Workers Compensation Law in BC - Risks and Responsibilities when Engaging a Contractor

I. Contractor Status, Registration and Premiums, and Related Risks

In BC, the basic scheme underlying workers compensation law (WCL) is this: employers are obliged to register and pay premiums into an accident fund; workers are eligible for insurance benefits, paid out of the accident fund, if they suffer workplace-related injury, death or illness, and related lawsuits by workers against employers are generally statute-barred. When SFU engages a contractor to lead a workshop, carry out construction, or complete other paid work, the University, the contractor, and/or their personnel generally accept certain WCL-related risks and responsibilities.

“Employer” and “worker” are key terms under the Workers Compensation Act (Act), and are defined broadly and with complexity. Basically, if an SFU contractor has any employees or is incorporated, then it is generally an employer. If an SFU contractor is obliged as an employer to register with WorkSafeBC but does not, or if the contractor registers but fails to pay all premiums when due, then SFU could be held responsible for those unpaid premiums (and penalties) to the extent that they relate to work performed by the contractor for SFU.

In contrast to an “employer”, an “independent operator” is a proprietor or a partner in a partnership (i.e. unincorporated entity) who has an independent business, but neither employs nor is employed by another person or firm. Put another way, if a contractor is not a corporation, is not a “worker”, and has no employees of its own, then the person is likely an “independent operator”. Independent operators are not required to register under the Act, nor to pay premiums. However, independent operators may be eligible to purchase and maintain Personal Optional Protection (POP) coverage under the Act.

Other categories exist for contractors under WCL; multiple variables and special inclusions/exclusions add complexity. Procurement Officers are not responsible for interrogating a contractor and independently determining which WCL category best fits that contractor. Instead, Procurement Officers are responsible for obtaining a status certificate (often called a clearance certificate) from the contractor; the contractor, in turn, would obtain the status certificate from WorkSafeBC. Further responsibilities of Procurement Officers will depend on the status of the contractor (as set out on the status certificate) and by other factors, as outlined below.

II. Protecting Health and Safety of Workers, and Related Risks

SFU is responsible for the health and safety of its own workers and for other workers at a workplace where SFU’s work is carried out. Some basic SFU obligations include reporting accidents to WorkSafeBC, remedying workplace hazards, adopting safety policies and programs, and ensuring the health and safety of workers at a workplace where SFU’s work is performed. As employers, contractors are generally subject to these same broad obligations. Supervisors are responsible for ensuring the health and safety of workers under the direct supervision of the supervisor. If SFU or its contractor run offside of obligations under WCL, then fines and/or penalties totalling hundreds of thousands of dollars may be imposed by WorkSafeBC on the responsible party. Persons convicted for an offence under the Act can suffer fines and jail time, and court orders to pay up any monetary benefits received by the offender as a result of the offence.

If a contractor is an employer in default of its registration or premium obligations, and one of its workers suffers a mishap in relation to work performed for SFU, then WorkSafe BC may order either the contractor to pay compensation directly to the worker, and/or may order SFU to do so. This risk extends beyond unpaid premiums, to the costs of compensating the affected worker for lost income, medical expenses, other compensation, and any penalties assessed by WorkSafeBC. 

If a contractor is an independent operator without POP coverage, the person is outside the scope of the Act and its protection, and SFU bears no health or safety obligations in relation to that person under WCL (but a duty of care under negligence law may apply: to take the precautions that a reasonable person would take under the circumstances). If the uncovered independent operator suffers a mishap in relation to work performed for SFU, the person is not eligible for workers compensation and may sue SFU for damages. SFU’s general insurance coverage may or may not respond to the claim.

For example, if a consultant or lecturer is an independent operator without POP coverage, and if the person is injured in a slip-and-fall accident on SFU property (or even on their own property while performing work on an SFU project), then the person may not be entitled to insurance benefits under the Act, but may be free to sue SFU for negligence. From SFU’s perspective, it is generally required that an independent operator buy POP coverage under the Act; the person would become eligible for insurance benefits, and would forego their right to sue SFU in relation to work-related accidents.

A multiple-employer workplace raises additional concerns. If workers of two or more employers are working at the same time at a site, it is a multiple-employer workplace. A classic example is a construction project, led by a prime contractor engaging subcontractors. Under the Act, the “Prime Contractor” is responsible for ensuring that the activities of all the employers, workers and other persons at a multiple-employer workplace are safely coordinated, and for establishing a system or process to ensure compliance with the Act’s health and safety requirements on site. If SFU owns the workplace, and if SFU fails to explicitly impose the duty of “Prime Contractor” on one of its contractors through a written agreement, then SFU will be deemed to be the Prime Contractor; SFU would then be exposed to related health and safety responsibilities, and non-compliance risks.

III. WCL-related Responsibilities when Engaging a Contractor

While drafting the RFP or contract:

• The Procurement Officer should complete a basic risk assessment. In your file, write down any health and safety risks that may arise in relation to your purchase. Decide whether health and safety risks are significant. Consult Risk Management, if uncertain.
• If health and safety risks are significant, include a clause in the RFP and/or contract requiring the vendor to deliver a project safety plan to SFU. Once judged satisfactory by Risk Management, the safety plan would form part of the contract.
• If SFU is issuing an RFP to select a contractor, then the Procurement Officer should give consideration to whether a bidder’s premium non-payments, accident record, and/or safety plan is relevant to evaluations. If appropriate, ensure that the RFP includes appropriate language, so that SFU will be entitled to evaluate relevant WCL-related criteria. The bidder’s WCL status will generally be relevant to evaluations, because SFU should be entitled to reject a bidder who does not meet applicable WCL insurance requirements. However, with the approval of Risk Management, the RFP may be drafted to allow greater flexibility.

Prior to awarding or signing a contract with a vendor:

• The Procurement Officer must discover and document the status of the bidder or contractor (vendor), by obtaining a WorkSafeBC status certificate from the vendor.

If the vendor is an “employer” required to register:

• The status certificate must state that the vendor is registered with WorkSafeBC, and is in good standing (i.e. fully paid up on its WorkSafeBC insurance premiums). Until the date specified in the certificate, SFU can be assured that it will not be held responsible for unpaid premiums or compensation related to work performed by the contractor for SFU.
• If the status certificate does not state that the vendor is registered and in good standing:
  • Sole source: Request that the vendor remedy the situation, and provide a clean certificate to SFU, prior to signing the contract. If the vendor is unable or unwilling to do so, then select another vendor, or escalate to Risk Management for approval.
  • RFP: Follow the evaluation process set out in the applicable RFP.

If the vendor is an “independent operator”:

• The vendor is not obliged to register with WorkSafeBC, or to pay related premiums, under WCL. Nevertheless, SFU generally requires independent operators to obtain POP coverage through WorkSafeBC. If the vendor proves unable or unwilling to buy POP coverage:
  • Sole source: (i) Contact WorkSafeBC to determine whether SFU is entitled to cover the vendor under SFU’s own WorkSafeBC coverage, by paying an additional premium in relation to the work (perhaps seeking a credit for the premium from the contractor under the contract); (ii) select another vendor, or (iii) escalate to Risk Management for approval.
  • RFP: Follow the evaluation process set out in the applicable RFP.

or

Immediately after signing a contract with a contractor:

If the contractor is an employer, or an independent operator required by SFU to buy POP coverage:

• The Procurement Officer should register on-line with WorkSafeBC for clearance alerts in relation to the contractor. If the contractor’s status changes, then WorkSafeBC would automatically notify SFU, and SFU would be in a position to require the contractor to take appropriate remedial action.
• The Procurement Officer should diarize the expected date of final payment, so that the Procurement Officer is reminded to document the status of the contractor before final payment is made. See below for details.

After work is completed but before making final payment to the contractor:

If the contractor is an employer, or an independent operator required by SFU to buy POP coverage:

• The Procurement Officer should document the status of the contractor before making final payment, by obtaining an up-to-date WorkSafeBC status certificate from the contractor. If the contractor has fallen into default on its premiums, for example, then SFU would be in a position to hold back all or part of final payment, until the contractor has taken remedial action and provided a clean certificate.

CAUTION: This summary is intended to cover common situations and risks relating to WCL in BC; it is not a comprehensive summary of the Act, or related regulations, policies, directives or other documents, and it does not cover multi-jurisdictional issues. For more details, or if a situation arises in relation to a particular contractor which is not discussed in this summary, consult the WorkSafeBC website; contact WorkSafeBC for guidance (1-888-922-2768), and/or consult with SFULegal.

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