Policy in practice: Expanded Compulsory Coverage in Construction

Here are examples of scenarios covered by our Expanded Compulsory Coverage in Construction policy (12-01-06) related to:

  • Independent operator status in construction
  • Home renovation exemption
  • Cancellation of compulsory coverage
  • Executive officer status
  • Exemptions for partners or executive officers who do not perform any construction work
  • Reduced premium rate for partners and executive officers
  • Material change in circumstances
  • Verifying information

This is not a policy. If there is a conflict between this information and the policy, the decision maker will rely on the policy. For complete information, see our Expanded Compulsory Coverage in Construction policy (12-01-06).

Independent operator status in construction

 If you are an independent operator in construction, you must register with us and let us know you are an independent operator. Once you have registered, you will have your own WSIB account and reporting obligations. To support your status as an independent operator, you may be asked to provide copies of contracts, invoices and other financial records.

Any business doing activities that are considered construction, or Class G, Schedule 1 of Ontario Regulation (O.Reg) 175/98 and/or performing business activities listed in Class ‘G’ in the WSIB Employer Classification Manual (ECM) must have compulsory coverage with us.

If your status as an independent operator is in question at any time, we will make a determination based on the definition of an independent operator set out in our Expanded Compulsory Coverage in Construction policy (12-01-06). We may need to review this to determine which business is responsible for reporting insurable earnings and paying premiums to the WSIB.

Independent operator status remains in effect until there is a material change (as outlined in the material change in circumstances section below).

Independent operator status in construction - examples

Example 1: a contractor in construction meets the definition of an independent operator

Scenario:

Pat starts a construction business and has no employees. He takes his first construction contract with one principal from January 1 until March 31. He reports to the Canada Revenue Agency (CRA) as self-employed and hasn’t registered with the WSIB.

A few months after the end of his first contract, Pat takes a contract to work for another principal. The second contract starts on May 1.

Effective date: Because Pat has been retained as a construction contractor by more than one person during an 18-month period, he meets the definition of an independent operator in construction and must register with the WSIB and declare his independent operator status.

The effective date of his independent operator status is May 1, so he starts paying premiums from the period beginning that date. From January 1 to March 31, the business that hired Pat would have to cover him.

Example 2: an owner-operator of a truck is not an independent operator in construction

Scenario:

Salvatore owns and operates a dump truck and has no employees. He works exclusively in delivering and removing materials to and from construction sites.

Salvatore submits Determining Worker/Independent Operator Questionnaire – Trucking Industry (PDF) to the WSIB for work he is doing for ABC Construction Inc. The WSIB determines Salvatore is an independent operator in the trucking industry.

Home renovation work exemption

If you are a self-employed contractor who works in home renovation, your business may be exempt from coverage if you work directly for the home owner or member of their family and are paid directly by the home owner or member of their family.

Home renovation work exemption - examples

Example 1: occupant of a residence hires a contractor

Scenario: Vladimir lives in a house that he is renovating. He signs a contract with Bob of Bob’s Home Repairs and pays him directly. Bob is an individual contractor who is engaged exclusively in exempt home renovation work.

Why the exemption from coverage applies: The exemption applies for Bob because Vladimir, the occupant of the house, is directly retaining his services. Also, Bob is engaged exclusively in exempt home renovation work.

Example 2: a tenant hires a contractor to do work in their rental unit

Scenario: Cathy needs tiling work done in the apartment she rents in a multi-unit rental building. She contracts with Angie, an individual contractor, and pays her directly to have the work done. Angie works only in home renovation.

Why the exemption from coverage applies: the exemption applies because Angie is exclusively doing home renovation work and Cathy is directly retaining and paying Angie for work in the private residence Cathy occupies.

Example 3: a contractor retains subcontractors

Scenario: Carlos’ Contracting, an individual contractor, only does home renovation work. Carlos signs a contract with a homeowner/occupant, who pays him directly. The contract includes some electrical and plumbing work, but Carlos’ Contracting does not perform this work. Instead, Carlos retains the services of an electrician and a plumber, who are registered independent operators.

Why the exemption from coverage applies: the exemption applies because Carlos is retained directly by the occupant of the home, and is engaged exclusively in home renovation work. However, the electrician and the plumber are not exempt from coverage because they are not retained directly by the home’s occupant. The plumber and electrician are required to have clearance for Carlos’ Contracting.

Example 4: occupant of a residence hires a contractor with employees

Scenario: Steve’s Handyman Services, working exclusively in home renovation, is contracted by an occupant of a home to paint their dining room walls. Steve is a registered business with two employees whose insurable earnings he reports to the WSIB.

Why the exemption from coverage applies: the home renovation work exemption applies for Steve himself, because Steve’s Handyman Services is directly retained and paid by the home’s occupant, and is engaged exclusively in home renovation work. It isn’t compulsory for Steve to be covered and his business is not required to report his own insurable earnings to the WSIB. However, since Steve’s Handyman Services has two employees, he must continue to report their insurable earnings.

If you are exempt from WSIB coverage, you can still apply and pay for optional insurance coverage.

When the home renovation work exemption does not apply

Example 1: a property management company hires an independent operator

Scenario: The property management company of a condominium complex needs repairs to the leaky windows in its units. The company hires Roberto, an independent operator, to repair the windows.

Why the exemption from coverage does not apply: the exemption does not apply to Roberto because the construction work is contracted with the property management company, not directly with the occupants of the condo units. Roberto must register and declare his independent operator status with the WSIB. A clearance is required for this work.

Example 2: a contractor takes a home renovation work contract and a commercial contract

Scenario: Bob is an individual contractor operating as Basement Renos, who only contracts with, and is paid directly by the occupants of homes to perform home renovations. However, Basement Renos has secured a contract for plumbing repairs at a restaurant. The construction work for the restaurant contract will be completed during the same period that Basement Renos will be performing home renovation work at a private residence.

Why the exemption from coverage does not apply: The exemption does not apply, because when construction work begins on the restaurant contract, Basement Renos is no longer engaged exclusively in exempt home renovation work. Bob must register with the WSIB and report his insurable earnings from both the restaurant contract and the home renovation work at the private residence. A clearance is required for the restaurant contract.

Example 3: a partnership performs home renovation work and commercial work

Scenario: Bob and Joe operate as a partnership and take contracts with, and get paid directly by home occupants. They work together and do not have employees. They do home renovation work from the start of the year until October, when they take a contract to install new countertops for a restaurant chain. Bob continues to work exclusively on home renovation work while Joe installs the restaurant countertops.

Why the exemption from coverage does not apply: once the partnership takes the restaurant contract, the exemption does not apply to Bob and Joe because the partnership is no longer engaged exclusively in exempt home renovation work. Both partners must now be covered and they must register with the WSIB within 10 days of taking the contract. They must report the insurable earnings of both partners starting in October. Their insurable earnings must include the earnings from both the home renovation work and the commercial work. For more information see Insurable Earnings-Construction policy (14-02-18).

Cancellation of compulsory coverage

If you are an independent operator, sole proprietor, partner or executive officer of a business that alternates between exempt home renovation work and non-exempt construction work, you must be covered because your business is not engaged exclusively in exempt home renovation work. If your business is reporting to the WSIB and stops doing any construction work other than exempt home renovation work, you must contact us to cancel your coverage.

However, if your business has employees other than yourself, your WSIB account will remain open and the business must report your employees’ insurable earnings.

Coverage for yourself will remain in effect until you ask the WSIB to cancel it. Cancellation will take effect on the date the WSIB receives the cancellation request, or on a future date requested by you. You must report and pay premiums on your home renovation work until the coverage is cancelled. However, a minimum period of three months of coverage is required.

Cancellation of compulsory coverage - examples

Example 1: home renovation contracts exclusively – minimum three months of coverage

Sue registered with the WSIB on January 1 and declared her status as an independent operator. She takes contracts from commercial businesses, and also does electrical work for homeowners. On February 15, Sue finished a contract to rewire a restaurant’s electrical outlets and decided she would no longer take contracts for commercial work. She began taking contracts for occupants home renovations only. She requested to close her account with the WSIB, effective February 15. 

Although Sue was no longer taking contracts for commercial work after February 15, her coverage continued until April 1, because coverage is subject to a three-month minimum.

Example 2: independent operator no longer takes commercial contracts

Scenario: Dave was registered as an independent operator with the WSIB effective March 1. He performed metal siding work exclusively for home occupants but on March 1, he began a metal siding contract for a commercial business as well.


As of July 9, Dave stopped all commercial siding work and only took contracts with home occupants. Dave submitted a request to cancel his coverage in November, which the WSIB received on November 30. 


Although Dave met the criteria for the home renovation exemption from coverage as of July 9, his WSIB coverage remained in effect until November 30, the date the WSIB received his request to cancel his coverage. Dave must report his insurable earnings for the commercial and exempt home renovation work from March 1 to July 8, and then for the contracts with the home occupants from July 9 to November 30.

Executive officer status

Examples of titles of executive officers can include president, vice president, chief financial officer, secretary/treasurer, etc.  An executive officer is remunerated, appointed or empowered to act as an officer through corporate documents like articles of incorporation, charters, by-laws and/or corporate profile reports filed with a federal or provincial agency. The appointment of an executive officer should be recorded in the corporate minute book.

Title alone does not make an individual an executive officer. The key to executive officer status is that the person is empowered or appointed to act as an officer of the organization. We reserve the right to determine who is an executive officer by reviewing the person's roles, responsibilities and authority within the organization.

In a self-reporting system, the WSIB uses a number of processes – such as audits, CRA information matching, tip lines and payroll matching – to periodically review and assess the correctness of a business’ designation of executive officer status. In assessing this designation, we review the corporate minute book and/or public records filed with government authorities. The following corporate documents are considered to persuasive forms of evidence:

  • Articles of incorporation
  • Charters
  • By-laws
  • Provincial/federal corporate profile reports

We consider roles with significant functional responsibilities demonstrating that the person has the responsibility for overall direction, whether exclusive or shared, for the entire organization. We may consider one or any combination these roles as decisive evidence of executive officer status:

  • having company-wide management responsibilities (beyond one’s own department)
  • reporting to the board of directors
  • attending board meetings
  • acting independently on behalf of the organization
  • having the authority enter the organization into binding agreements/contracts
  • making significant decisions that can impact the organization as a whole
  • voting at executive committee meetings
  • having fiduciary duties to the organization

We will decline a business’ designation of executive officer status if we find that the business has not provided sufficient evidence that a person has executive officer status. In that case, the business will be responsible for making retroactive premium adjustments and may be subject to fines and penalties. Knowingly making a false statement about executive officer status is an offence which may be prosecuted.

Exemptions for partners or executive officers who do not perform any construction work

Partnerships, corporations with employees, and corporations without employees but with multiple executive officers may exempt one partner or executive officer from coverage if that person does not perform any construction work as defined in our Expanded Compulsory Coverage in Construction policy (12-01-06) – this includes any manual work of a skilled or unskilled nature, the operation of equipment or machinery, or the direct on-site supervision of employees. The partner or executive officer may make periodic site visits, provided they do not perform construction work on the site. Independent operators are not eligible for this exemption.

A person who is eligible for the exemption must complete the application for exemption from coverage for a partner or executive officer in construction (PDF) for review and confirmation. For the first exemption request, coverage will be cancelled the date the exemption form is received by the WSIB, or on a requested future date. You must report and pay premiums for insurable earnings of the partner or executive officer until the coverage is cancelled.

If a person returns to compulsory coverage after receiving an initial partner or executive officer exemption, they can only be granted an exemption following a minimum three-month period of compulsory coverage.

If the WSIB discovers that the individual named in a declaration did not qualify for the exemption, a retroactive premium adjustment will be made to the business’ account.

Exemptions for partners or executive officers who do not perform any construction work - examples

Example 1: first declaration for partner or executive officer exemption from compulsory coverage submitted

In 2015, Mike and Paul were partners in the construction industry. Mike only performed administrative duties for the partnership, and never performed any of the construction work on the work site. Paul and the partnership’s other employees performed all of the construction work. Because Mike was a partner and did not perform any construction work for the partnership, he was eligible for the exemption from compulsory coverage in construction. Mike completed and signed the application for exemption from coverage for a partner or executive officer in construction (PDF) as the applicant and the authorized representative of the employer and sent it to the WSIB.

The WSIB accepted Mike’s declaration and sent a letter to both Mike and the partnership confirming that the effective date of Mike’s exemption from compulsory coverage was March 1 – the date the WSIB received the declaration. The insurable earnings of Paul and the other workers had to be reported to the WSIB. Mike’s insurable earnings had to be reported from January 1, up to the effective date of his exemption, February 28.

Example 2: second declaration for partner or executive officer exemption from compulsory coverage submitted – three-month minimum period of coverage

Based on the scenario above, on March 15, Mike began performing construction work, so he cancelled his exemption. The partnership reported his insurable earnings from March 15 with the insurable earnings of Paul and the other employees. On May 2, Mike stopped performing construction work again and became eligible for the exemption. Once again, Mike completed application for exemption from coverage for a partner or executive officer in construction (PDF).

Although the WSIB received his declaration on May 10, the effective date of his exemption is June 15, as the three-month minimum period of coverage is applicable.

Reduced premium rate for partners and executive officers

A partnership, corporation with employees, or a corporation without employees but with multiple executive officers may ask to report the insurable earnings of non-exempt partners or executive officers who do not perform any construction work under the reduced premium rate for non-exempt partners and executive officers, a separate classification code. Construction work refers to any manual work of a skilled or unskilled nature, the operation of equipment or machinery, or the direct on-site supervision of workers. Periodic site visits are permitted, provided the partner or executive officer does not perform construction work on the site. Independent operators are not eligible for the separate classification code and reduced premium rate.

An authorized representative for the partnership or corporation must complete and submit the application for exemption from coverage for a partner or executive officer in construction (PDF).

Non-exempt partners or executive officers in construction is distinct from other construction classification codes, and is to be used only for reporting the insurable earnings of partners or executive officers who are eligible.

We will confirm in writing and provide the effective date of the reduced premium rate on your account.

If particular partners or executive officers become ineligible for the reduced premium rate at any time, the partnership or corporation must begin to report those individuals’ insurable earnings under the construction classification code. If you no longer have any partners or executive officers eligible for this separate classification code, you must report this material change to the WSIB within 10 days.

If the WSIB discovers that an individual did not qualify for the reduced premium rate, and the individual’s earnings were reported under this separate classification code, a retroactive premium adjustment will be made to your account.

Reduced premium rate for partners and executive officers - examples

Example 1: partnership requests reduced premium rate for non-exempt partners and executive officers to report one partner’s insurable earnings

Scenario: Pam, Bob and John are partners of PB & J Plumbing. PB & J Plumbing completes and submits the application for reduced premium rate for non-exempt partners and executive officers in construction, asking us to add this separate classification code to use for reporting one of the partner’s insurable earnings. The WSIB receives the completed form on March 1. 

Pam performs the administrative duties for the partnership and never does any construction work.

Bob and John perform all of the construction work. Since Pam is a partner who does not perform any construction work, she is eligible for reduced premium rate. Bob and John are not eligible because they perform construction work. Although Pam also can exempt herself from coverage with the WSIB, she chooses to remain covered.

The WSIB sends a letter confirming the reduced premium rate will be added to PB & J Plumbing’s account, effective January 1.

Example 2: incorporated independent operator ineligible for reduced premium rate for non-exempt partners and executive officers 

Scenario: Rick of Bright Lights Inc. is an independent operator. Bright Lights Inc. completes and submits the Application for reduced premium rate for non-exempt partners and executive officers in construction.

We send a letter to Rick informing him that Bright Lights Inc. is not eligible for a reduced premium rate because Rick is an independent operator.

Material change in circumstances

You are responsible for reporting any material change in circumstances to the WSIB within 10 days.  Some examples of material change are:

  • Independent operators no longer qualifying for this status
  • Independent operators, sole proprietors, partners, or executive officers no longer qualifying for the home renovation work exemption
  • Partners and executive officers no longer qualifying for exempt status
  • Employers no longer qualifying for the reduced premium rate assigned to their partners or executive officers

Verifying information

The workplace health and safety system relies on everyone to accurately meet their responsibilities to us. We have a legislated duty and authority to ensure that they do so. To verify reporting accuracy, we can request information from you, including the following:

  • Proof of reporting to another government agency, copies of invoices or other financial records, including copies of contracts, as supporting evidence for the independent operator status declaration
  • Ownership or corporate information and documentation to verify that an individual is a partner or executive officer
  • Documentation to verify eligibility for the home renovation work exemption or eligibility for reduced premium rate

Any inaccurate information provided to the WSIB may be considered a lack of full disclosure or making a false statement and can impact the period of premium adjustments made to your account. To learn more, see our Employer Premium Adjustments policy (14-02-06).