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Ontario employers could see cost hikes from new workers comp law

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Newly adopted legislation in the Canadian province of Ontario has the potential to significantly raise the costs for employers that participate in its workers compensation program and bars them from strong-arming employees about claims.

Bill 109, adopted in December, prohibits employers from retaliating against or discouraging employees from filing for benefits, with corporations that commit such violations or others, such as knowingly making a false or misleading statement to the board, facing sharply higher fines. The law also could spike the costs of providing workers comp benefits by changing how survivor benefits are calculated.

The legislation, which applies to any company that has employees in Ontario and participates in the workers comp system, amended Ontario's Workplace Safety and Insurance Act to bar employers from threatening or taking disciplinary action, including terminations, suspensions or penalties, against workers for filing workers comp claims or influencing them to withdraw or abandon claims.

It also amended the act to raise the maximum fine that could be imposed on corporations found guilty of offenses to $500,000 Canadian dollars from CA$100,000 ($352,750 from $70,550).

Legal experts say the legislative change is partly in response to an April 2013 report prepared for Ontario's Workplace Safety and Insurance Board that found that claim suppression — actions taken by an employer to induce a worker not to report an injury or illness or to underreport its severity or attendant time lost — appeared to be a “real problem.” The researchers estimated the proportion of likely compensable work-related injuries or illnesses for which workers do not submit claims at 20%, while employer nonreporting was pegged at about 8%.

The legislation is also being driven by the provincial government's general desire to expand protections for workers, though the experts say most employers take workplace safety reporting obligations seriously.

“For many employers, those prohibitions are not going to impact them,” said Jodi Gallagher Healy, a London, Ontario-based partner with Hicks Morley Hamilton Stewart Storie L.L.P. “They understand that employees have the freedom to report injuries, that they have a responsibility to facilitate that and do their reporting. But this is meant as a protective measure in the event that there are employers out there who are discouraging people from making claims or unintentionally doing so.”

“It's making out the employers to be the big bad party,” said Norm Keith, Toronto-based partner with Fasken Martineau DuMoulin L.L.P.

The Ontario safety board pays out about CA$2.5 billion ($1.76 billion) in benefits each year, according to the agency, and one Bill 109 provision could significantly increase that: It allows the board to calculate survivor benefits based on the average earnings of the deceased worker's occupation at the time of diagnosis rather than the legislated minimum payment.

Of the CA$2.4 billion in benefit payments made in 2014, $184 million was directed to funding survivor benefits, a total that has held at 7% of overall payments in the 2012-2014 period, according to the board.

The change applies to any injury that occurred on or after Jan. 1, 1998, which would allow survivors to refile their claims or to ask the board to reconsider decisions.

“That's actually pretty controversial because retroactive application of legislation, at least in the workers comp field here in Canada, is not considered to be particularly good public policy,” said Laura Russell, partner with law firm Mathews Dinsdale & Clark L.L.P. in Toronto.

The legislation addresses a “gap” in the way survivors were compensated in the past, so many are likely to request board review, said Howard Goldblatt, a founding partner for Goldblatt Partners L.L.P. in Toronto.

The board had been making payments based on the date of diagnosis until it came to the board's attention that previous legislative language did not allow that so the change should not increase costs significantly, said Carmen Santoro, president of the Ontario Professional Firefighters Association, which represents 11,000 members and was a major proponent of the bill.

However, others say the change would increase costs for some individual employers and the overall cost to the workers comp program.