No. There is currently no voluntary disclosure provision for dealing with the Workers’ Compensation Board. The Board and its Advocate for Business indicate that employers must wait for a penalty notice before any action can be taken to remedy a potential error. This notice might come within a few months, never or in as many as 10 years (if not more). Fortunately, the Board’s main goal with the penalty system is to ensure employer compliance with Section 50, which mandates workers compensation insurance coverage for all employees. Thus, once a penalty notice has been issued, we can start negotiating an eventual compromise in furtherance of a settlement. In the interim, there are specific actions an employer can take to show that remedial action was taken immediately upon determining an error or violation of the law. For example:
1. An uninsured employer can obtain workers compensation insurance. If no workers’ compensation claim is filed against the employer during the periods of no insurance, and if the employer has never failed to insure its employees in the past, the penalty might be negotiated to a more affordable, yet still memorable amount. In the event the employer had coverage and mistakenly let it lapse, an explanation for the lapse will be required. Explanations might include:
a) The insurance carrier improperly cancelled coverage.
b) The insurance carrier failed to properly service the required Notice of Cancellation.
c) The business with a long history of compliance only failed to maintain its policy during the period in which it was winding down the business and had a limited presence at the business address.
2. An underinsured employer can request an audit from its insurance carrier and pay any back premiums due. Again, as long as there are no pending claims against the employer for work-related injuries during the period(s) in question and if the employer can show due diligence in correcting errors, a nominal penalty payment will often satisfy the Board.
3. An employer’s counsel can gather information regarding the reasons for no insurance or underinsurance. Often the offending employers reasonably relied upon their accountants’ advice and that their accountants were misinformed on worker classification criteria regarding workers’ compensation and unemployment insurance. At other times, the employers might successfully challenge recategorization of workers where the resulting premium adjustments were unduly expensive. You will basically want to prepare an argument that shows:
a) The employer did what a reasonable employer of comparable size and structure would do in the industry where it operates (although being mindful that the “everybody else does it” argument is about effective with the Board as it was with your parents).
b) As soon as an error was discovered, actions were taken to ensure the employer’s workers were covered for their work-related injuries.
NOTE: This post is a general overview of the defenses to workers compensation (“WC”) penalties for failure to secure WC insurance. It is not legal advice, and there is certainly no guarantee that any of the actions detailed above will generate a similar or specific result. Past success is never a guarantee of a future outcome. If you require information or advice applied to your unique situation, please contact an attorney.