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Guide to Workers' Compensation Insurance

Part 2: Must Your Business Register For Workers' Compensation Insurance?

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Generally, if your business is incorporated, or if you have any employees, you must register with your provincial Workers' Compensation Board or WCB (and pay Workers' Compensation insurance premiums). Sole proprietors or independent operators running unincorporated businesses with no employees don't have to register for Workers' Compensation insurance, although they may choose to carry optional coverage.

This isn't always the case, however; in the Northwest Territories, all businesses need to register with the WCB within 10 days of commencing operation, even if the business has no workers, as you can't get a business license without a certificate of compliance from the WCB. In B.C., virtually every employer has to register with the WCB, including people who are building their own homes, and people who hire casual domestic help on a regular basis, such as gardeners, cleaners, or nannies. (Yes really; see "Do I Have To Register?".)

If you're a really small business, the number of employees you have may determine if you have to register for Workers' Compensation insurance. In New Brunswick, for instance, you must register for coverage if you employ three or more workers; in Nova Scotia, you must register if you have two or more workers. In other provinces, such as Alberta, where you must register with the WCB within 15 days of hiring your first full- or part-time worker, or Ontario, where you must register within 10 days of hiring your first full- or part-time worker, it makes no difference. If you're not in one of these provinces, check the WCB site for your province.

The regulations covering corporations also vary from province to province. In Alberta, directors (registered officers) of corporations are not automatically covered, although they may apply for optional personal coverage. However, if your company is incorporated in B.C., all shareholders or officers who are actively engaged in the company business are regarded as employees of the company.

In New Brunswick, employers who operate a limited company must include in their annual reported payroll all individuals receiving salary from the company, regardless of age, including the owners, executive officers, directors and managers, which means you will have to include your children in your report if you're paying them to work for your corporation. Other provinces have age restrictions.

It doesn't matter if the employees are full-time, part-time, or casual, or if they're contract workers or subcontractors. In many provinces, such as Alberta, if you hire a proprietor (an individual who operates a company but doesn't have any employees) to do work for you, the proprietor is considered to be one of your workers, unless he maintains his own WCB account.

Even if he does, you're still not off the hook. In Alberta, If you hire contractors or subcontractors with their own WCB accounts, you have a responsibility to ensure that these accounts are in good standing, which you can do by obtaining a clearance from the WCB. This protects you from becoming liable for payment of your contractor's or subcontractor's premiums. This fact sheet, Your Responsibilities For Contractors/Subcontractors, gives more information about clearances.

Some industries are exempt from mandatory Workers' Compensation insurance. In Ontario, computer programmers, private health care practices such as those of doctors and chiropractors, private day cares, travel agencies, photographers, and taxidermy are among the exempt industries. Industries that are exempt in one province may not be in another, so you'll need to check with your provincial WCB to be sure.

Even if Workers' Compensation insurance isn't mandatory for your business, you may still want to purchase it voluntarily. If you're a contractor, for example, you may find that principals prefer to deal with contractors who have their own Workers' Compensation insurance, and some companies will insist on proof that you have your own coverage.

When you purchase optional personal Workers' Compensation insurance coverage, be sure to base the amount you buy on your insurable earnings, as this is the amount that will be used to determine compensation if you do suffer a work-related injury. If you purchase only the bare minimum, you won't receive enough benefits to replace your lost income.

The next page of this article looks at the cost of Workers' Compensation insurance and how you may get a discount on your Workers' Compensation insurance premiums.

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