Highlights of Noteworthy Decisions

Decision 326 22
11/03/2022
G. Dee
  • Board Directives and Guidelines (class of employer)
  • Retroactivity
  • Class of employer (cleaning services)

The employer started a laundry business serving customers in the hospitality industry in its local area. The business was initially run as a partnership. As business increased the employer incorporated and took on staff. It registered with the Board on May 5, 2017. The employer's business was incorrectly classified by the WSIB at the time of registration. The assessment rate in the group that they were classified in was substantially higher than the rate in the group that they should have been classified in. The employer made a formal request for reclassification of its rate group classification in September 2019. The Board granted the request but limited the retroactive effect of the classification to January 1, 2019. The employer appealed this decision to the Tribunal.

OPM Document No. 14-02-06 provides for retroactivity of premium adjustments to January 1 of the third year prior in most instances but may in some cases allow for adjustments to any year. However, in the case of classification changes the adjustment is limited to January 1 of the current year.
In the context of the retroactivity of classification changes, referring to Decision No. 724/16, the Vice-Chair noted that the policy itself contemplating a same year retroactivity limitation and the imposition of a same year requirement cannot therefore be regarded as unforeseen. There may be a class of such appeals however where exceptional circumstances have been found to exist when an error in classification occurs at the time of the initial registration.
The Vice-Chair provided the following non-exhaustive list of factors that were considered in prior Tribunal decisions in determining whether there were exceptional circumstances warranting an exception to the general policy on the retroactivity of classification changes:
The employer's voluntary registration of their start-up business;
A clear error in the classification assigned to the business due to a WSIB mistake or a lack of appropriate and accurate information being collected;
No change of business activity by the employer since the date of registration;
The employer's lack of professional representation by a lawyer or paralegal when dealing with the WSIB; and
Reasonably prompt action by the employer when it becomes aware of the incorrect classification.
In the present appeal the employer was small and unsophisticated at the time of its initial registration with the Board having just taken on its first employees, it was not represented by a lawyer or paralegal in its dealings with the Board but by a bookkeeper that it had hired to perform its accounting. In addition, a clear error in the employer's classification occurred. The error was one of considerable significance for the employer. The premiums charged to the employer would appear to have been significantly higher than would have been charged if the employer has been classified correctly. Furthermore, the employer also took action to deal with the classification issue once it became aware of the fact that it had been incorrectly classified.
The employer demonstrated that there were exceptional circumstances in this case. The date of the employer's initial registration fell within the retroactivity period for other types of other types of assessment changes, which would be January 1 of the third year prior to the change. It was therefore entitled to a correction of its classification dating back to its date of registration on May 5, 2017.
The employer's classification for assessment purposes within the Rate Group 975 and Classification Unit 9721-000 for Power Laundries and Dry Cleaners was effective as of May 5, 2017.
The appeal was allowed.