August 2007 NEWSLETTER: 5 Minutes to Improve ...
"5 Minutes to Improve ..."
This newsletter is a free service to the North American not-for-profit community from William Harper Associates. Its focus is on helping organizations that do good, do better ... by identifying practical ways that small- to mid-sized organizations can improve their operations, one small step at a time, in just a few minutes.
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August 2007: 5 Minutes to Improve ... your Workers' Compensation
This month's "5 minutes to improve ..." idea is to review your workers' compensation or workplace safety and insurance status.
Workers' compensation has been a feature of many workplaces for the better part of 100 years. In Ontario, for example, the Workmen's [sic] Compensation Board (WCB) was established in 1914. Despite this (or, more accurately, because of this), not all workplaces are included in this coverage. In fact, you may be operating under the belief that your organization doesn't need to register with the (in Ontario) Workplace Safety and Insurance Board (WSIB). You may be right.
When the WCB was formed all those years ago, at least two things were very different:
- services were not a major portion of the economy, as they now are. It seems an accident of history, therefore, that many service organizations are not mandated to be covered by the WSIB. As discussed below, however, it is worth considering voluntary coverage even if you are not required to participate;
- the original focus was more likely aimed at protecting employers, rather than employees. This has changed significantly over the years, of course, with safety, prevention and rehabilitation now forming the backbone of the system.
Do you need to register?
As noted, many service organizations are not required to register with the WSIB. The list of exclusions, though somewhat curious in its composition, may include your association or charity. The exclusions highlighted by the WSIB include:
- Banks, trusts and insurance companies
- Private health care practices (such as those of doctors and chiropractors)
- Trade unions
- Private day cares
- Travel agencies
- Clubs (such as health clubs)
- Photographers
- Barbers, hair salons, and shoe-shine stands
- Taxidermists
- Funeral directing and embalming
Don't fit in this eclectic list? Keep exploring, for many other organizations don't have to register (but aren't highlighted as such by WSIB). These include: business associations, religious organizations, cultural organizations, and civic and fraternal organizations. Many readers will fall into one of these categories and therefore not be required to register.
But, read on!
You may not need to register, but you still can register. Why would you?
Benefits of registering
Recall that the first WCB regime was more focused on protecting employers rather than employees. Some of those original benefits remain, and it is well worth considering them. Per the WSIB Website, these benefits include:
- Protection from lawsuits
- No-fault insurance
- Workplace insurance benefits for your workers
- Prevention and training programs
- Help in returning workers to the job
Today, we take our obligations to our employees seriously. We understand the value of preventing injuries, and providing benefits and rehabilitation services to injured workers.
In terms of protecting your organization, however, this coverage also protects you from lawsuits from injured employees. And, anyone who has ever been a party to a lawsuit will understand that the costs of such actions go far beyond the lost wages: legal fees, investigative fees, claims for suffering and loss of enjoyment, and the time and emotional energy of preparing your defense can all dwarf the actual loss of income. It only takes one such action to cast a far more flattering light on the notion of being registered under the WSIB.
The costs
So, there are benefits, but what are the costs?
Have you heard that workers' compensation costs can be so steep as to cripple your organization? Well, they can be steep, in industries that have the injury records to justify it. As you might imagine, mining, logging, or heavy manufacturing companies can pay 5% to 10% of their total payroll in premiums - demolition companies pay 16%!!
Now the good news. Many NPOs will pay just $0.61 per $100 of employee payroll. For an organization with 5 employees earning an average of $40,000 annually, that's about $1,200 in premiums annually.
Now, that's not small change to our sector's tight budgets. But, it does sound pretty cheap thinking about that one lawsuit.
There are also ways of controlling this cost.
The WSIB offers incentive programs that encourage employers to improve safety in their workplaces. Premium reductions apply to strong safety records (and, premium increases apply for poor records). In support of this (and, of course, to promote safe workplaces), WSIB also offers a variety of training programs and resources.
Finally, it is also worth double checking your rate classification to ensure that you are classified in with the right group of organizations. Premium rates range from as little as $0.17 to $16.02 per $100 of payroll. Being in the wrong group can be a costly mistake indeed!
Next Steps
If you are not currently registered with WSIB, check out the employers portion of their Website. Determine your employer classification and estimate your premium. Consider the value offered by this coverage.
If you are already registered, you should still check out the site and review your employer classification to ensure that you are in the correct rate group. While you are there, you can also check out the various programs and services for employers to help you manage your costs and make your workplace as safe as possible.
Yes, being part of the workers' compensation regime is one more regulatory burden and cost associated with having employees. But, unlike some other requirements, workers' compensation offers some very direct and tangible benefits to your employees and your organization. Like any other requirement, however, you should pay attention to the particulars and actively manage the process.
William Harper is a Chartered Accountant and has broad experience in not-for-profit operations and management. Call us to discuss how you can improve your organization's operations.