The WSIB has concluded a review of the rate setting approach for temporary employment agencies (TEAs). The review was in response to concerns raised by a subset of businesses in the TEA industry, in particular those that supply clerical labour. They indicated that the approach the WSIB originally planned to introduce in 2020 would result in significant rate increases for some TEAs.
A key component of the review was a stakeholder consultation, divided into two phases.
Phase one (May 6 to June 30, 2022): The WSIB sought information about the TEA industry to support its analysis of the rate setting approach for TEAs and possible modifications to the approach.
Phase two (October 12 to November 16, 2022): The WSIB sought feedback on the proposed modification, and on how TEAs would transition to this revised approach.
Proposed modification
In October 2022, as part of phase two of the stakeholder consultation, the WSIB communicated its proposed modification to the rate setting approach for TEAs. In that communication, the WSIB indicated it continues to support the objective of generally aligning TEAs’ rates with the rates of their clients’ classes. However, significant rate increases for TEAs that supply clerical labour (including certain knowledge-based job roles) would be misaligned with the low-risk nature of those activities. As a result, it is reasonable to introduce an exception for clerical labour.
The following details were provided about the proposed modification.
- Create a new classification for the supply of clerical labour. The activities included in the classification would be similar to the activities included in the pre-2020 Supply of Clerical Labour Operations classification (e.g., clerical labour and certain knowledge-based job roles).
- TEAs would report all their clerical labour under this new classification, regardless of the classification of the client. However, for all other types of labour they supply, TEAs would continue to report based on the classification of the client.
- The new classification would be added to Class L (Professional, scientific and technical), which has a risk profile that is comparable to this activity.
- The new classification would be rated separately from the existing supply of labour to the Class L classification.
The new classification would allow TEAs to be assigned a rate for their supplied clerical labour comparable to the rate they were assigned pre-2020.
Phase two feedback
As part of phase two of the consultation, the WSIB sought feedback from stakeholders on the proposed modification, and how TEAs would transition to this revised approach.
- 14 were from the TEA industry perspective, including individual TEAs, TEA associations and representatives.
- Five were from the worker perspective.
- Seven were from additional perspectives, including non-TEA employer associations and representatives.
Note: Submissions are posted in the format they were received. If you require them in an alternate format, please contact the [email protected].
TEA industry perspective
The submissions were supportive of the proposed modification (to create a new classification for the supply of clerical labour in Class L), indicating it addresses their concerns regarding the classification of their supplied clerical labour.
A few submissions sought additional clarity on which knowledge-based roles would qualify for the new classification, and provided suggestions about how the roles included in the new classification could be defined. As well, several submissions expressed interest in audit and enforcement mechanisms to support compliance and avoid misuse of the new classification.
A number of submissions requested that TEAs be able to classify their internal staff, currently classified in Class M, NAICS 561320 (Temporary help services), in the new classification.
Several submissions requested that any rate increases be held until the new classification is in place. Additionally, some submissions requested gradually transitioning TEAs currently assigned rates below the class rate in Class L from those lower rates towards their rates in the new classification.
Worker perspective
The submissions supported the original approach for TEAs, to generally align their rates with the rates of their client’s classes, including for the supply of clerical labour. In their view, the original approach removes an incentive for businesses to use TEA labour and helps promote health and safety.
The submissions articulated concerns about the TEA industry in general, taking the view that it allows businesses to avoid risk and costs by outsourcing work to TEAs.
Several submissions raised issues about the potential for TEAs to inappropriately report non-clerical labour under the new classification. They argued the WSIB lacks the audit and enforcement mechanisms to address such misuse of the new classification.
One submission indicated the proposed modification would lead to requests from the broader employer community for a lower risk classification for their ancillary operations. They oppose such a classification, arguing it would negatively impact the WSIB’s funding position.
Some submissions offered alternative approaches or recommendations instead of the proposed modification.
Additional perspectives
These submissions supported the original approach for TEAs. They argued the WSIB has not demonstrated there is a need to make an exception for the supply of clerical labour.
Most submissions indicated that if the proposed modification is implemented, the WSIB should also modify the ancillary operations rules (applicable to all businesses) to allow businesses’ internal administrative staff to be classified in the new classification. They argued that would treat clerical labour equally. They also called for the WSIB to end the current consultation and conduct a new one to consider their concerns.
Implementation
After carefully considering the feedback provided by stakeholders, the WSIB is planning to implement the proposed modification, as described above. The WSIB still holds the view that significant rate increases for TEAs that supply clerical labour would be misaligned with the low-risk nature of those activities.
Implementation year
The WSIB is planning for the new classification to be effective January 1, 2025. This is to ensure the TEA industry has sufficient time to prepare for the change and the WSIB has sufficient time to perform outreach to the TEA industry and make the necessary operational and system changes to ensure a smooth implementation.
The effective date, and the modified approach more generally, is dependent on amendments to Ontario Regulation 175/98. As a result, the WSIB is engaging with the Ontario government on this issue.
Approach for 2024
TEA rates in 2024 will be set using the same approach as all other businesses, as they were in 2022 and 2023, as the new classification will not be effective until 2025.
Closing existing operations for WSIB reporting purposes
Currently, some TEAs exclusively supply clerical labour under some, or all, of their existing supply of labour operations (e.g., supply of labour to Class A [Agriculture], Class B [Mining, quarrying and oil and gas extraction] etc.).
When they open the new classification in 2025, they are expected to close those operations for WSIB reporting purposes, as all the clerical labour they supply will begin to be reported under the new classification going forward.
When a TEA closes part of their operation assigned a separate rate, they usually wait 12 months before its experience transfers to another active part of their operation. However, in 2025 that 12 month waiting period may be waived and experience may transfer immediately. The experience will generally transfer to the part of their operation that contains the new classification.
2025 rates
TEAs will generally be assigned the class rate in Class L when they open the new supply of clerical labour classification in 2025. Class rates for 2025 have not yet been determined, but the 2023 class rate in Class L is $0.21.
In cases where a TEA closes some, or all, of their existing supply of labour operations for WSIB reporting purposes, the rates they are assigned for those operations will generally be used to calculate their prior year rate in the new classification. However, the prior year rate will not be greater than the 2025 class rate in Class L.
For example, a TEA may exclusively supply clerical labour to clients in several classes and they are assigned a rate of $0.18 for each of those operations. In 2025 they will close those operations when the new classification is opened. Their experience under those operations will transfer to the new classification and their $0.18 rates will be used to calculate their prior year rate in the new classification. They will then move from their prior year rate towards their projected rate based on the regular rate movement rules.
Note: Some TEAs’ 2025 rate under the new classification may increase more than 15 per cent compared to some of their 2024 rates, depending on the rates of the operations they close in 2025. However, the prior year rate used in the 2025 rate calculation won't exceed the 2025 class rate in Class L, as noted previously.
TEA ancillary operations
TEAs will continue to report their ancillary operations (e.g., their internal office staff that are not supplied to clients) under Class M, NAICS 561320 (Temporary help services).
Changing the WSIB’s model for reporting ancillary operations, for the TEA industry or for all businesses, would be a significant change to the classification and rate setting model and is considered out of scope of the current review.
Compliance efforts
The WSIB will continue to ensure all businesses, including TEAs, are meeting their obligations to report and pay their premiums correctly. Premium amounts reported by TEAs to the new classification will be monitored as part of the risk analysis process, and the WSIB will take appropriate actions including education, audit or enforcement, based on the level of non-compliance risk that is detected.
Additional information
As discussed above, the activities included in the new classification will be similar to the activities included in the pre-2020 Supply of Clerical Labour Operations classification unit (e.g., clerical labour and certain knowledge-based job roles).
The details of the new classification will be included in a new Employer Classification Manual (ECM) policy that will be released in 2024, in advance of implementation.
Also, relevant policies in the Operational Policy Manual (OPM) will be updated to reflect the modified approach for TEAs, the implementation details discussed above and other items. Like the new ECM policy, the updated OPM policies will be released in 2024, in advance of implementation.
Additional information about the implementation of the modified approach for TEAs will be shared with TEAs as part of our 2025 rate-setting process.