WCB urged to disburse extra funds to local employers

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This article was published 20/07/2023 (814 days ago), so information in it may no longer be current.

The Workers Compensation Board of Manitoba (WCB) exceeded its revenue target last year, and a national business lobby group wants the extra funds disbursed to local employers.

However, the WCB — which has distributed its excess funds over the past four years — is holding its purse strings tight amid economic uncertainty.

On Thursday, the Canadian Federation of Independent Business released a report highlighting workers compensation boards who they believe owe businesses money. Manitoba made the list, as did British Columbia, Prince Edward Island, Yukon and New Brunswick.

“Getting excess WCB money back to small businesses would be a huge help at this time,” said Brianna Solberg, the CFIB’s director of legislative affairs for the Prairies and Northern Canada.

Manitoba’s WCB sets a revenue target to cover its operating costs plus 30 per cent for unforeseen circumstances — so overall, a funding target of 130 per cent each year.

Its 2022 annual report shows the board’s funding level hit 145.2 per cent.

“Essentially, the source of funding for boards comes directly from employer-paid premiums, so it’s only fair that if overfunded, the boards give that money back to employers,” Solberg said.

Last year, more than 39,000 businesses registered for WCB coverage. In return for payment, the WCB covers costs of staff who fall ill or are injured due to their jobs.

The WCB has exceeded its funding target in past years, but it’s always returned excess funds to businesses using its services, Solberg said. In 2022, the organization distributed $95 million.

This year is different: the organization won’t be offering rebates.

The CFIB’s new report estimates the average Manitoba employer with one employee could get a WCB rebate of $383, should the organization disburse its funds. The total rebate potential could be $190 million in Manitoba, according to the CFIB.

The non-profit seeks Manitoba legislation to mandate rebates when the WCB surpasses target revenues. Ontario passed such legislation in 2021.

“In the absence of that legislation, we end up in the situation we’re seeing now with Manitoba holding on to its surplus funds,” Solberg said.

The WCB in Manitoba has a policy to refund surpluses, but it’s not mandatory and is up to the board’s discretion.

A government spokesperson did not answer whether Manitoba would create such legislation. Instead, they directed a reporter to the WCB, adding “they make annual determinations regarding any surplus funds.”

The WCB’s funded position last year was $604 million, a substantial drop from the $709.8 million of 2021. Premium revenue makes up the bulk of funding: last year, it accounted for $255 million of revenues, $24 million above the WCB’s budget.

However, also last year, the WCB saw a major plunge in investment income, posting $70.4 million in the red. The year prior, it had investment income of $165.3 million.

The organization’s annual report cites global economic forces like Russia’s war in Ukraine, interest rate hikes and inflation as reasons investments fell, not only for the WCB, but for the North American stock market.

The WCB also saw negative returns during the 2008 global financial crisis, Sarah Wallace, the WCB’s communications director, wrote in a statement.

“Due to our long-term financial projections and an uncertain economic outlook, we have decided not to distribute surplus funds back to employers in 2023,” Wallace wrote. “We believe that exercising caution in the current circumstances is essential.”

Market performance wasn’t the sole factor leading to the decision, Wallace added. She did not answer what specifically the excess money will be used for but noted the WCB keeps a reserve fund to protect both employers and workers.

The WCB’S board evaluates its funded position and long-term projections, leading to an annual decision on fund distribution.

The CFIB maintains Manitoba businesses should be getting rebates.

“(It) can be a big difference for a business owner,” Solberg said. “In terms of a grossly overfunded board, (the money is) like a dip in the pond.”

Nearly half of small Manitoba businesses carry pandemic-related debt, the CFIB found. The average business holds $60,000 of debt. Most CFIB Manitoba members — 67 per cent — have less than 10 employees.

Since 2018, a typical small business in Manitoba has seen a 17 per cent jump in overall payroll costs — including wages, payroll taxes, WCB payments and pension plans, Solberg wrote in an email.

The average company paid 95 cents per $100 of assessable payroll for their WCB assessment rate last year.

The Winnipeg Chamber of Commerce generally supports rebates when funds exceed the WCB’s established target, said Loren Remillard, the chamber’s president. In this situation, the WCB should provide businesses a reason for the lack of rebates, he added.

“Let’s ensure that our approach is more than just trying to find pockets of money,” Remillard said. “We really need a more comprehensive, robust approach to how we’re helping our local businesses during these challenging times.”

Some businesses are taking out new loans to pay back federal government issued Canada Emergency Business Account loans before the December 2023 deadline, Remillard noted.

“We’ve just come through the pandemic, there’s a lot of hurt in the community, we’re dealing with significant debt loads,” Remillard said. “(We need) a comprehensive approach to ensuring that we don’t see mass bankruptcies.”

gabrielle.piche@winnipegfreepress.com