The situation has hardly improved in a year, starving businesses of much needed funds
Canada’s small businesses could use billions of dollars right now, but their wait for money due from workers compensation boards continues, says the Canadian Federation of Independent Business.
The body that provides a voice for small and medium businesses across the country says that six WCBs are holding on to $4.9 billion in funds above their desired funding target that should be returned to businesses. It’s urging the boards to adopt practices of some of their peers.
The CFIB says that while nine out of 12 boards have rebate policies that return excess funds to employers, five of the six that are overfunded are the same as last year.
The CFIB’s research snapshot reveals that WCBs in British Columbia, Manitoba, Ontario, New Brunswick, Prince Edward Island, and the Yukon are overfunded, with Manitoba's board the most overfunded at 160% when its own funding target is 130%.
"Little has changed since our report last year, and the same five boards – with a new addition of Ontario – are sitting on huge surpluses they don't need while small businesses struggle with lower consumer demand and rising costs on all levels. These surplus funds would allow business owners to pay down their debt, offset the elevated costs of doing business, invest in their employees through health and safety and other measures, and grow their business," said Marvin Cruz, CFIB's director of research. "Overfunded boards are in a strong financial position to issue rebates to small businesses without coming close to affecting worker payouts."
The average rebate to businesses is estimated at $1,745 for a firm with five employees in Ontario and $5,360 for the same size business in New Brunswick.
Mandatory rebates
Ontario is currently the only province with a mandatory rebate policy when WCBs are above 125% funded and in April 2022, its Workplace Safety and Insurance Board distributed $1.2 billion in surplus funds to almost 300,000 eligible Ontario businesses.
"CFIB encourages all provinces to follow Ontario's lead and make the return of WCB surplus funds law," said Julie Kwiecinski, CFIB's director of provincial affairs for Ontario. "We also urge all governments that have boards with surpluses over their funding targets to issue employer rebates now, and regularly in the future."
The CFIB is calling for governments to:
- Return surplus funds to employers or lower employer premiums where the funding ratio exceeds the board's funding target, with a stronger preference for a rebate to eligible employers.
- Legislate the return of WCB surplus funds to eligible employers.
- Implement mandatory distribution policies, so surplus funds are returned on a regular basis.
- Enhance WCB transparency and accessibility by setting dates to publicly release board funding levels.
"Most employers say that workers' compensation premiums are one of the most harmful taxes to their business, because as a payroll tax, they're profit insensitive," said Kwiecinski. "WCBs are directly funded by employers, so we're just asking governments to return surplus money that belongs to businesses that pay into WCBs."
