Alec Caldwell
Mandatory WSIB in Ontario: more fuel for the underground economy
Canadian Contractor Loss MarketMore and more contractors I talk to are planning to work for cash, or to set up barter systems, or find other methods of avoiding punitive government fees and taxes. The WSIB money grab in Ontario is possibly the last straw for many formerly law-abiding, legit contractors.
The feedback we are receiving right now from home renovators on this new mandatory WSIB in Ontario says that it will be like rocket fuel to the underground market.
One anonymous contractor (not a member of CARAHS) recently told me that he is part of a network of other self-employed contractors who are planning to use a lot more cash when they are working together. And they are going to increase their barter system. All to circumvent added WSIB expenses.
Another contractor told me that he asked two of his best sub-trades in electrical and plumbing to now register for WSIB. They both refused. So what does he do? They say they will not accept any holdbacks of WSIB premiums from their jobs. Does this mean the contractors will now have to pay the WSIB himself and take the loss or try to factor this into his pricing? How will increasing his pricing help him in today’s market, especially in a tight economy?
Many of you reading this will say that he needs to find other contractors to work with. But how easy is it to find reliable people or give up on relationships you’ve taken years to cultivate?
As I said in my last column about Working for Cash, in my opinion homeowners are the main driving force behind the cash economy. We got a lot of response to this. Some agreed that homeowners are to blame. Some said it was the government’s original mistake that caused the problem. Others said that, regardless of who is to blame, it puts a blemish on any industry when businesses are willing to play along with illegal tax avoidance.
But in the end, I believe that people will always find excuses to circumvent laws – or taxes – that they see as unjust and unfair.
Email alec@carahs.org or call toll free 1-866-366-2930
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How disappointing! Here’s another perspective, and for my money what we really ought to be angry about. Why is a one man shop or self employed person any less deserving to claim WSIB than one of his/her employee’s? Why doesn’t WSIB treat us like customers? WE ARE!! It’s like dealing with The Ontario Labour Relations Board!!. Why is their unfunded liability so out of line with the other provinces? Is WSIB really just the governments way of downloading healthcare costs onto small businesses? I have been paying WSIB and EHT for a long time now. I’m mad that many of my competitors don’t have the same financial burdens.
To the guy you quoted “Your sub trades refused”??? So you just throw your hands up and resort to cash?? This is childish and this person is part of the problem. We would all pay less if everybody paid. Also, if we let anyone start a business and not pay WSIB, EHT, HST etc we are really sending them down the wrong path. I don’t like red tape any more than the next guy, but lets be honest…this is a tiny burden of time. If you don’t feel that way maybe you shouldn’t be in business. Also, as an Electrician our industry rate is 3.32%….glad I don’t have to share the pain with some other more costly trades. We should all want a level playing field and HST off our labour or significantly reduced then this problem would fix itself. By the way…I just renewed my ESA/ECRA license and they required proof of WSIB. It is quite likely that CoT will also do the same with each trade too.
The contractors who try and circumvent the system are not going to make it very far, cash/barter contractors cannot qualify for any larger projects, bonding, etc. And they also seem to forget, your always looking over your shoulder trying to cover your tracks.
The system will never be perfect, but more then ever now all government departments are exchanging information, WSIB talks to HST who talks to CRA tax who talks to who ever…I hope they do a lot of covering because its a vicious circle and one slip up…your done.
The consumer who thinks they are saving by paying cash is happy…until something goes wrong, what recourse do they have? If a guys willing to forgo WSIB then chances are he doesn’t have liability insurance and good chance he really doesn’t own or have anything…so the consumer can only blame themselves.
Do I like all these rules and regulations? No, however, this is what must be do and if you follow the rules and everyone plays the same game we get as close to a fair system as possible. By the way my rate is 9.1% with no claims
Chris:
Mostly, you are right. But with the spread between what the cash contractor charges and what consumers pay for a legit contractor opening wider and wider, more consumers are willing to take the risk. And something that isn’t often mentioned: It is not illegal for a homeowner to hirer a “cash” contractor. They are under no obligation to find out of the contractor doing their work for next to nothing is paying their taxes or anyting else. The only danger is if someone gets hurt. And how often does that happen? The reality is, when a cash contractor gets hurt on a job, the simply go away because they don’t want to be found out. If it was happening often, it would be all over the media. When was the last time you read a story about a homeowner getting sued by a cash contractor that got hurt working on their home. Like, never, maybe?
The consumer who pays cash but plays innocent is as guilty as the contractor who accepts cash without providing a contract or receipt…both are doing the cash for the same reason.
Lawsuits for injury are not common since our government picks up the tab regardless of WSIB or not. Our media does not advertise minor/moderate injuries. We are not the USA. We are not lawsuit crazy people.
De-regulating WSIB I believe is a mistake, I lived in and owned a US company for 5 years, my rates were as high as 21% again with no claims, the US is private based workers compensation. As much as I do not like the government being my silent partner some things they manage to control costs on and regulate, mind you when there is a shortfall or they loose money they don’t go bankrupt and close up shop they just collect it other ways.
I guess at the end of the day the province requires so many billions of dollars to cover its overhead, they have/are devising a system to try and keep it as fair and equal as possible, when someone plays with their system and there is a shortfall big brother must make up somewhere for it, as people complain about where or how it is raised big brother will implement new systems and cross checks to justify what they are doing, it’s one big vicious circle, and the bigger it gets the more it costs to operate…and it all leads back to someone somewhere trying to pay cash and beat the man.
Please note that Bill 119 – Mandatory Coverage for Construction does not apply to construction trades that work solely with homeowners. Most of the discussions above do not apply to the WSIB’s changes. True, a test of a contractor’s integrity is whether he has insurance – WSIB or private. Most importantly, will the contractor guarantee his work?
If you read the Tony Dean Report, it is his recommendation that Ontario implements a system whereby employers only hire subs that have been approved by the government as having an approved H&S program. Its in our future. Is H&S that much of a pain that we “throw our hands in the air” and cry wolf? Is the well-being of workers in Ontario being decided by the almighty dollar rather than doing the right thing. Can’t we all just get along safely?
And if this doesn’t work, we can hand over workplace insurance to profit-oriented insurance companies. I would love to see what the rates would be.
i see 3 percent of the trades in the home depot wearing proper boots, im not paying into a system that allows someone to call themselves a trade because they bought a skillsaw and a level. There are very few people in the residential side of this industry that have more than about 5 min safety training, i get laughed at for not going up 3 sections of scaffold without a harness.(they taunt me haha look at the union guy, wants a hawnes, awww.) There is no safety practices in place. not to compare apples with oranges but.. I have never been payed a dime of OT since i started at 16. how much tax did the govt loose on that, a ton of 14 hour days for straight time, WTF really? so i go out on my own and now have to deal with this SCAM .you want revenue, its out there. how about policing some of the old laws instead of coming up with new ones. cash jobs here we come.
just thought of this, make sure to show on the receipts you hand to clients a separate line on the invoices for wsib, this way they can see where the money is going. do not bury this in the price, show it for what it is!
Has anyone stop to ask “where does WSIB get it’s power from” and who do they have power over? If you look into the actual law you will find that “persons” are fititious, they are made up, pretend. Look it up under blacks law, or the police act.
The only power they have over anyone are those who volinter it. And if you exceriser your right not to be reconized as a “person” before the law. Then they have no power over you. THERE IS ONLY US PEOPLE HERE ON EARTH AND WE MAKE UP THE RULES. WHY SHOULD ANYONE HAVE POWER OVER ANOTHER. ARE WE NOT ALL CREATED EQUAL!
I hear all the time that cash carpenters don’t have insurance. a lot of us have private insurance , mainly because wsib was to expensive to have for ourselves. covering employes ,no choice in that, a lot are paid by cheque and claim it.I would like to know how anybody knows for sure who is getting paid cash ,or are you just pissed at your competition and hope to discredit them at any cost. THAT WOULD SUCK . How does the government real knows who is taking cash only and who isn’t . And how would anybody really know unless you went door to door , and who would tell the truth nobody ,because you wouldn’t believe them if they told the truth,unless its what you want to here. the little guys are a small problem wsib is the real problem , take a look at there ceo pay cheques and a lot of other top govt. employees and bitch at them. the little people are a drop in the bucket compared to there pay checks. all of the regular class people are easy to step on and squeeze into the dirt so wsib can squander more of our hard earned money . I don’t imagine they would go to work in freezing temperatures or in severe fly time , not a chance in hell.