E-Conomy Finance Group publishes articles focusing on a different aspects of trucking industry. Issue 4: “Independent Owner Operator and WSIB”…
Originally this article was published in: Doroga/Road: April 2013
” Independent Owner-Operator and WSIB”
Hiring owner-operators is a common practice in the transportation industry. While at first glance the advantages of hiring an owner-operator may be appealing, the reality is there are many financial repercussions which could significantly impact your business. Here are some things you should know before your hire an independent operator.
What is an independent operator? An independent operator is different from a regular employee. An independent operator carries on a business, separate from the employer. Typically, an independent operator in the transportation sector will have the following characteristics:
· The owner-operator pays for the truck and the majority of the equipment or other related property;
· The owner-operator has a choice in selecting and operating the vehicle and has market mobility in the at he has discretion to enter contracts of any duration to transport goods and maximize profits.
The WSIB uses an organizational test to determine if a subcontractor is an independent operator and therefore not automatically covered for WSIB purpose.
Employer’s Responsibilities. The duty of the employer is to ensure that the contractors working for you who are required to be registered with the WSIB are registered and remain in good standing with the WSIB. To ensure the contractor is in good standing, you must ask the contractor for a WSIB clearance certificate. A clearance certificate is a confirmation that contractor is registered and has met his reporting and payment obligations.
Example. Company ABC Trucking Inc. hires Nick Small to carry commercial load by using his own truck. ABC Trucking Inc. does not check if Nick has WSIB coverage. As it turns out, he doesn’t. While transporting goods, Nick is seriously uninjured. The WSIB is notified of the injury. The WSIB applies the organizational test and Nick is considered an independent owner operator. As an independent operator without coverage, Nick sues ABC Trucking Inc. for negligence and is successful. ABC Trucking Inc. is unable to pay judgment and goes bankrupt.
In a different case, Nick is a separate incorporated company and decides to subcontract some of the driving to Michael Black. Michael is seriously injured while driving one of Nick’s trucks. The WSIB is notified of the accident and does not apply the organizational test as Michael does not own his own vehicle. Michael is considered a worker by the WSIB. As Nick hired and paid Michael, he is responsible for the WSIB costs. However, Nick did not register with the WSIB before accident. Consequently, Nick is fined by the WSIB. Furthermore… Company ABC Trucking Inc. did not ask Nick for a clearance certificate to confirm that Nick is registered with the WSIB. Now, Nick cannot pay his WSIB bill. The WSIB has the authority to move the responsibility “up the chain” and collect from the principal of ABC Trucking Inc. ABC Trucking Inc. failed to obtain a clearance certificate from Nick and can be held responsible for any money Nick may owe the WSIB.
Section 141 of the Workplace Safety and Insurance Act addresses a principal’s liabilities regarding a subcontractor’s responsibilities for WSIB.
If you don’t receive a clearance certificate, you may be held liable for other people’s WSIB bills.