WSIB Disability Carve Out

For individuals not required to be covered, they may choose to “opt-out” of Workers’ Compensation on the premise they can obtain better coverage under a personal individual disability policy.

In determining whether one qualifies to opt-out, it will be necessary to consider the relevant provincial legislation and the policy guidelines that are provided by the applicable Workers' Compensation Board. The employer must comply with the Board's policy or face the possibility of an audit.

Ownership of a business in the context of a sole proprietor or partner is a question of fact. Some factors to consider in this regard may include:
• individual’s degree of control in his or her relationship with the business,
• opportunity to make a profit or lose money when working, and
• whether he or she works for more than one firm at the same time.

In the case of executive officers, the question arises as to the definition of executive officer for purposes of the provincial guidelines.

In the Ontario court decision of Ryan vs. Westinghouse, the court commented on the court’s power to review decisions of the Board as to whether executive officers were entitled to opt-out of coverage. The judge observed that the difficulty is the "officers" are not defined in the relevant legislation (for Ontario).

The judge considered the wording in the Procedural Manual of the Workers’ Compensation Board as follows: “The Board defined executive officers to include the chairman, vice-chairman of the Board of Directors, president, vice-president, secretary and treasurer or Director in a limited liability company or general manager or manager designated an officer by by-law or resolution of the Directors”.

It would appear, based on the comments in the case, and from similar audit cases, that the definition of executive officers is a question of fact as determined by the Board. He commented, “The court is expressly precluded from interference and consequently, the Board having determined the status of the employees, the court is bound to accept their conclusion. Whether the Board has interpreted the Act correctly is, in my view, immaterial”.

Caution Regarding “Opting-Out”

In considering the opting-out provisions regarding Workers’ Compensation coverage, it is highly recommended that the employer’s own legal advisors be consulted for advice. Further, any decision to opt-out should be communicated to the relevant Workers’ Compensation Board for purposes of follow-up as needed.