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The other side of cost transfers

In the past, I have written about the importance of considering cost transfers as a cost-saving strategy in managing compensation claims. The concept of transferring costs in workers’ compensation is important for employers whose workers are injured because of the negligence of a third-party worker.

Because the injury employer is primarily responsible for the costs of a workplace accident, being able to transfer those costs — either wholly or in part — where another party is responsible for causing the injury is a means for the injury employer to obtain relief from those costs. For example, if your employee were to trip and fall over tools or materials left on the floor by a contractor working at your workplace, and become injured, the employer could request that the costs of the injured employee’s claim be transferred to the contractor’s workers’ compensation account.

If the compensation board determines the contractor was negligent, they may transfer all or part of those costs to the negligent party’s account, depending on the degree of negligence of each party. If the injured employee was not paying attention to where they were walking, for example, they may apportion negligence.

There are some limitations on the ability to transfer costs, so this should be reviewed with the compensation board in the employer’s jurisdiction. In order to protect the company from being found negligent in this type of situation, employers should ensure they have a health and safety management system in place to prevent incidents from occurring.

Create policies and procedures for activities and for hiring contractors. Ensure those procedures identify hazards associated with the work and the workplace, including how others may be affected by the work. Procedures should outline hazard controls and mechanisms to prevent incidents and injury.

Provide information, instruction and supervision to the workers. Ensure workers are aware of their rights and responsibilities under health and safety legislation. Ensure they are aware of their responsibility to work safely and to follow established procedures.

If the employer has contractors working in the workplace, ensure the employees are aware that contractors are present and of what they are doing. If the workplace activities may or will affect the contractors, ensure all parties are working in a manner that will prevent injuries to each other.

Provide information to contractors, including temporary workers, about hazards associated with the specific workplace. If the employer hires temporary workers from placement agencies, ensure they are given an orientation, information and training on specific safe work procedures.

There is no way to ensure a company may not try to transfer costs to your organization, but by taking proactive steps to prevent incidents and injuries, you may decrease the likelihood of your workers being found to be “negligent” should an incident occur.

Successfully defending a cost transfer application could result in significant savings.

David Marchione

David Marchione is an occupational health and safety consultant and paralegal at Fasken in Toronto. He can be reached at (416) 868-3468 or dmarchione@fasken.com, or visit www.ehslaw.ca for more information.
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