerical number at the moment. You add up the premiums they pay you, you add up the impact they have in cost, and you put those numbers in a computer and it spits out a refund or a surcharge.”

What he objects to is that the Ontario Federation of Labour has said employers are liars and cheaters.

“I just don’t accept that,” he says, adding that though there may be a small minority who lie and cheat, just as a small minority of workers might be committing fraud, he believes the vast majority of employers want to see their workers go home safe.

Still, he recognizes the flaws in the current system. “It’s going to change,” he says. “But I don’t believe that any change we make other than scrapping any kind of incentive program will satisfy any of the critics...They just want to kill it.”

The board’s committee is looking at possible ways to alter the system. One option on the table, Mahoney says, is a model like that in B.C., where employers entitled to a rebate get a reduction of premiums on a go-forward basis rather than a lump sum cheque.

Labour groups would prefer to start over with a whole new system, and have suggested as possible models the Excellence Initiative in Germany, which funds research in universities, and one based on the Canadian government’s EnerGuide that would directly subsidize improvements that control or eliminate workplace hazards.

As for Endicott, she would like to see the WSIB stick to claims management and leave prevention to a new, separate “occupational health and safety board.”

We need to talk

Both the WSIB and labour seem to agree that better information exchange among all parties would lead to more responsible decision-making regarding compensation claims. Besides more open communication lines between the WSIB and the Ministry of Labour, there needs to be direct interaction between government decision-makers and the people for whom the compensation system is intended to help.

Steve Mantis, secretary of the Ontario Network of Injured Workers, wants a system that doesn’t pressure injured workers into hiding their injuries or returning to work prematurely. He says that after the media coverage in early 2008, there seemed to be a broader interest in trying to understand this issue.

“The WSIB is developing a new service delivery model that has a closer contact with the injured workers they’re dealing with,” he says. “In some of my discussions with senior management, they’re trying to find ways to build relationships.” In particular, he is referring to a recent meeting he had with WSIB senior managers.

Mahoney wasn’t at that particular meeting, but in the same month, the WSIB chair had “a wonderful meeting” with an injured worker group. As far as he’s concerned, since starting this job two and a half years ago he has always encouraged dialogue with the people the system is intended to help.

“If there have been consequences in the negative, they have been unintended consequences, and we’ll fix that,” he says. “I hope that when they put me in the ground they’ll at least say I listened.”

Michelle Morra is a former COS editor and award winning journalist. You can reach her at writemorr@yahoo.ca.

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