Highlights of Noteworthy Decisions

Decision 2134 19
04/01/2021
E. Kosmidis
  • Class of employer (dual rates) (segregated payroll)
  • Schedule 1 employer (application industries)
  • Schedule 1 employer (compulsory coverage)
  • Class of employer (dual rates) (small employer)

The employer began its operations as a small pet store with a primary focus on education. In 2006, the facility became accredited as a zoo, but part of its operations included a gift shop. After the employer became accredited as a zoo, the Board classified the employer in Rate Group 937-15, for recreational services and facilities botanical and zoological gardens. Rate Group 937-15 does not have compulsory coverage. The employer did not apply for coverage.

After an audit in 2013, the Board found that the employer shoulder be classified in Rate Group 937 and that the employer was required to report its entire payroll to the Board under that Rate Group. The employer appealed.
The Vice-Chair found that the employer operated a business activity that is correctly classified in Rate Group 937-15. This represented the majority of the employer's business operations. This business activity is considered non-compulsory. However, the employer also operated and had employees working in a retail sales capacity to run the gift shop. The business activity of retail sales is compulsorily covered under Class F for retail and wholesale trades. Accordingly, the employer carried on more than one business activity. The Board determined that the employer could not segregate its payroll for its retail activity.
Section 12 of O. Reg. 175/98 provides that the payroll of workers engaged in operations carried on partly as an industry under Schedule 1 and partly as an industry not under Schedule 1 shall be rated as if all the operations were under Schedule 1. Therefore, where an employer carries on more than one business activity and one of these business activities is a compulsorily covered business activity (such as retail), the employer's entire operations are considered to be compulsorily covered and the employer must pay premiums to the Board based on the company's entire payroll.
Under s. 9 of O. Reg. 175/98, if a small employer (such as the employer in this case) has more than one business activity, the employer's premiums are based on the employer's predominate business activity, unless the business activities are properly segregated.
The Board, having determined that the employer was unable to segregate its payroll, correctly classified the employer in Rate Group 937-15, for botanical and zoological gardens. The appeal was dismissed.