Highlights of Noteworthy Decisions
- Board Directives and Guidelines (experience rating) (NEER)
- Employer (related companies)
- Experience rating (NEER) (multiple accounts) (calculation)
The employer was a corporate entity with two unincorporated divisions under which it carried on business. Both divisions had accounts with the Board. One of the divisions had a performance index for 2008 of 6.64. This led to a NEER surcharge of $70,000. The employer appealed a decision of the Appeals Resolution Officer confirming the Board's calculation of the employer's cost limit for 2008. Board Operational Policy Manual, Document No. 13-02-02, on NEER, provides for a limit on a firm's total claims for a year. Beginning in 2006, the firm cost limit was four times the expected claims cost. The employer submitted that the performance index of 6.64 was well above the limit of 4, and that, using the limit of 4, the surcharge would have been much less. The Board found that the corporation was the legal entity and that, in accordance with the NEER policy provisions regarding multiple account organizations, it performed the calculations for the rating factor, expected cost factor and the firm's cost limits with reference to the overall operations of the employer. Calculated at the organization level rather than the individual account level, the performance index for the corporate employer was less than 4. Thus, the Board's calculation was in accordance with the NEER policy. The Vice-Chair noted that Operational Policy Manual, Document No. 12-01-01, on who is an employer, provides that the person in law who is legally responsible for the operation's liabilities is the registered employer and that divisions of employers are not themselves employers for the purpose of assigning liability. If a division is itself incorporated and registered with the Board, it is treated as a distinct person in law. Further, Document No. 13-02-02 provides that, as of 1996, calculations are performed with reference to the overall operations, so that where an employer has multiple accounts containing a common rate group, the premiums and costs are combined for the purposes of calculation the rating factor, expected cost factor and firm cost limit. In this case, the divisions had their own accounts with the Board but they were not separate legal incorporated entities. The Board correctly made the calculations in accordance with the provisions of Documents No. 13-02-02 and 12-01-01. The appeal was dismissed.