The devil is in the details. This is our corporate solicitor’s favourite expression and he uses it ad nauseam. We have nicknamed him ‘the deal-breaker’ because if there is even the remotest whiff of the possibility of risk with a transaction or business venture, Mr. Deal-breaker will unearth it, shine it up with spit and polish and present it to us enthusiastically, beaming like an 8 year-old on Christmas morning.
His over-fastidiousness used to really irk me, until I slowly came to realize that, in point of fact, he’s actually right. The devil really is in the details. That is to say that, in business (and in life in general, for that matter), it’s more important to pay close attention to the minutia than it is to the large obstacles and opportunities that confront us.
You see, the obvious problems and issues that we have to face are, well, obvious. You see them coming and have time to strategize, adapt and react. On the other hand, those seemingly insignificant but really important elements are, like West Nile infected mosquitos, the ones that you actually need to watch and plan for precisely because their potential importance is not so readily apparent.
I believe that the soon-to-be-implemented WSIB (Workplace Safety and Insurance Board) Bill 119 will be the infected bug bite to our industry.This policy comes into effect on January 1, 2013 and will have serious implications. The trouble is that most companies aren’t paying sufficient attention to the details and that’s precisely where the devil is lurking.
As we all know, most of the installation work in our industry is performed by contractors. Some work for window manufacturers who retain their services as sub-contractors and others for renovation companies or dealers who employ them in a similar fashion.
Many of these sub-contractors or ‘installers’ maintain the legally required WSIB coverage. They have active WSIB accounts and pay premiums (which are expensive, generally in the 10% of payroll range) to insure their employees in the event that they get injured while working on a job site. The principal (owner) of the installation company may exempt himself from coverage, but his employees must be insured by law.
Other installers, conversely, have applied for and been granted Independent Operator status by the WSIB. This means that they have advised the Board that they do not employ any workers and wish to decline coverage for themselves personally. If they get injured on a job site, they cannot legally apply for WSIB coverage but, at the same time, they don’t have to pay any premiums.
Bill 119 will change all of that. It says two things:
- That the owners or partners of a window and door installation company that previously exempted themselves (but covered their employees) can no longer do so. They now need to start insuring themselves personally as well, unless they don’t do any physical work on a job site.
- That Independent Operators must now also insure themselves. That is, their exemptions will be taken away effective January 1, 2013.
Again, bear in mind that WSIB premiums are approximately 10% of the payroll amount for both the employee and now, under the new bill, for employers and independent operators. This is not chump change to a small business and certainly not small potatoes in new revenue for the WSIB.
What will happen in the marketplace is interesting. The net effect will be higher prices to consumers, since companies will have to increase their selling prices to account for the additional overhead. As well, I believe that Bill119 will be helpful in beginning to level the playing field, since some companies were able to get Independent Operator Status for their installers while others were not. Going forward, all installers in our industry will be required to have WSIB accounts and pay premiums to insure their workers and, in most cases, themselves. A fair and across-the-board policy that has everyone playing by the same rules is always a good thing. However, there are a couple of problems.
Firstly, there is a tiny loophole. Contractors that work alone (do not have any employees), performonly home renovation work (don’t do commercial or industrial-type work) and work only in a variety of private residences are exempt. So the small, independent contractor that does renovations and repairs for different homeowners all of the time is not required to pay premiums to the WSIB.
To me, this is unfair. Many of these contractors already fly under the radar by doing little cash jobs which they don’t charge and remit sales and income tax on. They already have an advantage over larger companies who collect and remit all of the requisite taxes and properly insure all of their employees. The new WSIB legislation is a giant step in the right direction, but falls short of making the rules equitable for everyone in the market.
Secondly, as mentioned at the outset of this article, many companies in our industry have not taken the time to think about and digest what these changes will mean to them and the costs for non-compliance are massive. Hiring a subcontractor without a clearance certificate in 2013 could mean a penalty of up to $25,000 for an individual and $100,000 for a company. Both the principal and the sub-contractor can be fined.The WSIB is in dire need of new revenue and you had better believe that fines will be aggressively assessed and upheld.
Bill 119 and its ramifications are the kind of administrative detail that is too often overlooked, shooed away like a pesky fly.But our lawyer’s words ring loudly and clearly in my ears. Sellers of installed windows and doors in Ontario should listen, before the insect bites.