How workers' compensation can work for employers

Kelly McDermott for The Lawyers Weekly

September 11, 2009

Most employers in Canada participate in a legislated workers' compensation insurance system. This system of no-fault insurance reflects a historic trade-off whereby workers receive the right to compensation for workplace injuries and employers receive protection from legal action by injured workers. This protection, or "bar to claims," is the cornerstone of the workers' compensation system.

How can counsel ensure that their employer clients avoid becoming immersed in a costly civil law suit when the claim is statute-barred and must be dealt with under the workers' compensation system?

Bar to claims

Every provincial workers' compensation system contains broadly worded legislative provisions that prohibit employees from resorting to claims in lieu of compensation available under the workers' compensation insurance plan.

For example, subs. 26(1) of the Ontario Workplace Safety and Insurance Act, 1997 (WSIA) establishes a general prohibition that prevents workers from resorting to civil actions to obtain benefits that are available under the insurance plan. Subsection 26(2) also provides that entitlement to benefits under the insurance plan is in lieu of all claims that a worker, a worker's survivor or a worker's spouse, child or dependant has against the worker's employer or an executive officer of the employer for an accident involving the worker, or an occupational disease contracted by the worker, while in the employment of the employer.

Subsection 28(1) provides that a worker employed by a schedule 1 insured employer cannot commence an action against any other schedule 1 insured employer regarding the worker's injury or disease. Subsection 28(2) contains a similar restriction for schedule 2 insured employers. In concert, these provisions provide a definitive legislative bar to civil actions where compensation under the plan is available.

Compensable injuries

Despite this statutory protection, employers are often unaware of the breadth of coverage available to them and what constitutes a compensable injury under the applicable provincial workers' compensation legislation.

A compensable injury is broadly defined under the provincial workers' compensation legislation and may include injuries arising from events such as harassment, assault or battery that arise out of or in the course of employment.

For instance, the WSIA broadly defines an "accident" to include "a wilful and intentional act, not being the act of the worker." The Ontario Workplace Safety and Insurance Appeals Tribunal has rendered numerous decisions determining that this definition includes incidents such as assault (including a sexual assault), battery or harassment that arises out of or during the course of employment.

The scope of coverage available to an employer under the workers' compensation system is also very broad. Not only can an insured employer receive protection from civil actions relating to its own workers who sustain a compensable injury, but they can also receive protection from civil actions arising from compensable injuries to workers of other insured employers with whom its own workers interact.

For example, the tribunal found that a civil action was statutorily barred against an employer who employed the perpetrator, and not the victim, of an assault, because the injury was deemed compensable, the victim was in the course of employment and the insured employer was entitled to expect protection under the workers' compensation legislation it paid into (see Decision No. 1607/03, [2005] ONWSIAT 954).

Despite this breadth of coverage, many employers fail to identify events such as harassment, assault or battery as a compensable workplace injury. Failure to make such an identification can have costly consequences. For instance, an employer could find itself immersed in a civil lawsuit for vicarious liability arising out of such a workplace incident even though the civil action may be barred by the workers' compensation legislation. An employer can avoid the cost of litigation and any ensuing damages by identifying from the outset that the incident was a compensable workplace injury under the workers' compensation system.

Advising employers

In light of the potential costs associated with civil actions arising from workplace accidents, counsel to employers must ensure that their clients:

* are properly apprised of the scope of their workers' compensation coverage;

* have a system in place to properly identify whether a workplace incident constitutes a compensable injury under the applicable workers' compensation system; and

* report such claims in the manner and within the time periods prescribed under the legislation.

Counsel to employers must keenly assess each civil claim involving a workplace incident, such as harassment, assault or battery, and determine whether the action is barred by virtue of the applicable provincial workers' compensation legislation. If counsel determines that the action is statutorily barred, counsel should promptly bring a right-to- sue application to the applicable workers' compensation appeals tribunal and seek to have the civil action either wholly dismissed or stayed pending the resolution of that proceeding.

Kelly McDermott is an associate in McCarthy Tétrault's Labour and Employment Group in Toronto. Her practice focuses on advising management and preparing and presenting labour and employment matters before administrative tribunals and courts. Send an e-mail to Kelly McDermott today

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