CFIB calls on overfunded WCBs to issue direct rebates

Five workers' compensation boards in Canada are overfunded, according to report

CFIB calls on overfunded WCBs to issue direct rebates

The Canadian Federation of Independent Business (CFIB) is calling for fairness for small businesses when it comes to the country’s worker’s compensation boards (WCBs) that are overfunded.

 “We really believe it's only fair that if a board is funded over and above their own target ratio, that they return this excess amount back to small businesses through direct rebates,” says Duncan Robertson, policy analyst with CFIB.

CFIB released a report called Funding Fairness: State of Workers’ Compensation Funding which identifies five WCBs that are overfunded. Prince Edward Island, New Brunswick, British Columbia, Manitoba, and Yukon.

The CFIB is calling on these WCBs to send direct rebates back to the employers, saying it would give small businesses a big boost at a time when they’re feeling the pinch due to inflation and high interest rates. “If all five overfunded boards provided direct rebates, it would result in a $3 billion boost for small businesses,” reads the report.

“It's just another added cost, another payroll tax” says Robertson referring to the premiums employers must pay to the WCBs. He points out that EI and CPP payments have also been increasing. “It's been tough out there for small businesses and this rebate could definitely be game changing, especially when we see that six out of 10 small businesses are still carrying pre pandemic debts, averaging around $126,000.”

In British Columbia, WorkSafeBC represents the largest of the five overfunded WCBs with a funding ratio percentage of 146 percent in 2022. That is 16 percent above its target of 130 percent. Robertson says a target of 130 percent “is 30 percent above what they would need to operate. So what we're seeing now is almost a buffer for a buffer.”

WorkSafeBC issued a statement to Canadian Occupational Safety arguing that because it is significantly overfunded it has been able to keep its premium rate of 1.55 percent flat since 2018, which is less than its expected cost rate of 1.80 percent.

“Between 2019 and 2023, WorkSafeBC projects that $1.7 billion of surplus funds will have been used to keep the rates paid by employers below the cost of claims,” reads the statement. It goes on to say that if WorkSafeBC did not have the surplus it “would no longer be able to keep the premium rates paid by employers below the cost of claims or stable year over year. In other words, with no surplus funds, premium rates would need to increase in future years and significantly fluctuate year over year.”

Robertson says he can appreciate the fact that WorkSafeBC has maintained a stable low premium rate for several years, “but want to make sure we’re getting as much support to small businesses as fast as possible, which could come from direct rebates.”

The CFIB would prefer to see all provinces adopt a similar model to Ontario’s Workplace Safety Insurance Board, which is mandated by legislation to provide rebates when funding surpasses 125 percent. Robertson refers to Ontario as “the gold standard.”