Workers' Compensation Board

Staff Present: TR, GG, OE, GS, SN, PL

Notetaker: Steven Noble

Date: Tuesday, April 7, 1998

• General Topic area is Scope of Coverage: What is covered and who is covered?

• JOHN STEEVES
• Mr. Chair as Mr. Robertson indicated I am covering on behalf of the BC Federation of Labour two coverage issues – what is covered and who is covered and as Mr. Robertson indicated I go first, Mr. Winter, and then Mr. Sayre. And then we get a chance to do a rebuttal and reply and so I am looking at Section 2 of the written submission that was provided to you. And again I apologize for the pagination but it is section 2, page one and starting of with what is covered by workers' compensation we have a general introduction there entitled as it happens:
• What are Covered as Compensable Injuries and Diseases?
• And we say as a starting point that it is extremely important that the scope of compensation extend to all of the injuries and diseases that arise from employment. This is important for at least two reasons. You’ll recall the – comments of the Minister of Labour in the Social Credit Government in 1972 that the purpose of the legislation was to expand the coverage of compensation to more and more people and our comments are in that context as well. So two reasons that we put forth for expanding coverage are:
• First, if society is to have mechanisms to prevent injuries and diseases that are related to work there must be some system of economic incentives to prevent them from happening again, and, in serious cases, there must be a system to go further and write Orders or even prosecute. Some employers will do the right thing to prevent injuries and diseases simply because it is the right thing to do but there must be some mechanism to apply to those who do not do the right thing. The system we have for preventing occupational health and safety hazards ties claims to prevention as best we can so that an unsafe workplace is more expensive to operate than a safe workplace.
• The other reason is to re-visit Mr. Justice Sloane’s comment about the "grim aftermath" that results from work related injuries and diseases that do not come under a workers’ compensation system. Society as a whole has an interest and we think an expectation that work related disabilities will be looked after by a fair system of compensation.
• It follows from this that to exclude specific diseases or injuries from the workers’ compensation system – as some propose – is to reduce to eliminate the normal incentives to prevent these injuries and diseases. When the medical and factual evidence supports a relationship between a disease or injury and the work it is illogical and arbitrary to exclude that condition from the prevention rules that would normally apply to that condition.
• Q: What do you mean?
• A: I guess the question is what is the logic that you apply? If the logic is to try to prevent the disease then yes that is the case.
• Q: I guess where I’m coming from in this question is to say that if there are for whatever policy reasons a – if there is a justifiable basis to define a specific condition is not compensable does it necessarily mean that it should not be by legislation declared preventable?
• A: Well, I suppose that’s – there’s a logic to that – I – but – and it may be for employers to say that why should they work on preventing diseases that don’t come under the compensation side of the system and you might want to ask them that?
• Q: Did you mention that that if you exclude a specific condition that it will necessarily mean that incentives to prevent them from appearing will disappear and I suppose logically that if there is not a cost to compensate it might be arguable that the incentive is diminished but could that not to some extent be replaced by an obligation to prevent legislatively imposed nonetheless?
• A: So the concept is that it wouldn’t be – compensation wouldn’t be available but there would be some prevention strategy to….
• Q: Yes, for a given condition whatever it might be.
• Q: Well, I – I hadn’t thought of that – it seems to me that if – I guess a question from the workers’ point of view would be what happens when the worker does suffer an injury or a disease as a result of that and that’s precisely the point that we want to prevent. So I guess if where this goes is that if there is some way you can separate compensation and prevention – I’m not sure there is – I haven’t put my mind to it but perhaps we can develop that over the next couple of weeks but it seems to me that they are very closely and if not intimately connected.
• Q: All right; can you clarify a question – I’ve read your paper over on Sunday and along the line of the Judge’s question – that it seems to me that what you are suggesting is supportive of an experience rating assessment concept. And that is – it is experience rating assessment would be the negative incentive that would cause employers to take preventative action against certain diseases. Does that go hand in hand with your saying if you exclude diseases you lose the deterrence of the experience rating assessment?
• A: In part, we don’t’ take the position that experience rating assessment should be thrown out; we think that in principle there is something valid in experience rating assessment – we think that there are a number of problems with that and we are coming to that in the funding system but so in part that’s part of – that’s what we’re saying but also simply having – quite apart from experience rating assessment – there’s a claim over a fatal matter at work which seems to me that that’s – we talked about this when we were examining the Board about sharing of information that we would hope that it would lead to inspection right away so that is quite distinct from experience rating assessment – it is more – it is experience rating assessment partly and you know the problems with it but it’s also the ability to connect again the compensation side with the prevention side and send someone out straight away in a serious case.
• Q: Are you talking about focus on the compensable aspects of the disease or injury – a focus of prevention on it?
• A: Yes. Yes and that goes to our position that compensable – compensation and prevention should be in the same organization and in the same Act.
• Q: Which is the more important in your – you and your clients’ judgement – experience rating assessment and the financial incentive aspect of it or the focusing of the problem?
• A: ah I think the focusing – I think the merging – the merging of the information between compensation and prevention for the purposes of tagging situations – as you say focusing.
• Going back to our submission:
• Further, such an exclusion would result in the people suffering from these injuries and diseases being left to their own devices for economic loss, medical aid and rehabilitation. All of the previous commissions have reminded us that society expects a fair system of compensation to take care of disabled workers and they should not be left to their own scarce resources.
• A final introductory point on this issue is to note that the Act and policy apply to a range of situations. Most claims involving coverage issues will be resolved simply and usually in favour of the worker without any controversy. But a small number may be controversial and the results in those cases may even be surprising to people not familiar with the system. A couple of examples here:
• There are situations where a worker is impaired when injured on the job – whether through alcohol or drugs or something else. Board policy – and I give you a cite there (Section 16.10 of the Manual) covers this issue and essentially the approach is that if there is something in the work that is of causative significance for the injury, then the claim may be acceptable. However, if the injury was solely the result of impairment, then the claim may not be acceptable. Another example, is the fire fighter who had a compensable heart attack while on holidays – and this becomes something of minor legend I gather before the Commission. To some this does not seem sensible. But, again, Board policy (Section 26.20) covers this issue and it is based on gradual exposure and latency periods and in the context of the specialized nature of worker’s compensation, the policy is sensible.
• The point there is that the exposure to risk factors that cause heart attack happens over time and the actual onset of the heart attack need not necessarily occur at work in order for it to be compensable. The point here is that there may be unusual cases but these should not be a reason for large-scale change in the system. Each issue has to be decided on its own merits. We next talk about:
• NORMAL BODY MOTION
• And you may recall the discussion with the Board and this issue has vexed Workers' Compensation Boards for some time. As Decision 2 pointed out,
• The problem, of course, is that the activities of men are not neatly divisible into two clear categories, their employment functions and their personal lives. There is a broad intersection and overlap between work and personal affairs, and somewhere in that broad area we must map the perimeter of workers' compensation (1 WCR 7).
• Current Board policy is contained in section 15.20 of the Manual, Just by the way Mr. Chair where you see Manual is the Rehabilitation Services and Claims Manual – unless I otherwise refer to it – it says there that:
• Claims of the kind here must be adjudicated with great care. Nevertheless, the necessity for the exercise of judgement will result occasionally in what may appear to be inconsistency or the application of slightly different criteria. This is inevitable in any situation where it is virtually impossible to draw a line. (Page 3-9).
• We accept the complications of these types of claims and for the reasons given above but to a much lesser extent than is made out in the policy.
• When we heard from the Board in February an example was used. The example was a worker who drops a tool while working at a workbench at work and the motion causes an inquiry to his back during the motion of picking up the tool. This was described as a "grey area" and the following statement was made,
• One side is that it is a work-related motion. The other side of the debate is that activity is a motion that occurs in daily living. Unless there is an unusualness in bending down it doesn’t bring it within the scope of employment.
• Reference was made to Decisions 99, 115, 121, 145 and others.
• Our concern is with the "side of the debate" that says there has to be some "unusualness" to bring the motion into the employment situation and therefore make any injuries resulting from the motion compensable. And I think you will see over the next few days Mr. Chairman that this unusualness is a theme in workers' compensation – for example you see it in psychological injuries – the so-called chronic stress injuries that there has to be something additional in the work and so this is another example of that. As acknowledged by the Board there are decisions where this "side of the debate" prevails and we submit it is contrary to policy and the Act.
• Section 5(1) authorizes compensation for personal injury or death "arising out of and in the course of employment". There are two aspects to this requirement: the injury has to occur in the course of employment and it has to arise out of the employment before compensation can be paid. As section 15.20 of the Manual points out (page 3-9) the addition of "arising out of" along with "in the course of" must be given some meaning. The usual meaning attached to "arising out of the" employment is that "causation cannot be measured solely by the fact of employment…clearly something more is required".
• This means that, to use the usual example, when a worker turns his head out of curiosity while at work and suffers a muscle strain there would not be an injury "arising out of " the employment and the injury would not be compensable. As Board Policy states,
  "To be an injury arising out of the employment, there must be something in the employment that had a particular significance in producing the injury."
• It is the requirement of something of "particular significance" that causes the most difficulty.
• As the Board indicated there are situations where a claim is denied because a worker injures his back when he bends over to pick up a tool that was dropped. This should not happen because Board policy also states,
• "if a worker bends down to pick up an object, and that motion is required by the job (e.g. a piece of debris while on clean-up, a piece of mail while working in the mail room, an item of equipment or machinery in a plant)[emphasis added]
• Any injury from that motion might "establish some work causation". The language is overly cautious – and this is part of the problem in our view – but the point is that a claim for compensation would be acceptable. And I give you a couple of decisions there of which support that view.
• This conclusion is supported by the following decisions:

1. Decision 115 – A worker was taking a shower at the end of a shift and suffered an injury while applying pressure to the neck. The decision is not clear but the shower appears to have been on the employer’s premises. It was held to be arising out of and in the course of employment. (2 WCR 97).
2. Decision 145 – A worker had been bending down to lift some doors and then felt pain in her back after the lifting. The claim was accepted. "If a job requires a particular motion, and that motion results in injury, the injury arises out of the employment and is compensable". (2 WCR 171 at 174).

• While there are some difficulties when considering normal body motions at work, in our submission, the situations are not as complex as reflected in Board policy. Indeed we suggest that one of the reasons for the difficulty in adjudicating these types of claims is the overly complicated policy of the Board.
• At some point decisions have to be made on the basis of the best possible policy and it does not assist consistent decision making to have policy that is ambiguous and complicated. The Act has to be complied with but there also has to be a balance between straightforward and effective decision making and costly and complicated decision making. In the course of answering questions the Board acknowledged the need for new policy direction on this issue. And we just end up this section with a statement:
• In general, we believe the Board’s policy on normal body motions makes sense. However, we have some concerns with the application of that policy. And we actually struggled with this Mr. Chairman and this will be – since we seem to be starting off here I think one of the things we all struggle with is – in – using this specific example we see I guess to put it as clearly as how can you solve problems of ineffective or overly zealous or timid administration or policy? And we started off with – in our previous recommendation that you get into the policy and you change it and you make it more simplified and we make that recommendation. And we ended up with this but so I guess what we are doing here is highlighting for your concern and specifically as an example of where Board policy and we’ll get into the Board practices and policies later on – Board policy becomes something much more complicated than it should be.
• Q: You are not suggesting that the classic phrase "arising out of and in the course of employment" that is used in a number of jurisdictions be altered at all?
• A: We are not saying that it should be deleted, no.
• Q: Well, there is one jurisdiction I recall, I’m not sure if it is a Canadian one or not that says "arising out of or in the course of employment" – that would broaden it considerably – that would – it would be either/or – you are not suggesting anything like that? As I gather, that phrase – you are simply highlighting that there are difficulties that arise in some cases with respect to the application of that test but the test itself is sound?
• A: Yes.
• With respect to other issues that were discussed under this topic – psychological injury, need for non-rebuttable presumptions, chronic pain, protective reassignment we will be dealing with those in other sections. We thought we would make more sense to pull them together and deal with them all at once. I –
• Q: Do you intend to go on to your section 3 or?
• A: Yes.
• Q: Maybe just before you do that let’s go back to an example – one of the examples you used about impairment – the Board policy currently is to deny coverage where the injury arises out of – where it is caused by impairment by alcohol unless there is some feature at work that has causative significance to the injury. In other words something that says well maybe the accident would have occurred even if the person hadn’t been drunk. Right? So that policy is there to address those situations, now isn’t that – I’m not sure whether we are going to get back to conduct disentitling an individual – a worker to coverage or not so I’m going to ask this question – isn’t that a classic example of a policy choice where you say if a person is impaired at work and is injured, not because of the impairment on the one hand it seems unjust to deny coverage but on the other hand isn’t that policy in itself making a statement about – it’s okay to be impaired at work as long as you are careful?
• A: Well, ah….
• Q: So I guess my question is – should there be an exception to conditions that are identified as being dangerous work conditions – impairment by alcohol or drugs – to then say well, but, if you can show that it’s not – if you can handle your liquor – in other words – it’s okay?
• A: Well, we don’t support that.
• Q: But doesn’t the exception lead to that as a statement, generally – I guess that’s my question?
• A: Well, your first example I think was the easiest one – if the accident would have happened regardless of the impairment then that’s relatively easy. But then we get into the more difficult examples. The – I don’t – I don’t know why you’d have an exception to – as I understand what you are saying that if the work is more dangerous there’d be a higher standard on the worker either through the policy or through the Act.
• Q: No, I’m saying this – that is there some justification in a policy that says this – if you come to work while impaired whether or not that impairment contributed to your injury or not – you are going to be denied coverage in order to make the statement that impairment by alcohol at work is not acceptable under any circumstances. And perhaps in making that statement for the broader public good of ensuring that workers protect themselves and their coworkers by not being impaired that you are simply going to make a blanket statement to deny anyone who is injured while impaired? Is that a justifiable policy in your view?
• A: No, and if that was the policy then the easy example that you and I both used could result in no compensation.
• Q: Yes.
• A: But if a worker showed up at work impaired and was injured – even if they weren’t impaired they would have been injured there would be no compensation – that seems – that seems….
• Q: It is clearly unfair – but what I’m asking you is to weigh that against the risk imposed by that person to other workers in the workplace.
• A: Well, that’s just not – that’s just not a question of compensation – that’s a question of Board – of employer management of the workplace – that’s a question of prevention – it’s not solely the worker’s responsibility – if for example the work site is notorious for drinking – well why should the worker be not get compensation for that? And I guess as a policy matter why should the Board go in and have to investigate that in every case?
• Q: Isn’t it something similar to the tort concept of contributory negligence – a person could be grossly impaired but if that impairment didn’t contribute in any way to the injuries sustained then there would be no deduction in his damages? In other words there has to be a causal relationship between the impairment and the injuries sustained and it seems that this policy follows the common law in that regard?
• A: I think that’s right – I’m reluctant to turn to contributory negligence issues – because you start with the damage and its cause….
• Q: I had a case – anecdotally many years ago – where a longshoreman had a .39 blood alcohol level – which most people would be unconscious or dead - but he was at work and a rope broke and a bale of pulp fell on him – nothing to do with his impairment whatsoever – and he would have been denied or his family would have been denied coverage.
• A: Yes.
• Q: in those circumstances because he was grossly impaired but it had nothing to do with the breaking of the rope that killed him.
• A: Yes, yes, yes. I think that’s the test. I think in the policy and I think it makes sense as I say I am reluctant to tie it to contributory negligence but – I think that’s right – it arises from that. And – and I don’t mean to underestimate some of the – some of the difficulties and decisions being made and in fact longshoremen have been working on his own and it would be a question of just exactly how do you get in that position and was that impairment responsible for him getting in that position so on those are hard cases and that is why we say each case should be dealt with on its own, individual merits.
• Q: I think another example might be is what happens if there is a fire in the factory and a number of people are seriously injured?
• A: Yes.
• Q: The ….
• A: The fire was caused by? We don’t know?
• Q: Whatever. They are at work though; they are all at work.
• A: Yes.
• Q: Would you expect that those who that were – they had all been tested and those who were found to be under the influence would be denied?
• A: Right. No. We wouldn’t suggest that. And as I say that – I guess that’s where it gets into the balance between making the fairest decision you can based on the policy and the Act and for the most people and then set that against a very detailed analysis and decision on a specific work site. At some point you’ve got to draw a line as a - the Board has to draw a line as a public policy institution that you know there is some arbitrariness in what they do. They say that expressly in some of the policies and some people are going to benefit – you know frankly unfairly and some people aren’t. The public policy objective is to cover the most people as best as possible.
• Q: Thanks, before you go on to section 3 are there any other questions on Section 2? Okay, why don’t you go on then?
• OTHER ISSUES
• We will be addressing the issues of psychological injury, and the need for a non-rebuttable presumption in the section on occupational diseases. We will be dealing with the issues of pain in the section on pensions and protective re-assignment in the section on rehabilitation.
• So this is the other aspect of coverage which is:
• SECTION 3: WHO IS COVERED BY WORKERS’ COMPENSATION?
• And we spent a bit more time on this.
• BACKGROUND
• The importance of who is covered by compensation is similar to that for what is covered by compensation. To arbitrarily exclude coverage under workers' compensation for a group of people, through legislation or policy, when the factual and medical evidence supports an association between their disabilities and their work, means that this group has to rely on their own resources to obtain any remedy. It also means that the costs of such disabilities are externalized so that the deterrent affect of the compensation system cannot come into play.
• Some of our recommendations in this section would result in matters that are currently part of Board policy becoming part of the Act. We believe this is consistent with the commission’s analysis of the difference between legislation and policy as contained in the Phase I report (pages 5-8). That is that McClure piece that you used.
• DEFINITION OF WORKER
• Who is and who is not a worker under the Act is a fundamental issue in our system of compensation. If a person is not a worker then he or she cannot obtain the benefits of coverage under the Act such as wage loss, rehabilitation assistance and a pension. This is true even when the injury or disease is clearly related to the work so one effect of applying the definition of worker can be to override medical causation. Another effect is to legally prevent the usual deterrent effect that we could expect if the situation came under the Act.
• In our submission, the term "worker" should be defined to enable the largest possible numbers of working persons to obtain workers' compensation benefits.
• As a starting point for that we note what we heard from Mr. Du Gas that the definition of "outworker" was left in the Act and it shouldn’t be there and it should be taken out – it just seems to be a housekeeping matter - as an oversight when Bill 63 was passed by the legislature. It should be removed.
• RECOMMENDATION: We recommend that the definition of "outworker" in section 1 of the Act be repealed.
• A more substantive issue is that around the concept of:
• INDEPENDENT CONTRACTORS
• As it stand now the largest group of people who cannot benefit from the Act are independent contractors (unless they purchase Personal Optional Coverage).
• For some of these people this is probably appropriate. We have in mind contractors who genuinely are independent when applying the traditional master-servant test (including the issue of control and economic dependence) as well as the Board’s broader definition. And you’ll recall Mr. Massing talked about in general the Board apprises a broader definition than the traditional common law test. As Decision 255 makes clear the major test for workers' compensation purposes is "whether the supplier of the labour has any existence as a business enterprise independently of the person for whom he works" (3 WCR 155 at 156). In applying this test the wishes of the people who are doing the work – whether they wish to be workers or independent contractors – are not legally relevant (Decision 32, 1 WCR 127 at 130).
• The purest form of independent contractor is the independent businessperson who opens a small enterprise. This person sets their own hours, owns all of the equipment and assets of the business and takes the risk of profits being more than the losses. In this situation the distinction between owner and worker is very difficult to make out (except where there is an incorporated company involved). We do not say that these people should be mandatorily covered by the Act.
• Our concern is with situations where the distinction between independent contractors and workers are artificial and really do not stand up to any practical analysis, whatever the legal principles involved. There are many circumstances, especially now with the increased growth of services industries and home work, where the relationship between a person supplying a service and the person supplying the work is one where there is increased control but no economic independence. Bearing in mind that that’s one of the critical tests in the common law is the economic dependence. This creates an artificial situation where people are treated as contractors but they do not have the independence contemplated by the legal tests for master/servant relationships or the Board test. There is no economic independence, only dependence.
• An example might be a consultant who is retained by a business. The work is done at the office of the consultant but it is defined in terms of specific tasks and even number of hours or amount of money by the person for whom the work is done. The agreement between the parties says the consultant is an independent contractor but there is really no serious bargaining because the consultant has no economic power to effect any real changes in the relationship. It is not particularly significant how the contract defines the relationship (Decisions 32, 138, 255) that is in common law and it is these decisions, but we understand the general thrust of Decision 255 to be that the consultant would be an independent contractor for workers' compensation purposes. Certainly Decision 255 makes it virtually certain that labour contractors will be considered employers simply by the fact of application for registration.
• The issue of genuine versus artificial independent contractors has been considered for a number of years in the context of labour law. Historically, there has been recognition of a middle definition of what are called "dependent contractors". In the past a bargaining unit could not be comprised of an independent contractor and it could not be comprised of dependent contractors unless there were legally defined workers in the same bargaining unit. And I’ve given you a cite there from George Adams – The Canadian Law and an excerpt of that is attached to this submission. The concern in labour law has been that dependent contractors have not had access to collective bargaining because of they are not genuine independent contractors. This has now changed and dependent contractors can now form their own bargaining units and be represented by a union.
• Section 1 of the BC Labour Relations code defines "dependent contractor" as follows:
• "‘Dependent contractor’ means a person, whether or not employed by a contract of employment or furnishing his or her own tools, vehicles, equipment, machinery, material or any other thing, who performs work or services for another person for compensation or reward – and this is they key part I think - on such terms and conditions that he or she is in relation to that person in a position of economic dependence on, and under an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of an independent contractor."
• Section 1 of the Labour Relations Code includes dependent contractor as part of the definition of "employee" and by that sort of mechanism they are covered by the Act.
• Applying this to workers' compensation we currently have people who work as dependent contractors who do not have the benefit of mandatory coverage when they become disabled because of work related injuries and diseases. Whether or not these people furnish their own tools, equipment, etc. they perform work ore services for another person for compensation on such terms that they are in a position of economic dependence on, and under an obligation to perform duties for, that person. The relationship more closely resembles a relationship of employee than independent contractor and yet they cannot obtain the benefits of the Act unless they pay for optional coverage themselves.
• A specific occupational health and safety concern in these circumstances is that the person who has the most responsibility for the performance of the work does not have any responsibility for the costs of injuries and diseases that arise from that work. This is contrary to one of the fundamental principles underlying our legislation: the cost of compensation should, as best it can, act as a deterrent to prevent future injuries or diseases. Employers should not be permitted to contract out from this cost.
• RECOMMENDATION: We recommend that section 1 of the Act be amended to include the definition of "dependent contractor" from the Labour Relations Code and that the definition of "worker" in section 1 of the Act be amended to include dependent contractor in the definition of worker.
• We then go on to talk about DECISION 255 itself.
• Decision 255 is concerned with the registration of labour contractors especially where person contracts with another to provide the labour of himself or himself and others in an industry covered by the then Schedule A of the Act. And you may recall historically before Bill 63 – Schedule A was attached to the Act which listed all the employers who were deemed to be covered. And – the – so – Bill 63 abolished that and this is under section two of that.
• The decision noted that the Board, since Decision 138, had denied applications for registration as employers unless the application demonstrated clear evidence that the contractor has engaged in an independent business. The emphasis after Decision 138 had been on the labour component of the services provided by the contractor, equating it with the services provided by an employee and stressing the dependence of the contractor on the organization for which it worked.
• Decision 255 decided – I summarized the reasonings and conclusions here:

1. That Board "practice had laid – this is under Decision 138 - too much emphasis on those aspects of the labour contractor’s relationship which slow dependence on the organization for which he is working" (page 156). Bear in mind that that’s the thrust of the common law definition of employment relationship dependents and so it’s not surprising. Indeed, it’s required under common law for dependents to be paramount.
2. "Greater weight than has been the practice" should be put on contractors seeking out and bidding for contracts, keeping their own books and records, income tax/Unemployment Insurance Commission /Canada Pension Plan deductions, making hiring/firing decisions and exercising control over the contractors’ employees (page 156).
3. Some regard must be had to the particular structure and customs of the particular industry (page 156).
4. A full investigation of an application for registration as an employer is no longer appropriate. "After all, the fact that a contractor applies for registration as an employer is in itself some indication of his status as such"" Applications for registration as an employer should be accepted without further investigation if they are "proper on their face". (Page 157).
5. It is reasonable for the Board to accept applications for registration as employers by corporations at face value unless there are circumstances which indicate a full investigation should be made (page 158).

• We ask the Royal Commission to consider the significance of the change made by Decision 255. In practical terms it meant that an application for registration as employers must generally be granted as long as the applicant keeps their own books. A full investigation is not required in those circumstances. In general, if a person makes an application for registration as an employer it is accepted on its face especially if the applicant is incorporated. This is because the Board had, pursuant to Decision 138, paid too much attention to the issue of dependence on the organization that is supplying the work.
• In legal terms the test of dependence has always been critically important in defining whether a person is a servant/employee/worker or not. This is true in the common law tests as well as the Board’s policy. What Decision 255 does is to downgrade this issue to, at best, worthy of minor consideration and thereby abolish a major feature of common law definition of master/servant law. It facilitates the actions of organizations who prefer having independent contractors rather than workers. These organizations insist that persons make themselves independent contractors in order to obtain work, these persons do that and then the Board accepts the applications their face. This provides the opportunity for applicants for employer status and the people they work for to create the fiction of an independent contractor. This is the kind of abuse that occurs when statements such as the application "itself has some indication of the status" of the employer are made.
• RECOMMENDATION: We recommend that Decision 255 be accepted as wrongly decided on the basis that it is contrary to at least one major common law principle of master/servant law – that is the economic dependence test and that it facilitates situations where employment relationships are treated as relationships involving independent contractors. Further, we recommend that Decision 138 be re-confirmed as being consistent with the common law and that the definition of "worker" in section 1 of the Act be amended to include this definition. (See also next recommendation).
• We are next going into a discussion of the APPLICATION OF DECISION 255
• The commission may recall the Board’s presentation and the answers provided to questions about Decision 255 from 1977. In our submission the Board has adopted a "practice", based on an interpretation of Decision 255 that the decision cannot sustain and this has become part of the unwritten and unauthorized "policy" of the Board. In fact, it was presented to you as official policy when clearly it is not. And I don’t think I’m giving anything away Mr. Chairman this is going to be a theme throughout the entire two weeks and we have the governance section at the very end and that’s where we are going to deal with it in a head on kind of way but this is – this comes up in a number of different areas.
• The example, that was discussed with the Board was that of courier drivers. If a courier uses his/her own bicycle for the work then that person is a worker and is mandatorily covered by the Act. However, if the courier buys a van for use at work then he is an independent contractor and he is not mandatorily covered under the Act. And I should say to be complete there if he buys a van and applies for employer registration the Board would say that he is an employer – an independent contractor rather than a worker. The difference is that the Board considers a van a significant investment in the business and the bicycle is not so considered. There have been situations where one company has bicycle couriers as workers and courier drivers who own their own vehicles who are independent contractors.
• Decision 255 was held out as the authority for this situation. At page 4 of the Board’s presentation the following was stated, "In the past we would have held these people (couriers owning their own vans) to be workers, but Reporter Decision 255 gives them the option of registering like other employers or independent contractors".
• No where in Decision 255 does it say that a person who has made a significant investment in an asset should automatically be considered an independent contractor."
• When pressed it was admitted by the Board that Decision 255 does not say this specifically but rather it is the Board’s interpretation of Decision 255 that has created this situation even though it was also admitted that there is nothing in Decision 255 about the value of the equipment that the worker owns.
• So we have a situation where courier drivers who own their own vehicles have been disenfranchised from coverage of the Act not because of Board policy but because of an interpretation of a decision that cannot reasonably be sustained by that decision. Put another way, an unreasonable interpretation of a decision has been given the force of policy without any approval of the governance of the Board. More disturbing is that, prior to Decision 255, the "policy" was the reverse (see Decision 138, 2 WCR 143) so we have an unfounded interpretation of a decision by the Board’s management changing previous policy. This is also a matter of definition and control of Board policy and we will be addressing it in that section of the argument that relates to governance.
• Finally, there is the BC Court of Appeal decision in IPX International Limited versus Workers' Compensation Board (1988) 25 BCLR (2^nd) 273. And that is attached to the submission Mr. Chairman. In that case, a challenge was made to a Board decision that IPX International’s courier drivers were workers and not independent contractors. The challenge was not successful at the BC Supreme Court or the Court of Appeal.
• The significance of the case for the purposes of these proceedings is that the Board’s position in that case was the opposite of what was said before this commission. The original decision of the Board is quoted in the judgement and an excerpt at page 278 is as follows,
• "(The Commissioners speaking in 1988) consider it significant that the messengers operate under your motor carrier license and, not withstanding your argument that they are free to work for other companies, find that, in reality, they have no independent existence as a business without your company. Again the common law test of economic dependence - There is little chance of the messengers making a loss. And then this statement. Though their vehicles are provided by themselves, your logo is on the vehicle and all billing for the services they perform is through your company. [Emphasis added].
• The decision in this case is the opposite of the position taken by the Board before this Royal Commission. And as I understand it what would happen in the situation is that if a driver from IPX who owned his or her own vehicle came to the Board and asked for employer registration the Board would decide that they would be an independent contractor. So it is the act of the application for employer registration that will trigger the finding of independent contractor. To put it another way – until that application is made they could well be workers. So you – I talked to Mr. Dugas about this morning and he explained that and I offer that as I hope for clarification for the situation. The point though and this comes to our recommendation.
• RECOMMENDATOIN: We recommend that it be confirmed in the definition of "worker" in section 1 of the Act that economic dependence is the primary consideration when deciding worker/employer status and, further, that investment in assets is not a determining factor for determination of an employment relationship. Also, it should be specifically confirmed in Board policy that courier drivers who own their vehicles are workers under the Act unless their situation is such as to comply with the common law and Board test of employment relationships.
• Those are the presentations on who and what are covered on behalf of the BC Federation of Labour.
• Q: There is the measure of economic dependence it would seem in virtually any relationship – business relationship?
• A: Yes, it’s not a – it’s not a black and white – I think there’s a – there’s a in the purest – well, I guess the example I used – the person opening their own shop – we don’t get into economic dep – that’s – there is no distinction between the worker and the owner so we don’t get into the economic dependency issue there – well in the purest form – there is ultimate – there is no distinction – there is pure economic dependence in a notional sense between the notional worker and the notional employer. On the other extreme is the accepted and undisputed worker who works in a production line, paid on an hourly basis and so on. There’s economic dependence there but and I guess the question is whether there is economic independence. And the common law test there is no economic independence. Now somewhere in the middle is everybody else and we don’t say that the courier drivers are the worker – the pure worker but we say that they are closer to that than the independent – we say that courier drivers are not independent contractors; they are workers – the fact that they own their vehicle is not – does not determine the question of independence. And we rely on the IPX decision for that.
• Q: I’m just trying to think of some examples where – that might assist us here.
• A: I just might add that if we are to get our way on dependent contractors we wouldn’t – we wouldn’t be getting into the problem with courier drivers.
• Q: Let’s say you have – in a familiar area – an associate lawyer or a lawyer who is not employed with any particular firm but is engaged by a firm on a project basis – the lawyer has his or her computer at home and so they are engaged to do a particular project – are they then workers? Because of the economic dependency; they have all sorts of controls I suppose in terms of how and when they want to do the work – they are doing it at home on their own – so I suppose they are workers in that sense -
• A: Yes.
• Q: How does that work?
• A: Well, I guess…
• Q: to be a worker?
• A: Yes, if there was a – they are paid by – to refine it a bit – two refinements on that – if they were as you say – had their own computer – they worked at home – they set their own hours and they were working on a particular case – doing specific research on a specific case – the damages portion on some litigation – and the – that could well be an independent contractor. On the other hand if they are working at home – paid on an hourly basis and they get work on a regular basis from the law firm and I mean just to make it really easy – they may even get some kind of benefits. That would be a worker so I – I think we need to take it to different levels of facts to understand the situation – it could be either one – the fact that they are at home is not determinate – this is the independence issue we got into yesterday with the Review Board – whether they are internal or external I don’t think is determinate of.
• Q: But if that is the only firm they are working for at that time – notwithstanding that they – that that fact I gather you are saying would be very important in determining and characterizing that associate as a worker – or that lawyer is a worker. Because of the economic dependence of that particular firm – that is the only project they are working on –
• A: Yes; I think it is important; whether it is conclusive on its own I’m not so sure – you recall that in IPX the Board said that the mere fact that they courier drivers could work for other people – didn’t mean that they were independent contractors.
• Q: So in this case if the lawyer had a number of projects on the go with different firms they’d be workers at each of those firms?
• A: I – again I don’t think it is black and white; at some point they become an independent contractor – if they are working for a number of firms doing specific projects – say they are – say the thing is damages and that’s what they do – so they work for a number of different firms doing research on damages and so they have in a sense a reputation and economic independence as an expert in damages – and then maybe would be an independent contractor. And I guess another point there – the person giving out the work would act at their peril would make that lawyer exclusively theirs. By at their peril I mean they run the risk of that person becoming a worker.
• Q: Does the home then become a workplace? Who is responsible for it?
• A: Well, that – that’s – that’s the problem of home work; we think that if the worker – if the person at home is a worker under the common law test and the Board test that is a workplace and that means that the employer is responsible for the – for some of the prevention matters at the worksite. Now, it becomes complicated because the employer – because the employer doesn’t own – assuming that the –
• Q: To use the law firm for example – they have nothing to do with the residence. So …
• A: It seems to me that in those situations that that – the employer – assuming it is an employer/worker situation – the employer as a contractual matter needs to set out things that are necessary at the home of the lawyer – using that example. And they might even require the ability to have a look every once in a while.
• Q: So if there is more than one employer – there are a number of law firms that this person is working for – let’s say two or three – which of them becomes – or is there a collective responsibility they have to make sure that the home is an adequately safe worksite?
• A: There may be.
• Q: It get’s difficult, doesn’t it?
• A: I’m not disputing that for a second; I – that’s the nature of home work and Mr. Winter in his questions posed the compensation side – if someone is working at home and they bend down to pick up their kid and also a pen for their work – and – how do you sort that out? And if – the easy answer is to abolish homework – but that’s not going to go very far so I don’t mean to underestimate the problem – I just think that to – there’s no simple answers either way. You can’t say that everyone who works at home is an independent contractor – that doesn’t sell – that doesn’t solve too many problems and it may create more problems. And nor can you say that the fact that the – it’s not an easy or complete answer to say they’re all workers either.
• Q: I can see where they may be a problem – I’m not sure whether we are starting to create a problem where they may not be one. In fact you did mention that dependent contractors have the ability to organize in a bargaining unit and thereby can perhaps negotiate something with their employer in the form of a contract to take care of the situation – purchase of insurance to cover those situations that might arise from employment. Similarly if you are dependent contractor – independent contractor you do you have the option to purchase insurance so I’m not sure what we are trying to get at here – what’s the issue – I mean there are options out there – there are choices for individuals to make – whether they are dependent or independent contractors – it’s not as if there are no options available to someone who gets injured at work.
• A: Someone who gets injured at work at home?
• Q: At home; the workers working on behalf of IPX. There are ways of….
• A: I think what we are getting at is maybe certainly close to the rule of law that – that if someone is working at home and they are a genuine worker for the purposes of this legislation then some things follow from that. And it may be that they don’t even know that they are workers and it may be that the person who is sending them work don’t know they are workers and you know that – that – I’m sure that happens. But one of the things that has to happen I think as we get into these new ways of working is that people have to understand what they are getting into. And it is not just a question of farming some work off to someone and getting the work back – which has some legal implications to what they do.
• Q: I think I might agree with you there. There is a need to make people understand about what they are getting into – but following that there is also a need to give them the options and choices of which route they would like to follow. And I think that there are options out there without us having to work hard at it.
• A: Well, I’m not sure what the options are that you are referring to.
• Q: If you are a dependent contractor you can as I say – there are options out there to – that others in a similar situation with that particular employer – that that may be the case to purchase some kind of insurance coverage.
• A: Yes, and if they were dependent contractors they could do that – I mean if we got our way with dependent contractor definition being added to the Act they could – they could that and form a union too you know if assuming that the Labour Board would agree that they were dependent contractors.
• Q: But you are saying that as it is now the labour law there is an ability to form a bargaining unit if you are a dependent contractor?
• A: Yes. Yes, the change was – it came in with the 1991/92 – the change was before a dependent contractor – you couldn’t have a bargaining unit of dependent contractors on its own. You could only have a bargaining unit of dependent contractors if it included workers also. And the change was you could have a bargaining unit of only dependent contractors.
• Q: I think the question that the Commissioner is raising is it appears as though nobody falls between the cracks – if you are an independent contractor you are entitled to the personal optional protection and you have coverage. If you are dependent contractor and then you’re a worker so there’s no – you don’t have any situation where someone doesn’t get coverage? If the Board refuses you personal optional protection then you are clearly a worker. So you can’t fall between the stools.
• A: No but if you use Decision 2, part 5 – then – then you would be treated as an independent contractor and the question is who pays for that?
• Q: Yes, but from a public policy standpoint we are not talking about people not being able to get coverage you are talking about employers contriving a way to avoid the expense of the premium.
• A: Yes.
• Q: Is really what’s at the heart of it, isn’t it?
• A: Yes. And that’s not a – that’s not a shell game – in the sense that it doesn’t matter what shell it’s under – the question is legally – and this comes back to your question Ms Exell – legally who has the responsibility for health and safety and claims at that work site – whether it’s at home or whether it’s a factory. And what we are trying to get here, as best we can is the complicated situation of homework – is to have that situation in place. I’m just reminded that the coverage as a worker is mandatory coverage – so a worker doesn’t have a choice – an independent contractor does have a choice and may not apply at all. Mandatory coverage is particularly an issue for young people. Young people tend not – they would rather have the money in their pocket than pay for the coverage. Another issue on optional coverage is when we have claims from people who are independent contractors they typically will under-insure themselves so they might have a serious injury they come in and say how come my compensation is so limited? And the reason is because they have under-insured themselves. If they were mandatorily covered that wouldn’t have happened.

• Unless the Commission has any objection I am going to start with the who question – the documents are placed that way in front of you. And the topics I’m going to address under who – I’m going to start with the fishing industry, then I’m going to talk a little bit about labour contractors that has been referred to by Mr. Steeves as dependent contractors – I think we are talking about the same concept – and then I have a couple of small points just to raise for the panel’s deliberations at a later date – dealing with the Aboriginal worker issue and the self-proprietor/partner who incorporates and then I’m going to finish these section of who with Section 51 – a couple of points on that section – then I will reply to Mr. Steeves comments on who – that will incorporate some of the questions that the panel has already asked if I don’t get asked them again.
• The fishing industry – as you will recall the discussion with Mr. Dugas – and his presentation – the current practice is that the first commercial buyer of fish is designated as the employer for the purposes of Workers' Compensation Board assessments and that first commercial buyer does not include foreign commercial buyers. On the other hand – for prevention and safety purposes – the Workers' Compensation Board recognizes the responsible parties being the vessel owner – not the first commercial buyer.
• Now Mr. Dugas agreed with me and it is recorded in the transcript that there are a lot of anomalies in the situation compared with how the rest of the system works. And I just wanted to highlight the anomalies. And then propose a solution which I believe addresses each anomaly for the consideration of the Commission.
• First off, Mr. Dugas agreed with me that the overall anomaly is everything the Board does is predicated on an employer/worker relationship. That is not always the case in the fishing industry.
• The reason that he provided to me for the first commercial buyer being put in the position of employer for assessments only is it’s the best position to pay the assessments. I’m not sure that’s accurate; in any event I don’t think it is the proper focus for Workers' Compensation Board purposes to split the employer. It may be a focus on the overall consideration of who is the actual employer at the end of the day when there’s multiple choices but I do not think it is appropriate to split the function by saying who is the most appropriate for A, B, and C. I’ll come back to that a little bit when I talk about dependent contractors.
• So here are some of the anomalies and concerns that were raised and Mr. Dugas agreed with each and every one of them. First off, I indicated that it was the only situation that I was aware of that the primary employer responsibilities under the Act were split between two different entities and he agreed– the first commercial buyer for assessments – the vessel owner for safety.
• Second there is no experience rating for employers for assessment purposes in subclass 0911 – which is where the first commercial buyers are – for that purpose. Most other employers as the panel is well aware have experience rating assessment with certain exceptions like deposit accounts and the federal government employers.
• Third anomaly – the firm that is saddled with the cost of the system i.e. the one that pays the assessments – has no authority or control over the safety or accident prevention. In other words the first commercial buyer has no ability to discipline or require compliance with the people who the fishers are – who are actually on the boat. Of course unless the first commercial buyer also owns the boat which wouldn’t be a problem because then you would have same entity covering both those roles.
• Fourth, the firm with the authority and control over safety and accident prevention i.e. the owner, has no general financial incentive to ensure a good safety record. I.e. the more accidents the vessel owner has the more it affects the assessment rate – but why does the owner care? Because he or she is not paying that assessment rate.
• Five – the situation you have with first commercial buyers – assessments are not paid on the full value of the catch. And that’s because there is no assessment on the value of the catch that’s sold to foreign processors – foreign fish buyers. Now what that does is it has the anomaly of inflating the assessment rate paid by the first commercial buyers that are covered under the Act? The reason for that is that the assessment rate is still dependent on the claims cost paid out to all of the workers in that subclass. So the value that is being paid out is constant. The value that is coming in – there is less fish. So there has to be a higher assessment rate based on a lower overall principle value. If the whole value of the fish was calculated there would be a smaller assessment rate.
• And we also have a situation where you have a potential subsidy by the employers – and I gave the issue to Mr. Dugas – is you have a fisher who is delivering fish to a foreign fish buyer – that value of that fish isn’t being assessed – the fisher suffers an injury while doing that – that is compensable – as long as the ten percent rule is met – as long as they are selling ten percent or more of their fish to commercial buyers in BC – they are 100% covered. And so the example I used was 50% to foreign fish buyers and 50% to BC – covered – injury occurs while they were foreign fish buyer – covered. But the value of the fish being sold when the injury occurred isn’t assessable.
• And the final anomaly that I raise that was agreed to is that there is a potential for overpayments in this industry. An overpayment is when the earnings of a particular fisher is above the maximum earnings for a normal employer/employee relationship – the employer would not pay above the maximum – which is $56,000 – thereabouts – but in this situation each commercial buyer pays on the full value of what he’s purchasing and so if you have one fisher selling to three different buyers each one being $50,000 the total catch would be a $150,000 but they pay assessments on all. Whereas if it was in the hands of the owner themselves the – when you hit the maximum you stop paying assessments.
• So there are quite a few anomalies in this situation – in my view there is an obvious solution. Make the same employer for assessment purposes as you do for safety and prevention – and the person who has control in that situation is the vessel owner. That would appear to address all of the anomalies that I’ve raised.
• And for the sake of time I won’t go through the solution on how it appears but I would be prepared to answer questions. But that seems to cover them all off.
• Now Mr. Dugas appeared to agree and then said – you’ll find it on page 16 of the transcript – "when the legislation was brought in and principles and Board regulations which implemented came about – the situation was different than today. There is a lot more offshore selling. Industry has changed quite a bit. Funding the system and how it works need to be reviewed." Now talking about common themes is as Mr. Steeves said this is one that you’ll hear from me quite a bit over the next days. Here is the first of what is going to be many examples of an issue that has been identified within the Board a long time ago – and we are still waiting and watching. The March 27, 1997 Briefing Paper called The Workers' Compensation Board – Dealing with the Fishing Industry – on pages 4 and 5 says this – " On August 30, 1994 the Board Senior Executive Committee set up a Working Group of Board staff from Prevention, Assessments, and Compensation to examine the general issue of responsibility to pay assessments. The group was scheduled to finish its work by November 15^th 1994 but no final report was ever issued." So here we are again 3 ½ years later and we are still waiting for some sort of resolution to a situation that has been identified as a problem.
• In my submission there is no reason for the Commission not to get involved with a recommendation with respect to the fishing industry. In fact, the reasons are all there for the Royal Commission to make a recommendation. The main one being that it is covered in the legislation under Section 4 of the regulations. So this is not just a matter of policy. Even if it came out of the Board it would be a matter of legislative change.
• And again it seems to be a simple solution – the full value of the fish would be caught if you assess the owner. We haven’t heard any reasons from the administrative viewpoint that this isn’t workable. I think we heard and it is in the paper that there are approximately 4500 fishing vessels. Within that number there is multiple ownership. And there are also some owned by commercial fish buyers who are already registered so it wouldn’t be 4500 being registered all at once. But in any event compare I think Mr. Dugas’ evidence was that on an annual basis there are possibly 25000 new employees that are registered anyways. This would be less than a fifth of that. And Bill 63 when it came in in a one shot deal in January 1994 had approximately 13,500 employees so the Board has dealt with new numbers of employees needing to be registered and dealt with of all sizes. In the 1994 changes a lot of them were small business operators. And then we also heard the information that the vessel ownership and the cash records are readily available to the federal government – the Federal Department of Fisheries and Oceans.
• Q: Do you foresee a problem given that the master, crew and vessel owner are coventurers with respect to the fishing season and that they – the amount that the workers on board the vessel get are the net profit after all expenses which would include the assessments?
• A: No.
• Q: In other words the people who are covered are paying part of their own assessment in the sense that it reduces their profit. Is that a problem?
• A: To me it comes down to the same problem as identified earlier – what is a worker versus a dependent contractor versus an independent contractor – in this situation I remember reading the previous Royal Commission’s and they tended not to get involved in this debate and they found them and continued to find them being independent contractors. This came up after the Tysoe Commission. I think that is probably still the same way that this issue should be dealt with – as any other industry. And I will respond a little bit later under the dependent contractors but these are very much factual cases. The legal principles are not going to be all that difficult – I don’t think Decision 255 is the answer. There are a lot more cases that set out much more factors than one. It is a factual basis of making that decision. Then we are going to come down to that maybe there philosophical or public interest reason that they should be mandatorily covered. A mandatory personal optional protection kind of philosophy that we may discuss when we get to dependent contractors. If you find that this is a group that should have that kind of protection – it is a very paternalistic view – I think if you find that they are independent contractors – I think that should be their decision. But there may be some value when you are deliberating that you believe that these people do have to have coverage and it will be the owners’ responsibility to make sure that’s done. I think that’s the best that I can answer that one.
• I’m going to move off that topic and I’m going to move into labour contractor. This is a very difficult area; anybody who practices in this area on behalf of employers and probably shakes their head every day they get a contractor issue. And the sort of difficulties the Royal Commission was asking Mr. Steeves. It’s not a concept in the Act – labour contractors – so that’s the first thing. It is purely a creation of policy. And the intent is to help identify the hybrid between worker and dependent contractor. That is independent contractor. It’s not a clear-cut situation. I think you’ll find one of the best descriptions of the labour contractor issue is in the Briefing Paper by the Board entitled, "Who Is A Worker". And it is on pages 16 to 18. And it starts this way on page 16, "This may be labour contractors – this may be one of the most confusing controversial aspects of this issue. Assessment policy 20.30.20 provides guidelines for distinguishing between worker and independent firms. But to assist in making that distinction the policy creates a category called labour contractors. [And here we go], labour contractors are people who employ others and supply essentially labour only in a contract or who may or may not employ others but supply labour in one piece of major revenue producing equipment on a contract. And that flows from the policy. This policy is based on the view that people who supply essentially labour only on a contract should be covered under the Act that is a person who supplies labour only is not prima facie an independent operator who can elect whether or not to be covered by the Act." I think you are going to find that’s where the problems start coming. Because it is an artificial one factor again to determine whether or not you are going to be treated as a worker, or an independent contractor. Just to supply labour to use the example of – we’ve used on contract basis – lawyers for research projects that we don’t have the expertise or capability of doing at that time. We know they have other contracts; they are only supplying labour. Under this kind of definition we get into this fuzzy – so what are they? Whereas I think when you step back – and I use the example of stepping back – in the real world a lot of times people are going to look at this and say – clearly that person doesn’t work for us while they do on a contractual basis and they’ve agreed to provide a services to us for now but when you look at all the other factors – control, timing, probably some negotiated rate, equipment, other clients, can they get someone else to do the work – when you throw in all those other factors that is when you start leading to the conclusion that every case is going to be different. Some are going to err on the side of the factors and circumstances on the side of the worker – others are going to be no way.
• So I think that is where the main problem comes in and then we get to the Board’s concept of – okay I’m a labour contractor – I’ve identified what it is for policy purposes – it supplies essentially labour – but we get this dual status. A labour contractor has a right – they have a right to register. If they register they are then treated as an independent and are covered. If I understand it if they have no workers they have to cover themselves by personal optional protection. If they do have workers they are treated as an independent and they don’t have to cover themselves. They have the option – to get personal optional protection but they have to cover their employees. But if they don’t register now they are a worker. And that I think is the real problem with the system and what – what I will be asking the Royal Commission to have to deal with is – if you agree it is a problem – we have to come up with a solution. And again I’m going to use construction because I have a lot of experience in this problem. A lot of people who supply services for renovations for example in construction provide labour only, usually by themselves and usually others – one labour and one piece of revenue – major revenue producing equipment. So they found the definition of labour contractor. When you look at the two parties – the principle and the labour contractor – I don’t think either one of them will obviously be able to put their minds to – hey we’ve got an employment relationship here. And that causes problems within the system. Starting with the homeowner. A home owner who retains the services of a construction group that’s going to work for more than 24 hours is going to face the potential that they are a labour contractor if you are not register and they become the employer. I know nothing about construction; I don’t know how to get my light bulb switched when the bulb goes out. I rely on someone else’s expertise and experience to come in and do that work and how they do it is their business pretty well. We tell them what we want; we work out how much it is going to cost and we know it is probably going to cost a lot more anyways. And they do it. It’s their job and it never crosses my mind that gee I am really an employer; I have some responsibilities and obligations here. And I’ve talked to a lot of people who do know that – dealing with Workers' Compensation Board. And I’ll bet that there are people in this room who have had renovations for more than 24 hours and the bill was more than $5000 who didn’t give a thought as to whether they should be covered under Workers' Compensation Board. That is a problem because of the consequences. If that person falls off your roof or otherwise gets a serious injury and they are a labour contractor and you weren’t registered you get the Section 47.2 – you have to – you have a mandatory penalty put on you of the capitalized value. Now we heard from Mr. Dugas that they excuse that for small business to an extent that it is a more reasonable penalty – A. that is not my experience but I’ll accept the evidence; B. it is still a penalty to something you would never have put your mind to.
• Take it out of the homework; put it in the businessperson. The example I used is – you have a pair - you have two partners – you have two partners on Fourth Avenue to open bookstore. They have no employees; they do it all themselves. They decide they are going to renovate. They want new shelves in so that it looks smarter and looks roomier. Then they go out and get a construction firm. It is not part of their core business; it’s not like they hire someone to work on the weekends to work on the cash and sell books – which they should have put their minds to – this is an employment relationship. They brought someone in to do what they can’t do – they shut down for a week to get the work done. Same thing. If that contractor is not registered with the Board – they are a labour contractor – and the partners are going to be responsible as an employer if anything happens to them. That is a problem in the system that somebody has to deal with in my submission. I’ll come back with a potential solution at the end.
• So we get into the problem that it is too confusing. It is too technical for the average businessperson or homeowner or anybody else who gets themselves in the situation. As we move through the 1990’s into the new millenium we are getting into more and more situations where people are going out and starting their own business and acting as consultants. And the same issue is always going to come up – what is the nature of the relationship between us? And the real difficult thing is that every agency comes up with a different definition. And so it becomes even more confusing. Revenue Canada says that’s fine you are not an employee – you don’t have to pay tax for them. But then the Workers' Compensation Board steps in and says they are an employee for Workers' Compensation Board purposes. That is a very confusing scenario. It is also confusing because it changes. And I used the example when Mr. Dugas was here – which was a case that I was involved in that changed – and that was for a municipal company that hires on a regular basis a dredging company. A municipal city that hires a dredging company. And the dredging company was clearly registered – never a problem – then one year they change their own internal structure and then now a company for the equipment and an unincorporated business for labour and they hire another person – and we knew they were hiring – we had no influence in that. And then that person died. The equipment they were on rolled over and we – the city I acted for – became an employer. Because that change in the relationship that we weren’t quite clear on – that we were now dealing with two companies – or one company – we dealt with the same person – all of a sudden he changed his legal relationship from the Board’s viewpoint – he became a labour contractor. And he wasn’t registered. He became our employee and all of a sudden we got zapped with the fatality. There is something wrong with a system that can change so easily. And the employer doesn’t know. The potential employer isn’t advised of that. It’s a problem in the system.
• Same thing with the frachisor/franchisee – the ones that clean buildings. The decision was that if the franchisee has other employees or contracts and is incorporated then they are going to be independent. But if they only act on their own they are not going to be so if you take the case where they two employees and for some reason they get rid of them the relationship changes. And we may not know that as the employer.
• So the recommended solution. My solution is that the labour contractor should either be treated as an independent for the purposes of the Act and that is because when we get into labour contracts they don’t have all the markings of a worker. That should be simple they are workers. They can’t register on their own. When we are dealing with someone from the Board who already recognizes has certain qualities of both and in my submission they are entering into the world of business as a separate entity and part of that is the financial aspect and coverage – they have to be made aware of their rights – communication problem is always going to be a significant one – how are we going to get them to know that they have the personal optional protection coverage option so at least that they are aware of that.
• Q: That solution – with the concern that the employer is simply offloading their responsibility?
• A: I think what it is going to come down to Judge Gill is that of a factual issue. A lot of these labour contractors applications I don’t have a problem saying they look like workers. And they probably shouldn’t be labour contractors; they look like workers. On the other hand I know of a lot of cases where I can say there is no way that labour contractor should even look like a labour contractor. They look like an independent. And so when you say offshoot them I think what you are going to find is that again you have to examine the nature of the relationship. If it is one that we normally – take us again – we have associates that work at home as well as work at the office. If we ask them to go out and incorporate simply because we know that will cause them to become a separate employer and maybe we’ll have some way of getting around this – I think the Board has to have the ability to step in and investigate that situation. And say no this is not a bona fide relationship. I don’t know how else to deal with it – it’s always going to be there and the only way to find it is for the Board to be able to examine – now the Board can’t audit everybody. But that’s the way the problem is ever going to come up – the Board gets involved when somebody comes to register or the Board does an audit or they find out something or other and then again it comes back to do we have clear sets of guidelines and what do you apply to determine where these people fall. And when they fall on the side of labour contractors – the submission by the employer community would be either they register on their own or they are independent. And they don’t have to register.
• Q: Isn’t putting that option in that wide a perspective just going to encourage more and more people not to have coverage? Which if you are the homeowner bringing in people who are going to be doing work on your house that it is going to be good for you?
• A: But Mr. Stoney, let’s say that’s true – so the homeowner brings in a person who – and a lot of times I find with these things is it is a person who has a job with another company – and it is a slow season so they going out and doing renovations on their own – one person let’s say. That person comes in – if they are aware that they could get workers' compensation coverage – again it is a communication problem – and they decide that for whatever reason they have they don’t want that. Where is the public interest? Is it to say to the homeowner, I’m sorry you bring them to your house, even though you are not really their employer but we think for the public interest they should be covered in case they fall off the roof and you are going to cover it? Or is to make sure the person is doing their own business has a knowledge at least of what is out there for them and they make their own decision. We may not like it; they may end up getting injured and we may all feel sympathetic to that but as long as they had the information in advance and made that decision consciously is there anything wrong with that? And that is where I get to; there’s going to be a line that people look more like workers. And may be the answer is we shouldn’t have this artificial labour contractor; it’s a tool to help decide which side of the line they fall on.
• Q: How do we know they made that decision consciously and in fact they just don’t have the coverage and we end up as the homeowner being responsible for the injured worker?
• A: Well, again, what I’m trying to do is stop that connection that the homeowner ever becomes responsible for the injured worker because I don’t consider them to be a worker. Again, I don’t know how to answer other than to say that there’s going to be times where I agree with you – the situation is going to look like one that the person is a worker and one should be covered, mandatorily, by the employer. Homeowner and construction worker is an example I used in my mind and my submission it is a clear example of one that most people looking at that situation would not see an employment relationship. It’s not obvious.
• Mr. Steeves’ presentation he has on page two of his written argument set out under Decision 255 he says " the Decision 255 makes clear the major test for workers' compensation purposes is – whether the supplier of the labour has any existence as a business enterprise independently of the person for whom he works." Now again that test when you read the case is that there are a lot of factors that go into that. But just taking the overall viewpoint – again that’s a helpful test. "If the evidence shows an existence of the business is independent of the person for whom he works we should err on the side of my submission. That they are independent. Let them know their rights and let them register. If not they don’t meet that test and it seems that they are a part of that business enterprise that they are working for then it is a worker and employer relationship and the employer has the responsibility. When you take the examples I’m using my submission is that the homeowner and the construction worker are independent businesses. There’s no connection; there’s no core business that you can say that these two have some sort of business relation with. Equally with the bookstore. But there are a lot and the courier driver is one of them. In a lot of cases where it’s a core business for the courier company – the person has a van – yes I understand that but it’s the nature of their operation is core to the nature of the employer’s operation too. I think that’s the nature of the problem in that industry. And again, we can debate all we want today; it is so factual that each and every case is going to have its fingerprints but what we need are guidelines and tests on how to determine where we fall on that.
• Q: If you have a very large business, large employer – say an industrial plant that manufactures let’s say a certain product. So that’s their sort of core business but in the course of doing that makes use of any number of skills in the plant – maintenance, inspections, materials being supplied – all sorts – design work, if you adopt that test just about anything not to do exactly with producing that particular product could qualify for to use my earlier term – to offload of employers to create categories of independent contractors who really are workers who are collectively necessary for that place to run?
• A: And so this is not a novel issue. You face that all the time in labour. There’s lots of cases on it – Workers' Compensation Board may have to start looking at other areas. You get into contracting out issues and a lot of times language deals with work that our workforce can do or presently has done or there’s all sorts of different languages and a lot of elaborate, complex applications toward exactly the issue that you are raising. You have the ability to contract out but under these circumstances and you get into cases where you do renovations and you want to bring in painters and labourers who can do the paint job. And you go through the same sort of thing. And again I don’t disagree that it is a very complex, factual area. But it is there and I don’t think it is going to go away; I don’t think there’s an easy solution that we are ever going to come up with and say everybody should be independent or everybody should be an employee. If you read the definition that Mr. Steeves put in front of you from the Labour Code – you got the same problem – it doesn’t go away just because you have a different definition. What it says is that at the very end, "the person most closely resembles the relationship of an employee than that of an independent contractor – basically the exact same issue. Still have to weigh everything and decide so what do they look like? And that’s all I’m saying here – whatever you put into the Act you still have to deal with this. You are always going to have a grey area; you are always going to have people that you are not quite sure of what they look like and that becomes a decision I think the panel won’t be able to deal with forever. It is going to come down again I think to guidelines that seem reasonable and the Board will over time work with those guidelines and hopefully come up consistent answers. Which I think is one of the problems now; I don’t think we’re all that consistent.
• Q: Just so that I’m clear Mr. Steeves proposed a definition of dependent contractor I presume for insertion into the legislation and that would qualify under the definition of worker and some other factors that were discussed along those lines were. What do you say about those? Do you have – or what would be your definition then of the test and the factors to be applied in the test? Just so that I’m clear on that.
• A: I don’t think I have a problem with the Labour Code definition – I have a problem with Mr. Steeves’ suggestion that it goes under the definition of worker. Because when you read what the definition of dependent contractor is that I don’t think it infers that they are necessarily a worker but that is where you are putting the definition so to me it would a different definition – just called dependent contractor as is done in the Labour Code and then you are going to have some section of the Act that talks about dependent contractors and what happens with dependent contractors. If you look at the material I’ve provided to you – it’s the second document I think there – I’ve provided an excerpt that’s taken off of the Order but I’ve provided an excerpt from a CLE paper I did. And the reason for that as soon as I can find it – it’s November 1994 CLE paper for workers' compensation. And if you look at the section called "Independent Firm versus Labour Contractor" – and Labour Contractor starts on Page 31.11 but the – but I was really putting this in for was page 31.12 – and under section B, "Factors considered by the Board in determining a person’s status because" – what I was going to say is that Decision 255 is just one and there’s all sorts of other factors that the Board had. These factors used to be in the Claims Manual but they found it confusing to have factors in the Claim Manual and to have different factors in the Assessment Policy Manual so they removed them from the Claims Manual and only have the Assessment Policy Manual. These factors are still discussed and I’m going to give you cites in published Appeal Division cases. So it sets out a lot of the other factors that you look at when making a decision whether someone is a worker or independent contractor and then sets out if you look at 31.13 actually two tests that are more focused on Workers' Compensation Board. The first seven are the common ones that you find in most situations and then you get the Appeal Division identify two further factors – who is in the best position to pay assessments? Who is in the best position for prevention and safety? And again they don’t divide it as we have seen in the fishing industry. You take the whole big picture and figure out now what do we do? And I think that applies and they use that for labour contractors – the problem we may have again is with that is that the Board has this funny situation with labour contractors that they can be both. I think what we are going to end up with at the end of the day no matter how you do it or the definition that you put in – once you make a finding that they are something - let them be that. If you find in the situation that they are a worker – then they are a worker unless significant changes happen and then you come back to the Board and say the facts have changed. If you find that they are independent then they are independent. It shouldn’t be a matter that if I register I’m independent and I’m no longer registered I’m a worker.
• Q: The problem seems to be where this test gets applied after the accident has occurred? And that seems to be most of the time.
• A: In a lot of cases.
• Q: So how do you get around that – you’ve acknowledged that you can’t – it’s very difficult for the Board to audit each application for registration to apply this test.
• A: Now how do you get around that – when you get to someone who should know that they are an employer should give it thought; we are going to talk about section 47.2 this afternoon. What should be in the Act to ensure motivation for its compliance? Other than that what can the Board do? You know – you are always going to get situations where it is reasonable for the two parties to think that we are not in an employment situation. I understand the concern that there ought to be certain employers that may want to take advantage of the situation. But I’m not talking about the nominals, I’m talking about the average and I come back to the homeowner. No one I’ve ever talked to that has had a renovation when I say by the way have you called the Workers' Compensation Board has ever said – yes. Because you don’t think about it. So there is no easy answer Mr. Chairman on how do you do that. There’s just got to be some sort of communication avenue that the Board adopts as communication policy in how we are going to get out – and communicate as widely as we can some of these consequences and obligations and entitlements.
• Q: Seems to come down to who bears the risk between the two parties and the answer is not a registration that should have been or possible could have been?
• A: And I think that comes down to again and it is usually after the fact what was the nature of the relationship? And unfortunately the risk is going to be borne by one or the other that may if they had the information in advance would never have gotten into that situation.
• I think I’ll move off of dependent contractors unless there’s other questions.
• Very briefly then I’d like to touch on the Aboriginal workers issue then. There may not be a problem but that doesn’t mean the Commissioners shouldn’t give it a quick thought on whether something has to be done. The problem was before July 1994 the Board had a policy that there would be no coverage with respect to band members engaged in band activity on a reserve unless the band had requested such coverage and had paid the required assessments i.e. voluntary coverage. And the reason for that was the Board believed that pursuant to the Indian Act they could not enforce the collection of assessments from Indian bands with respect to work on the reserve. So there was a question of if you want the coverage you have to pay – we are not going to make other employers pay for your coverage. The Isaac Case in 1994 which is found in the Reporter Series – the Workers' Compensation Board Reporter Series – volume 10, page 715 by the BC Court of Appeal said – no. That doesn’t flow – there was a band member that died from an accident while working a logging operation on the reserve and the Board denied coverage based on the above policy – they were not – the band was not voluntarily covered. The Court of Appeal said we could find no express provision that is the key to this case in the Act which exempted the Board from its obligation to pay compensation but due to the fact that the employer failed to pay contributions to the fund or that the Board was unable to collect those assessments. The court then referred to the provision that’s found in Alberta. And that’s at page 724 and I won’t read it now and then noted that in fact there was a regulation in Alberta which did exempt Indian bands unless they voluntarily sought coverage and that regulation was found to be intraveris by the Alberta Court of Appeal. And we don’t have anything like that in our legislation. Now Mr. Dugas explained that after the Isaac case now they demand mandatory coverage of the band – he said there were 213 covered – I wasn’t quite sure if that meant they were all covered – whether there’s more than 213 or not. But it doesn’t answer the question still. The Board may say that it is mandatorily covered but that doesn’t solve the problem of whether there is an issue on assessments and collections what happens there? And if there is such an issue again in my submission the solution is voluntary coverage as it is in Alberta as it was here without a statute allowing that. And then the band would make a decision on whether they want to provide such voluntary coverage or not. I do not have an answer to the legal question – if the Commission does have independent researchers in answering the legal question from the viewpoint of you can be mandatorily registered unless assessments can be collected from a band then I don’t think it is an issue. Because the Board has moved toward coverage.
• For proprietor; partners who incorporate – here the issue is an incorporated company generally is treated as an employer so anybody who works for the company is found to be a worker – doesn’t matter who you are – you can be active shareholder, director, and anybody else who we would consider to be a worker. But there’s an exception and an anomaly and those are why I’m raising the issue. I’ve provided you excerpts from the Assessment Manual – that should have been the top document. The first is two pages from policy 20.30.20 and they go on for four pages but you have enough paper so I provided the relevance for what I needed and the last page is a page from a different policy. I want to start with page two of 20.30.20, which is the second page in the package. So it says, "Independent firms include the following: includes incorporated companies under D. [but then there are the exceptions] unless it is a personal service corporation." And what is a personal service corporation? It‘s one where its purpose is where no help other than the principle active shareholders are employed and that if the firm is not incorporated the principle active shareholders will clearly be workers and fall into the worker category. So we get rid of the corporate entity from the viewpoint of – if we look at a personal service corporation and we think it’s a worker then that worker is going to be covered under the Act as a worker for that employer that they are working for. And if you take my law firm – we certainly had an associate that had corporation for tax purposes – under this policy for tax purposes the corporation is fine; for Workers' Compensation Board purposes it’s not. I don’t have a problem with that. The problem is the anomaly the other way around. And we brought that case to the Workers' Compensation Board – to the Appeal Division with respect to lawyers – I was retained by the Law Society – to say that lawyers were able to incorporate – about then – 1992 – somewhere around then – the first time for tax – taxability. And they did. And a lot of sole proprietors incorporated and all of a sudden they found they now had to register for Workers' Compensation Board and pay Workers' Compensation Board and all the wonderful things that go with Workers' Compensation Board. And so we went to the Appeal Division and said we should have the same exception. We said a bunch of things – but we said we should have the same exception – if the personal service corporation – and you are not going to look at the identity – if it is a worker why would you look at if it is a sole proprietor or a partner? And I pointed to the decision and you can read their answer – it’s reported in 1995 – 11WCR327 – and the answer was employers only have the right to come on error of law, contravention of published policy, and error of fact. And we couldn’t prove any of those – there was no contravention of published policy – the policy says if you are a worker otherwise then you disregard – it doesn’t talk about what would happen if you would be independent otherwise and so they said the policy stands. I think it has to be looked at – I think it’s an anomaly in the scenario – if we are going to give a personal service corporations a separate identity it probably should be for both subject to the fear of I understand of some employers taking advantage of that. If you are not going to give a personal identity why do it for a sole proprietor who does it only for tax reasons?
• The anomaly is on the next page. This is from 20.30.30 – and on 20.30.30 it deals with the registration of corporations. And it deals with the situation of the company being registered and the active principle gets injured. And you’ll see here that that’s the only time the active principle who is a worker will not be covered. They get no compensation. And the reason is it says here under point 2 except under unusual circumstances a person who is in essence both a worker and a employer cannot be given the benefit to do to a worker unless that person’s obligations have been met under the Act as an employer. It is a very anomalous situation – no other situation does the Board get into the situation that you are a worker but we’ll call you an employer but we are not going to pay you because you got injured. Either they are a worker and they are entitled to it or they understand that this corporate entity is sometimes artificial and can not always use it. Well, then, there’s good reason not always to use it other than to deny compensation. So the recommendation would be that personal service corporations should be treated the same for both. And if – and if it is found to be a worker underneath that they should be a worker – if it is found that they are found to be independent underneath that they should have the option of personal optional protection.
• For time I won’t deal with Section 51; you have full submissions on it. Section 51 to briefly state the employer community is looking to get rid of Section 51. Section 51 is the one where the principle is subject to the pay the assessments of the contractor if they don’t pay. Here we’ve got the person registered; they just didn’t pay. And again it is an unfair situation that an unknown go back to the homeowner. So now we got lucky they were registered but they are not paying; why do I have to pay their assessments? Why shouldn’t this be like any other big company or company and have a bad debt reserve? And charge it, as they need to every time as a reserve to the Accident Fund; it would be a nominal charge I believe but Mr. Dugas didn’t have the numbers. For all employers as opposed to one particular employer didn’t know and a lot of times you don’t find out until a year or two later that you have this obligation and the relationship is over anyways. Mr. Dugas referred to clearance letters – the problem with clearance letters is they are always out of date. They – assessments are always paid in arrears so you can phone today and find out yeah they were in good shape but last year in December.
• To finish off who…..
• Q: Should a general contractor on a construction site have a responsibility for - a percent of the responsibility to ensure the workers that come on the site are covered?
• A: Should a general contractor have a – certainly in the regulations that I’m familiar with – they have a responsibility if they are the prime contractor on the safety side. When section 51 first came in it was brought in for construction and forestry. It was found to be those were industries where there a lot of contractors using – that was in answer to your question – found that generals in those industries should have that knowledge and the answer is probably yes, they should have that knowledge. Should they be responsible for the assessments again I get back to the problem of having distinctions between certain industries now and maybe that’s the way to go – that forestry and construction would be on the prime or the general – for small business and homeowners or whatever it won’t be. That starts creating distinctions in – that I’m personally not comfortable with.
• Q: Because of the gypsy-like status is what I was thinking of – a lot of these people who work in these industries – that they are the ones who know where these people are at one given time – isn’t it be reasonable that they be the main – that they ensure that the coverage exists? When it is reasonably expected that these people be covered?
• A: It’s reasonable if you are coming to the point and saying that they are the worker as opposed to the principle contractor – if we agree that they are independent – then I don’t think it is reasonable to have those obligations on them – they are both independent firms. As should the prime be the one that has the information to pass on to the subcontractor – I have no problem with that. That’s a good way of communicating in the construction industry. That the general would pass down to everybody. Are you saying that the general has to have the responsibility every three months to check all the subs on the site and making sure that the subs use for subs are done that? I’m not sure that I agree that that’s reasonable on the prime contractor.
• Q: Who should be responsible?
• A: If it is an independent firm I think every employer has their own responsibility and they have to accept that responsibility. And they are responsible for their own registration requirements and assessment payments. And there is no doubt we are going to have bad debts. There is no doubt that all assessments are going to be paid. The solution in my submission is that the system as a whole pay for that. As opposed to any particular contractor having to pay for that.
• Mr. Steeves’ submission; again I don’t think the panel has to deal with Decision 255 – there’s a lot of later decisions. There’s one reported at 1995 12WCR7 – there’s an unreported decision – 1996 – 1327. They go through all the factors that you look at when you determine worker, labour contractor, or independent contractor. Mr. Steeves has asked to find the courier drivers that have their own vehicles to be workers – I think that’s a little far for this Royal Commission to go into individual situations like that. I think what the Royal Commission should be doing is determining general principles that the Board can apply and those general principles result in a review of what happens to the courier industry. But if they Royal Commission is going to specifically make a finding to deal with a particular industry I’m not sure that industry is aware that is going to happen or have made submissions. There may be facts that we don’t know about that have led to that conclusion. That should be explored so I would recommend caution on going out with a specific industry and saying that this should be covered.
• That’s it for whom.
• I’ll just take five minutes then and take questions at the end and that’ll be that. I have three topics to cover and I’ll do them very quickly under what. The three topics I want to cover under what are section 5.3, protective reassignment – if there is no time I will push that off to the Vocational Rehabilitation day, and a quick comment on normal body motions.
• Section 5.3 – you had a bit of a discussion on the alcohol issue – this is where I think it falls under. Section 5.3 is the one that talks about serious and willful misconduct and that compensation is not payable where the worker is – has such conduct and there is a proviso – there’s two provisos – first he has to be solely because of his serious and willful misconduct and the second proviso is that they have serious or permanent disability they get compensation. In my submission that doesn’t make any sense. When you look at section 5.3 you have to go back and ask what could the purpose have been here. In our submission the purpose of putting in an exclusion of compensation for serious and willful misconduct is it is a recognition that takes you outside of the parameters of employment. Alcoholism for example coming to work impaired may be that. Driving impaired, in my submission would certainly be that. And so if you make a finding that there is serious and willful misconduct and you accept the proposition that takes you outside of employment it is difficult to understand how the employment relationship is brought back in simply because there is severity of the nature of the injury. This is what section 5.3 states. And again I think the problem was identified through Mr. Pinto’s evidence – he’s not aware of any case where it’s been used.
• And you look at other sections – you look there – in the policy there is a horse play and what it says on the horseplay is this, "a worker who is injured through participation in horseplay is not for that reason alone denied compensation. The conduct of the claimant which caused the injury must be examined to determine whether it constituted a substantial deviation from the course of the employment. So here the language it is substantial deviation. I have to ask the question – What’s the difference between substantial deviation and serious and willful misconduct? If one were to assume that if you have been found to have committed serious and willful misconduct you probably have substantially deviated from the employment.
• Q: What I think I recall is that serious injury even of itself is not an insignificant consequence and you might say penalty for misconduct – and is it then to deny compensation on top of that some kind of instance of double penalty?
• A: I think – the panel – appreciating – has to be careful of sympathies; I understand that – I have dealt with workers that have come in – I did pro bono work and dealt with workers; I understand what we’re thinking – the issue is not the severity – the issue is did it arise out of the course of employment? If the answer is no – to then say haven’t they faced enough misfortune? Shouldn’t we compensate them – I don’t think is relevant any more. No matter how distasteful or unsympathetic that may sound. And the example is alcohol – a person and there have been cases where they have accepted it. And it comes to solely sometimes. There are cases where a person goes out and gets drunk three or four times over the limit and gets back in the car and drives and gets killed. And the question is whether or not they are still in their employment when they did that – not whether they had a serious injury – we know they had a serious injury. If the answer is that they were still in their employment then they should be compensated. If the answer is no they are not in employment – well I don’t understand why now that they’ve suffered a serious injury that brings them back into employment. I think that is where the problem with section 5.3 is coming. They seem to mix that up.
• Q: So what do you want to do with the test?
• A: We want to get rid of the proviso and we want to change the word solely to primarily. It’s very difficult to ever find a situation where solely be caused by something. I will deal with protective reassignment another day.
• And last is normal body motion; I think the only thing I want to say there is you’ve heard Mr. Pinto say that maybe we need clearer lines and Mr. Massing give a caution at the very end of the discussion about when you move a line all you do is make new controversies; you are just taking a grey area and moving it. I think the policy made sense for normal body motion – it’s another factual case and in each and every case you are going to have to weigh the facts to determine whether or not there was some nexus with employment. Some cause; something more than just being at work when that injury happened and these are not easy cases. But moving the line isn’t going to make them any easier. And I’m not sure when you read the whole policy there aren’t a lot of room to figure out where the line is going to go. I do want to correct one point that I think Mr. Steeves – it is just an elaboration on. I provided you the excerpt; the full excerpt from the manual dealing with the body motions. It is section 15.20 probably the third document as we go through. Mr. Steeves had used an example, which he said when a person bends down to pick up a tool that would be covered. You have to go back and read the beginning of that paragraph that is on page 39. And what the discussion already talks about is how you determine whether a normal body motion is work related or not and then it goes on to the very last paragraph. "Simply by adding a few more factors to these situations or others it might well be possible in individual cases to find that a work relationship existed. Here is the key sentence that was missing. For example – in these examples are not to be taken out of context without taking into consideration the discussion above. And then when you turn the page the second example is the one that Mr. Steeves put in about dropping the tool and leading the person that would be accepted. I don’t think that is what the policy says. It might be and it might not be and you have to look at the whole discussion to determine what might happen there.
• That’s all I need to say on body motions. A question came up on section 5.4; I have no submissions on 5.4 but I want to point you to page 188 and 189 of the Tysoe Commission. That’s the presumption on case of if an accident occurs in the course of employment, it’s presumed unless it is arising out of and vice versa. And what I explained when it came up is that the purposes of section 5.4 – the accident is considered to be the traumatic incident – not a fortuitous event – you’ll see that in the Tysoe Commission pages 188 and 189 and you’ll see a brief discussion of that in a reported decision – 1992 – 8 WCR 165 – pages 189 and 190.
• Q: Just so that I’m sure on that - 5.4 deals with traumatic incidents which means for example if you are struck by something that there then would be a presumption that the injury sustained not only occurred at work but was caused by work.
• A: That’s correct.
• Q: Is that the word it uses? Traumatic incident or does it use accident?
• A: It just uses accident.
• Q: Is it policy that’s defined accident to mean traumatic incident?
• A: No, I think that policy does talk about it – in that situation it requires that traumatic incident or the case that I referred to certainly did and Mr. Tysoe added the words in 1966 – in cases where the injury is caused by accident. And you’ll see in his discussion that he did that to get across that there is a difference between a presumptive clause and an entitlement clause.
• Q: The definition in the Act doesn’t appear to be an all-inclusive definition.
• A: I agree.
• Q: So if you are at work and you bend over to pick up a screwdriver and you throw your back out – does Section 5.4 apply or not?
• A: I think the Board’s policy would be no unless there was a – I don’t think 5.4 applies- I’m thinking of 5.1 when I’m answering no less – whether it would be compensable or not.
• Q: The tort test to determine whether or not causation is established with respect to any incident or any condition rather is similar to this causative significant – causative significance test I understand that is in policy - do you see any difference –in other words as long as it’s not on a diminimus basis – I think more than that should trigger entitlement for compensation for the entire condition?
• A: That’s a difficult one; I think when you get the injuries that is what they are looking for – for something with causative significance – and I think your answer would be yes. On occupational disease – which we won’t deal with today – the answer may not be that. I think we get more into the balance of probabilities when we get into occupational disease that just causative significance. But I do think in injuries yes they are looking for causative significance and then it is accepted.
• Q: Is it your experience that the test is fairly applied?
• A: Fairly? Injuries are a much easier case – I don’t find the same sort of problems with injuries that I do with occupational disease so I think it is consistently applied and I think you’ll find on the statistics the vast majority – I think it was like 96% of whatever the cases are accepted. Most employers I don’t think dispute a lot of those injuries – it’s been the cases I’ve been involved are we think someone came to work with an injury and five minutes into it we have an injury. It’s a different kind of case.
• JIM SAYRE
• I hope that all of you have the addition to the written submission that I’ve distributed at the beginning of the day. It starts at page nine. Pages 9 and 10 cover the issues that we are talking about this morning. Who is covered by the workers' compensation system and what is covered?
• I’m going to agree in part with a good deal of what both of my predecessors have said to you. I’m going to agree especially that the issue of contractors; whether they are called independent or dependent or labour is a particularly complicated one and is one that is probably not going to end up with a nice, clear, clean cut, bright line solution no matter how much attention we pay to it. At the same time I think I can suggest some perspectives that may be of assistance to the Royal Commission in devising a test that focuses most appropriately on issues that are relevant to workers' compensation and as opposed to some of the issues or in addition to some of the issues that may be more relevant in a labour relations context or other contexts. And I want to make sure that I get a chance to describe to you a couple of fact situations that I think will help to illuminate the issue that are quite different from some of the circumstances that have been discussed earlier. So I’m going to spend most of my time on the who issue but I do have some submissions on what as well that are largely set out in the paper and I will try to save some time to get to those too.
• Before beginning the question of who or before I quickly review what I’ve set out in the written submission I thought that I would mention to you the other area of law that I have most experience with – employment insurance – that also had to deal with exactly the same issue – who for the purposes of that legislation is to be considered an employee and who is considered to be a contractor because of course that determines whether the person’s income is insurable or not and whether the person who would be the employer is obliged to pay premiums.
• There is a separate appeal system for such systems – for such issues under the Employment Insurance Act – the appeals go first are reviewed by Revenue Canada – then go to the tax court of Canada – ultimately to the Federal Court of Appeal on a judicial review from a decision of the tax court. Leading case is called Wee Doors and it just – you may be somewhat amused to know that what the Federal Court of Appeal does in that case is say while the law has looked at a number of different ways of determining this question – one of them is a four fold test; profit/loss; ownership of tools; and so on. Another one is the control test; another test is the test of whose business is it? And I think in each case they cited some leading authority; some of them from English Court of Appeal which enunciated these tests. The conclusion they came to is that really nothing relieves the tax court judge from having to look at all of all of the circumstances of the individual facts before him and weigh them in order to come to the appropriate conclusion in that particular case. So they didn’t - they expressly refrained from finding a nice, clean cut fact or type of test that would lead to a clear answer in each situation because they essentially said well this – by definition this is a grey area and we just can’t come up with one. I don’t know whether we can do any better than that in the end for compensation but there are different considerations when one is dealing with the workers' compensation Act and when one is dealing with the Employment Insurance Act or the labour standards legislation or the labour code and some of those different considerations may conceivably lead to a different result for workers' compensation than would be the case under the other laws.
• Before going any further on that issue I want to turn to the submissions I’ve given you – on page 9 – we see two major problems with the – arising from the – or problem areas arising from the question of who is covered. The first is that essentially is what we have been talking about this morning relates to people who are in this grey area; people who are in our view and this is an area that we are most concerned with – people who should be covered as workers but are forced by economic circumstances or by the insistence of the people who have the work to offer to them to treat themselves as independent contractors. There’s a variety of industries in which that situation can arise – courier drivers is certainly one the Royal Commission has heard about before – another one that I will be describing to you because I just learned a lot about it this morning – while we were waiting due to traffic delays occurs in the logging industry and perhaps is the most serious situation from a workers' compensation standpoint because of the negative safety consequences that flow from the way in which this situation is currently existing.
• And the third that I will just mention is which our office is presently handling –is before the BC Court of Appeal involving a person who had a previous compensation claim and had a permanent disability and was hired by a truck dealership to clean trucks –and because he had a serious back and leg disability the dealership said we won’t – effectively said – at least this is his position – we will not hire you as an employee but we will hire you as a contractor. But you have to get your own compo number – and he accepted that because he wanted the work – years later when he had a very minor injury and went to the Workers' Compensation Board they said you’re not a contractor; you’re a worker. They told the dealership that they would have to pay for him and at that point his contract was terminated – the dealership would no longer retain his services – he made a human rights complaint – human rights said that’s not discrimination in our view – we disagree with that and that is an issue that is presently before the BC Court of Appeal.
• So it raises an interesting perspective in a sense of penalty which was imposed on this person indirectly for having had a previous claim and being disabled from a previous claim and that the penalty consisting of being forced by a later employer to bear the burden of his own compensation coverage because that employer was apparently afraid of the experience rating assessment consequences of having a person who might be vulnerable to further injury on their workforce. The employer – part of the evidence is that – is the previous person who had done that cleaning work was in fact treated as an employee by the dealership and after he was let go the people who were hired to replace him were treated as employees so he was treated differently apparently because the employer thought he was a walking bomb so to speak in terms of risk of further injury.
• It is our view that the Board has to be particularly diligent in protecting people who are in a vulnerable circumstance and who are within this grey area where they can be characterized by the person in a dominant economic position as being independent and thereby forced to bear the burden of their own compensation coverage.
• And the other situation that I wanted to describe to you –the person who told me is in the audience today – but I’m not doing this as evidence - it is a circumstance that is relatively common throughout the logging industry. A large forest company has timber rights –they hire a logging company - logging contractor to do the cutting for them – that’s a contract – the logging contractor as I am advised then hires people to actually go out and do the work –and when I say hire I use that term advisedly because what they do is they tell these people that they are to be treated as what they are called in the parlance - day raters. They are given a certain amount of flat rate of money per day and told that they have to have their own compo numbers. Now this includes not only fallers who may own a chainsaw – also apparently buckers and skidder operators who do not own a skidder. People are driven to the worksite by the company that owns the logging contract – they are told what areas to work on, what hours to work, what to get done and if they don’t get the work done their contracts so to speak are terminated. And in most respects that I’m familiar with and in the way the law would normally deal with such situations such people should be treated as employees – what particularly interested me was some of the consequences which were described that flowed from this situation – for example – and I’m going to be talking – I will be talking in the second half of page 9 about the concerns that we have about the optional amount protection under personal optional protection coverage which motivates some people to under insure themselves in order to save some money. Well I was advised that it is quite common on these sites for people who suffer injuries as long as they are not totally disabling to the point that the person cannot go on with the work that day – for people not to make claims at all – not just because they don’t want to lose the work for the rest of the day but because they know their compensation rate is going to go up due to experience rating assessment – so the effect of the combination of being treated as an employer when in fact they are a worker and the irrational nature of experience rating assessment is that people are actually not reporting injuries in order to keep their rates down. And of course there is always the balance that any person in the Personal optional protection area weighs in their mind – how much protection can I afford or how much protection to I want to afford? As opposed to other things that I could do with that amount of money. Ironically the dilemma snowballs for a worker who suffers an injury because they know if they make the claim the compensation rate is going to go up and they are going to pay even more for that same level of coverage. So the effect of having an injury might be to have to choose between buying even less coverage next year because he can’t afford the same amount or foregoing benefits for a condition which if a person doesn’t have it treated and doesn’t stay off work until he recovers can become permanent or chronic.
• It is a real dilemma that these people are in because of the fact that they are permitted by the system to be treated as independent contractors as opposed to workers.
• Q: In the logging industry is the motive of logging contractor to avoid the assessments or are there other motivations at work as well in terms of cost?
• A: Obviously I can’t tell what’s in their minds – I imagine that there are a lot of economic reasons why the company with the contract finds it advantageous to do this. The interesting – the other interesting result of that situation however is that the company and this is the other thing that I hadn’t gotten to with what I was told – is that this worker found himself on one occasion working on a steep hillside. In order to comply with the Forest Practices Act he had to do things that in his opinion violated workers' compensation regulations and he told me he talked to the Compensation inspector about this and was told well it is out of my hands –you’ll have to make your own decision – you’re a contractor. The consequence from a broad perspective of how the Workers' Compensation Board is going to accomplish one of its major goals is to prevent injuries is that the party in the best position to control the risk of injury in that workplace is obviously the head contractor –the company that decides which hillsides get logged, how they get logged, who does it, what techniques are followed, and so on and because all of the people doing the work are treated as independent contractors with their own compo numbers that head contractor suffers no consequences and has no motivation to ensure safety. In fact they have every motivation to simply get as much work done as possible and if somebody gets hurt the chances are quite realistic that they may not even report it. And if they do report it it is their experience rating assessment – not the contractor’s experience rating assessment that will go up. So it is perverse situation – we think that has some messages to the Royal Commission in terms of the meaningfulness of experience rating assessment as a tool for preventing injuries which is not what we are talking about this morning primarily but it obviously also has some very important things to say about the rules which the Board now follows in deciding whether to treat people as contractors or not. In that situation I was strongly agree with Mr. Steeves’ recommendation that people in that situation should be treated as a matter of policy and/or law as workers of the company which is in control of the worksite and which is best able to carry out the goals of the workers' compensation Act which is not only to – which is to be able to pay assessments and protect workers and compensate workers who are injured but perhaps more importantly in this situation to try and make sure that people are not injured. And the only way that that can be done is to – is to have them covered as employees of the company that actually has the contract and who controls the work and I started by saying that I agree with a lot of what both of my predecessors have said because it struck me listening to Mr. Winter talking about the fishing instance that he described that concerns number three and four that he described about the fish boat situation were exactly parallel to the situation that I’ve just described – we have a situation in which the – in which the person who is in the position to control safety – in that case the fish boat owner would be able to decide when it’s safe to be fishing and what risks to – are too great to shut the operation down for the day – there’s no consequences – it is not required to be treated as an employer.
• Now the second concern we set out in the submission is the treatment of people who are given the choice of whether they should have compensation coverage or not – and – to telescope it a bit and get to the end – it is our position that a person in some areas and there are going to be grey areas and because of the number and complexity of the relationships people set up in terms of how people go about their – gaining their livelihood –there are going to be grey areas – there’s no getting around that and there are probably going to be situations in which the Royal Commission feels that people should have some option about whether to be covered or not. One of the principles that we support is the autonomy of workers generally over their own lives so we’re against giving people choices but we do not think it is fair to give people the choice which essentially amounts to a trap. The trouble with personal optional protection is that a worker is induced to purchase less coverage than t