Maintaining the Imbalance in the Workers Compensation System
The BC Workers Compensation Act (Act) was designed to protect injured workers by maintaining a balance between worker and employer interests. Workers receive fair and equitable compensation and medical benefits funded by employer assessments, in exchange for employers receiving protection from lawsuits for workplace injuries. Maintaining this balance of interests is integral to the long-term viability of the workers compensation system.
For years the workers compensation system has been out of balance and injured workers have been shortchanged by a compensation system meant to protect them. Assessed in this context, the government’s most recent amendment to the Workers’ Compensation Act, Bill 41 must be seen for what it is – one step forward and two steps back.
Background: The Compensation System before Bill 41
The 1999 Royal Commission Report: For the Common Good concluded:
…the Workers Compensation Board of British Columbia has failed in its mandate to administer fair and equitable benefits to all injured workers, often those most in need of assistance1.
Despite this conclusion, there was no substantial action on the Royal Commission’s 222 recommendations to restore a balance in injured workers benefits before the new Liberal government came to power in 2001.
Instead, in 2002 the new government introduced significant changes to the Act that resulted in further significant reductions in injured workers benefits. A 2011 report by the independent Institute for Work & Health (IW&H) documented a further 15% average reduction in injured workers benefits as a result of the 2002 changes to the Act. The IW&H research documented the greatest negative impact was on older injured workers and workers with permanent disabilities.
Since the NDP formed Government in 2017, Labour Minister Bains has commissioned five different reports2 to address the imbalance in the Act with the expressed goal of restoring fair and equitable benefits to injured workers. The 2019 New Directions Report by Janet Patterson was the most comprehensive review and recommended 38 specific amendments to the Act.
Between May 2018 and May 2022, the Government made a limited number of amendments to the Act based primarily on the Boygo, Helps and Parr Reports. In April 2021 the BC Federation of Labour provided the Minister with a detailed list of 26 priority changes to the Act3 arising out of Patterson’s 2019 New Directions Report and the Minister acknowledged that “…we have much more to do.”
The Ministry’s response to these extensive reports and a wide range of recommendations, Bill 41, passed the legislature in November, 2022.
Bill 41: What was gained and what was lost?
Bill 41 implements one key recommendation well. It provides that certain accident employers4 have a “duty to accommodate” the continued employment of their injured workers. This duty to accommodate is a long overdue protection, since BC was the only jurisdiction in Canada that did not have this protection until now.
However, the Bill minimally addresses a few other identified recommendations and ignores many more. Some of Bill 41 provisions may well have potentially negative consequences for injured workers. On the basis of information available as of February 1, 2023, my assessment of Bill 41’s key provisions follows below.
A Fair Practices Commissioner – but No Commission.
The Patterson Report recommended the establishment of an independent Fair Practices Commission, with a mandate to ensure Board accountability and to restore integrity and fairness to all aspects of the Board’s decision-making.5
Bill 41 amends sections 356 and 357 of the Act to provide for the appointment of a Fair Practices Commissioner. The amendments do not establish an independent Fair Practices Commission nor do they provide the Commissioner with the authority to hold the Board accountable for fairness on individual and systemic issues. Rather, the amendments explicitly prohibit the Fair Practices Commissioner from commenting on or making recommendations on “…the setting or revision of a policy of the Board…” or on the “merits of a Board decision.” In effect, Bill 41 simply replaces the current (and according to some an ineffective) internal fair practices officer position with a “Commissioner” with similar powers and no Commission, leaving significant problems in the B.C. Compensation system unaddressed.
More Access to the Independent Health Professional (IHP) process – but No Medical Services Office:
The Patterson Report also recommended the establishment of an independent Medical Services Office, to ensure that independent medical evidence was easily available on a timely basis and that medical disputes could be quickly and fairly resolved throughout the life of the worker’s claim.6
Bill 41 amends Section 302 of the Act to expand the access of workers and employers to WCAT’s current IHP process, but only at the often-delayed final level of appeal. This minimalist response supports the current reliance on protracted appeals to resolve disputes and denies the worker the therapeutic benefit of an early resolution when the medical issues first arise.
Consumer Price Indexing (COI): Restored – but No Retroactive Correction
In 2002, the Act was amended to impose a 1% reduction in the annual COI increases on workers’ pensions. This deduction has systematically eroded the value of injured workers’ pensions over the last 20 years and helped keep employer assessments lower over that same time period. Injured workers loss was directly a gain for employers.
Bill 41 removes this 1% COI reduction, following the recommendations of both the Boygo and Parr Reports. The removal of the 1% reduction is a positive improvement for all injured workers going forward. However, the amendment does not restore the 18-20% loss of purchasing power that permanently disabled workers have lost in their pension between 2002 and 2023 when the reduction was in place.
There was a proposal in the Boygo Report, to “bring all pensions up to date with a one-time CPI adjustment” to restore the lost purchasing power of permanently disabled workers going forward. Boygo indicated that this would cost approximately $700 million over time. The Minister decided not to include this option in Bill 41 or otherwise correct this historic erosion of workers pensions.
Added Protection against Employer Claim Suppression – Sort of…
Section 73 of the Act has historically prohibited an employer from any activity that would interfere with a worker reporting a work “injury” to the Board. Bill 41 “adds” to that established protection by also prohibiting an employer from interfering with a worker “making an application” to the Board for a work injury. Since workers generally report an injury to the Board by making an application for that injury, the additional prohibition from making an application adds little to the current prohibition for reporting an injury. In my view it is a distinction without much of a difference.
However, this amendment to section 73 does resolve an administrative/ interpretive dispute between WCAT and the Board’s administration regarding the scope of protection against retaliation by an employer under section 48 of the Act7 for a worker making a “bare” application for compensation that does not also raise a health and safety issue.
Bill 41 it does not address the larger and more critical issue of well documented claims suppression in the B.C. compensation system, as identified in the reports.
In 2020 the Institute for Work & Health (IWH) provided the Board with independent and detailed research8 documenting extensive underreporting of time-loss injuries estimated at over 40,000 unreported disabling injuries in 2019 alone. In 2022, I issued an addendum9 to my initial report – “Restoring the Balance” commissioned by the WCB Board of Directors in consultation with the Minister of Labour. In this addendum, I detailed how the Board’s system of calculating employer assessments through “experience rating” provides an incentive for some employers to control claim costs through suppression of claims in violation of section 73 of the Act and at the expense of employers who do not engage on illegal claim suppression activities. I also documented the lack of effective enforcement of the prohibition against claim suppression in section 73 of the Act.
In both reports, I provided the Board and the Minister with a series of recommendations to reverse the increasing trend of claim suppression activities by employers. Bill 41 did not implement these recommendations or otherwise address B.C.’s significant claim suppression problem in any substantive way.
A New Duty for Workers to Cooperate with Employer’s Modified Duties
Bill 41 creates a new provision – s. 154.2 in the Act – which requires workers and employers to cooperate with each other and with the Board in identifying modified work duties for injured workers after an injury. This “recovery at work” practice is intended to facilitate/encourage an injured worker to continue to work in modified duties while still recovering from an injury. On first reading, the amendment appears to be a step forward.
However, a careful reading shows that this amendment leaves the entire issue of “work after injury” unregulated and renders injured workers highly vulnerable in the workplace. The provision states that the injured worker’s participation in identifying any proposed modified duties is at the discretion/invitation of the employer. There is no requirement that medical evidence be involved to ensure the duties will not delay the worker’s recovery or worsen the injury. There is only the duty for the worker to “cooperate” with the employer.
According to this provision, the Board will only become directly involved if the worker (or the employer) files a dispute with the Board regarding the recovery at work job. The new provision then gives the Board 60 days or longer to make a determination and makes no provision for the continuation of wage-loss benefits while the Board’s investigation is carried out. In other words, workers have no agency in identifying safe and productive modified duties and must forgo wage loss for up to 60 days if they dispute the employer’s decision, even if they are supported by their doctor. This approach is directly contrary to the recommended collaborative approach and early Board intervention, now considered “best practices” in most compensation systems.
In my view the “Duty to Cooperate” is a big step back for injured workers, from the current modified duties process which provides for early Board intervention where a dispute arises. In addition, this provision will likely contribute to the current high level of illegal claim suppression.
The Compensation Accident Fund: Financing Bill 41
During the legislative debate on Bill 41 the Minister advised that the amendments in Bill 41 will cost less than $0.07 per $100 of payroll in future employer assessments (approximately $84 million).10 This $84 million for Bill 41 would presumably be covered from the $2.69 billion investment income from the accident fund investments in 2021 The Minister also advised that employer assessments for 2023 would be frozen at an average rate of $1.55 per $100 of payroll from the actual projected rate of $1.76. This $0.21 per $100 of payroll reduction subsidizes employer assessments by $250 million, a deficit presumably to be covered by the $2.69 billion investment income.
It is worth noting that the income from employer assessments (premiums) in 2021 totaled $1.858 billion and the claim costs for 2021 totaled $3.2 billion, leaving a “shortfall” of $1.34 billion in employer assessment income which presumably will also be covered by the $2.69 billion investment income from the accident fund. On the basis of these figures from page 70 of the Board’s 2021 Annual Report, the investment income provides approximately a $1.54 Billion subsidy to employers’ contribution to the accident fund.
Since assessments are frozen, the $85 million in additional costs from Bill 41 would likely be drawn from the accident fund investment income. The combination of the $85 million toward improved worker benefits from Bill 41and the $1.59 billion support to employer’s financial obligations under the Act would draw approximately $1.675 billion from the investment income and leave a balance from the $2.69 billion investment income of approximately $1.015 billion.
It is tempting to consider what additional improvements in workers’ benefits could be achieved with this approximately $1 billion in the investment income fund. At a minimum the option of restoring the purchasing power in the pensions of permanently disabled workers would certainly be a good place to start.
On the basis of the data from the Board’s 2021 annual it appears that injured workers will receive approximately 5% ($85 million) of the $1.675 billion allocated from the accident fund investment income and employers will receive approximately 95% ($1.59 billion) from the investment income. It is apparent from this analysis that employers will receive the lion’s share of the allocations from the investment income. It is exceedingly difficult to see how this disproportionate allocation of available funds to employers will restore the current imbalance in the workers compensation system. If anything, Bill 41 will increase that imbalance. The 5% solution for injured workers falls far short of the promise to restore the balance between worker and employer interests in the compensation system.
During debates on Bill 41 the house leader for the Green Party, MLA Adam Olsen, observed that it is important to look at not only what is included in Bill 41, it is also important to look at what is not included. It is more than apparent that much more was not included in Bill 41 than was included. And what was included was at best only partial implementations of key recommendations in the Patterson Report.
Given the current government’s stated goal of restoring the balance in the workers compensation system between employers and workers, the amendments in Bill 41 take one step forward and two steps back. Considering the 1999 Royal Commission’s conclusion that the Workers Compensation Board had failed to administer fair and equitable benefits to injured workers, the former government’s actions in 2002 to further erode those benefits, and the current government’s actions in Bill 41 to maintain the imbalance in favour of employers begs the question: has the workers compensation system now transitioned to the employers’ compensation system?
February 1, 2023
- For the Common Good: Royal Commission on Workers Compensation in British Columbia, 1999. ↩︎
- Online links to the Patterson, Bogyo, Parr, Helps and Petrie reports can be found at: BC Labour Ministry Reports. ↩︎
- Workers Deserve Better, April 2021. ↩︎
- Applies to employers who regularly employ 20 or more workers and to workers who have been employed on a part- or full-time basis for 12 or more months. ↩︎
- New Directions, recommendations #66-70. ↩︎
- New Directions, recommendation #71. ↩︎
- See New Directions Report Recommendation #42 pp.141-42. ↩︎
- “Estimates of the Nature and extent of Claim Suppression in British Columbia’s Workers Compensation System“; Dec. 2020. The research was supported by funds from the BC WCB Research Program. ↩︎
- Claim Suppression: The Elephant in the Workplace, March 2022. Also see “Unreported Job Injuries: “The Elephant in the Workplace”, The Tyee, June 14, 2022, Andrew MacLeod. ↩︎
- Using the figures from the 2021 Annual report (p.70) a $0.01 increase in the assessment rate would equal $11.99 million, and $1.55 per $100 of payroll would equal $1.858 billion in assessment income. Using the $0.07 cost estimate for the amendments in Bill 41, the amendments would cost approximately $85 million. ↩︎