When a business takes a contract to carry out a construction activity, the overall purpose of the contract determines the business activity and North American Industry Classification System (NAICS) code for the contract. This means that only one NAICS code, and one premium rate, apply to the entire contract. In most cases, the business cannot break down the contract and report earnings in more than one NAICS code based on trades when more than one trade works on the project.
Frequently asked questions
What determines the business activity of the contract?
We work together with you to review your contract and determine the overall purpose of the contract based on the work and/or services outlined in the contract.
Example 1: Multiple trades
Domino Paving takes a contract to build a highway and is involved in all aspects of the work. The contract includes drainage and electrical work in addition to paving, but the overall purpose remains the construction of a highway. The overall purpose then determines the business activity and the NAICS that applies to the contract, in this case NAICS code 237310 Highway, street and bridge construction. Domino must report all insurable earnings for the contract (including drainage and electrical work) under this NAICS code and premiums are billed at the corresponding premium rate.
Example 2: Subcontracting
XYZ Contracting takes a contract to construct an office building. XYZ subcontracts most aspects of the work such as excavation, form work, plumbing, electrical, etc. to businesses registered with the WSIB. The only direct earnings for the project are paid to unskilled labour on the site. XYZ also has employees engaged in ancillary operations, such as clerical and administrative work, that support the main business activity.
The overall purpose of the contract is to construct an office building. XYZ must report all the insurable earnings for both the unskilled labour and the ancillary operations under NAICS code 236220 Commercial and institutional building construction.
Example 3: Scope of contract
Standard Concrete takes different kinds of contracts to repair or restore parking garages.
3A. The business takes a contract to repair a parking garage. The work involves concrete repairs requiring minor incidental work such as rewiring. The overall purpose of the contract is concrete repair work, and Standard must report all insurable earnings for the contract under NAICS code 238110 Poured concrete foundation and structure contractors.
3B.The business takes a contract to restore a parking garage. The work involves extensive renovations requiring electrical work, paving, and landscaping in addition to concrete repair. The overall purpose of the contract is to do major restorations and renovations to a parking garage. Standard must report all insurable earnings for the contract under NAICS code 236220 Commercial and institutional building construction.
What if there is no written contract?
Written contracts provide important information for determining the overall purpose of the contract including:
- who is doing the work (the business) and for whom (the principal)
- scope of project and details of work and/or services to be performed
- associated costs
- general timeframes to complete the project
When there is no written contract, you are responsible for substantiating the overall purpose of the project. You may use invoices when determining the overall purpose of the project and the applicable NAICS code.
If the invoices do not show the overall purpose of the project, then other supporting documents may determine the appropriate NAICS code. These may include documents, like:
- work orders
- work proposals/tenders
- building permits
What if there are no documents that identify the overall purpose of the project?
When there are no documents to clearly identify the overall purpose of the project, we will determine the single business activity and NAICS code that best captures the project.
The rules for classification by contract and project apply to all businesses, including small businesses (a business with annual insurable earnings of less than five times the annual maximum insurable earnings ceiling).