Required Construction Documents Part 2: WSIB Clearance Certificate by Steven Silva

As stated in my previous blog Required Construction Documents Part 1 , before I allow any contractor to work for me on a construction project here in Ontario, I require 3 documents to be provided IN ADVANCE: 1- Registration of Constructors (MOL Form 1000), 2-Copy of a Workplace Safety and Insurance Board (WSIB) Clearance Certificate, 3-Copy of the contractors Health and Safety Policy.  I have allowed work to start without contracts, quotes/estimates, and even without references BUT the first three MUST be provided.  As I tended to work with smaller contractors, except for the WSIB clearance certificate, they might not know what the other two were but almost all know what a WSIB clearance certificate is (even if they didn’t have one themselves).  Contractors are often surprised when I ask for a WSIB clearance certificate up front.  These three blogs introduce and discuss these three documents and why I think each one is so important.

What is a Workplace Safety and Insurance Board (WSIB) Clearance Certificate?

From the WSIB website: “A clearance certificate is a document issued free of charge by the WSIB. It assures you that a business, contractor or subcontractor: is registered with the WSIB, and has an account in good standing. More importantly, it clears you of financial liability and ensures you won’t be held responsible for someone else’s WSIB payments. If the business you hire is not registered or not making its payments to the WSIB, you could be liable for insurance premiums owing in connection with the work or service being performed on your behalf.” (www.wsib.on.ca/wsib/wsibsite.nsf/Public/Clearance Certificates, Jan 2010)”. In other words a clearance Certificate is your legal protection against being sued and be liable for payments not made by a Sub-Contractor.

In Ontario every worker is protected by WSIB. They provide a no-fault insurance policy for workers. What many people do not realize is that the worker gives up the right to sue the owner, company they work for or any other party when they are covered by the WSIB. So, as an owner of a construction project, if an accident were to occur on my site and the person was not covered under WSIB then I could be sued.

If I own a company that pays WSIB on my worker and I do not pay myself as an employee, I am not covered by WSIB and I cannot sue the General Contractor / Builder / Owner. If I own a company, which has no employees, and get aletter of exemption from WSIB (so I don’t need to pay but can legally work for a Constructor) then, if I get hurt on the job site, I am NOT covered under WSIB but  I CAN sue the Owner, General Contractor, and Other Contractors on site UNLESS the one who hired me remits the WSIB premiums. Generally, I will not hire any contractors who are WSIB exempt. I do not want the liability. I will only hire them if they obtain the Voluntary Optional Insurance that WSIB provides.

Occasionally, I will hire a contractor who does not yet have WSIB coverage. In order to protect myself, I could contact WSIB and find out the rate the contractor should be paying. I would then withhold that amount from the trade and submit it to the Compensation Board. This protects me from being sued and allows me to close my books. NOTE: If I were to pay a contractor in full that has not given my a copy of his Clearance Certificate and be audited by the WSIB, I would be responsible for  the compensation payments after paying some fines.

In conclusion, before I hire a contractor I want a WSIB Clearance Certificate. ANY clearance Certificate (whether it is current or not) to confirm that they are registered with the WSIB. I also check that the account number and rate is the same as on their Form 1000. Then PRIOR to EVERY payment made, I would confirm that I had a copy of an UP TO DATE clearance certificate. IF NOT, I HOLD BACK A STANDARD 10% ABOVE AND BEYOND THE 10% lien hold back (I do not pay out any more than 80% of an invoice without the clearance certificate) In this way, I can release some money, but I am still protected.

(Next Part 3:Health and Safety Policy) Or (Can I Hire a Contractor Without WSIB)