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Canadian Worker's Compensation: What U.S. Companies Need to Know

Posted by Stacey Duggan

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Mar 17, 2014 9:05:00 AM

Workers Compensation Board in Canada is Government run

Unlike the U.S., the workers compensation program in Canada is government run. Every Employer in Canada must register for a worker’s compensation account in every province that they have employees working in and each province has different rules as far as the registration process.

For example, in Ontario you cannot apply for a workers compensation account until you actually have an employee start date, in Nova Scotia you don’t register for an account until you have 3 workers and in Alberta you can pre-register regardless of whether you have employees or not.

Each province also has different registration fees and some may even ask for a pre-payment for new registrants. As an employer, you pay a certain percentage in taxes to the provincial workers compensation board based on the wages of your workers and the risk associated with the type of work your employees are performing.

The bigger the risk of injury to workers, the larger the percentage used when calculating what is due

For example currently in Ontario a worker in a clerical role would cost an employer 0.22% in workers comp taxes. However a worker on a construction site in Ontario would be taxed at 5.05%.

If a worker is injured on the job, a workers compensation board will assign a claim adjuster who will investigate and make recommendations. The workers compensation boards in every province are in place to protect the worker and ensure employers meet health and safety standards. They can be a daunting authority to a U.S. company unfamiliar with the rules and regulations associated with the Canadian Ministry of Labour.

Many U.S. companies don’t realize that they should complete their own investigations and they have the right to appeal the board’s decision.

They also tend to rely on their own legal counsel in the States to advise them on best practices across the border.

Lack of experience in Canada can lead to hefty fines for non-compliance so it’s important that U.S. companies engage in Canadian expertise, or rely on an experienced Employer of Record, when expanding their workforce to the great white north. 

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: Ministry of Labour, Payroll Tax in Canada, Employer of Record, U.S. Companies operating in Canada, MOL, Worker's Compensation, Canada Revenue Agency, Canadian Employer of Record, Paying Canadian Workers, Canadian-Based EOR, Canadian EOR

3 Common CRA Remittance Pitfalls

Posted by Stacey Duggan

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Jul 24, 2013 9:00:00 AM

3 Common CRA Remittance PitfallsIt seems that remitting your payroll deductions to the CRA should be a simple, straightforward process, and yet, Canadian businesses run into problems time and again. Part of this has to do with legislative and bureaucratic changes that catch people unawares. Sometimes small business owners just have too many things on their minds; it's hard to keep up with everything, especially with things like CRA remittances which don't help your business to stay afloat or improve your bottom line. Let's take a look at three common CRA remittance pitfalls and how to avoid them.

1. Not sending in your remittance on time

This is probably the biggest mistake that employers make, and it's no surprise. The money collected from payroll may sit in your business account for weeks or even months before it's due to the CRA, so it's easy to forget about remitting. Do your best to stay on schedule, however, because the penalties for failing to remit are stiff and increase the more time you take. Not only the fee but the whole amount is subject to interest making a late payment much more costly than the timely payment would have been.

Companies with a 12-month history of remitting compliance and who have a monthly withholding amount of less than $3,000 may be eligible to remit quarterly instead of monthly. You will be notified by the CRA if your business qualifies for quarterly remittance. Otherwise, you'll be expected to remit monthly, and it's important that you keep up with your deadlines.

2. Remitting less because you're treating some employees as independent contractors

A worker engaged with your company who has a registered business, doesn’t always qualify to be paid as an independent contractor in the eyes of the CRA. As a business owner, you need to be aware of how to properly classify independent contractors in order to be compliant. A finding of misclassification can lead to the payment of both the employee and employer portion of the remittances going back as far as the initial engagement. If the CRA finds that you have violated the law, you will also be charged interest and penalties, which can add up very quickly.

3. Calculating remittances incorrectly

It's a lot to keep track of, but you need to remit CPP contributions, income taxes, and EI premiums from your employees' earnings, along with your share of EI premiums and CPP contributions for each employee. Recognizing taxable benefits and calculating then remitting them correctly is another area that is often misunderstood by business owners. Your employee is considered to have received a benefit if you pay or provide to him or her something that is personal in nature such as free use of property, goods or services. If the benefit is deemed taxable you must add the fair market value of the benefit to the employee’s income and tax accordingly.

One thing you can do to help with calculating payroll deductions is to use the CRA's Payroll Deductions Online Calculator. Instead of looking up deduction amounts on the provincial and territorial tables, you can simply enter your data into the calculator. Remember, though, that you assume the risk associated with using the CRA's calculator. If you end up remitting the wrong amount, you can't use the calculator as your excuse.

By taking care with these three CRA remittance pitfalls, you can avoid most of the headaches and frustrations encountered by business owners in the reporting area. Another alternative is to outsource payroll processing and let someone else take care of CRA remittance for you. When you're sure that your CRA remittance is handled correctly, you can face the details of your business confidently and irreproachably.

What Are You Leaving to Chance by Handling Payroll on Your Own

Topics: Payroll Service Provider, Canadian Payroll Deductions, Payroll Tax Calculations, Employee Payroll Deductions, Employment Standards Act, Best Payroll Calculator, MOL, ESA, ESA Compliant, Employee Payroll Tax

How ESA Violations Can Put Company Directors in Jail

Posted by Ray Gonder

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Jul 19, 2013 9:00:00 AM

http://i.istockimg.com/file_thumbview_approve/14624102/2/stock-photo-14624102-group-of-men-in-prison-cell.jpgYou're a hard-working, law-abiding citizen. In fact, you have worked hard enough that you employ other people who count on you for their pay cheques and benefits. You should be aware, however, that you could face severe fines and even jail time for violations of the Employment Standards Act (ESA).

What is the ESA?

Signed into law in 2000, the Ontario ESA regulates wages, work hours, and workplace health and safety in Ontario for provincially-regulated companies. The Ontario Ministry of Labour (MOL) enforces these regulations, educates and informs employers about how to comply with ESA regulations, investigates potential violations, and resolves complaints from employees.

It can be difficult to know all of the standards that make up the ESA. To help, the ESA produces a workbook to help employers know and understand their obligations under the Employment Standards Act. For starters, the workbook lists ten different areas in which employers need to be well-versed to be ESA-compliant:

  1. The ESA Poster
  2. Payment of Wages
  3. Wage Deductions
  4. Work Hours
  5. Eating Periods
  6. Overtime Pay
  7. Minimum Wage
  8. Public Holidays
  9. Paid Vacation
  10. Termination and Severance

You might think that common sense could help you to navigate these standards, but that's not necessarily true. For example, in the workbook section about Public Holidays, you'll read, "Although vacation pay is not considered to be part of one's regular wages, the calculation for public holiday pay includes any vacation pay that was payable to the employee during any of the four work weeks prior to the work week in which the public holiday fell." Clearly, ESA standards are not always obvious or even, well, clear. And this leads us to the problem at hand.

ESA Violations

If you take a look at convictions under the ESA for March of this year, you'll see that there are several different ways that employers have violated the Employment Standards Act. One company failed to retain records, another failed to make records, several failed to pay for overtime, and another failed to give an eating period during a work shift. Most of these ESA violations resulted in fines of less than $500, but this shouldn't make you feel that you can relax when it comes to abiding by ESA standards. In fact, at least one Ontario employer is currently serving jail time for non-compliance.

The owner of six Ontario companies ignored orders by an MOL officer to correct wage payment problems with 61 employees at all of the six companies he owned. Under ESA, a director of a company can be held personally liable for violations of the law, including failing to pay wages. The Ministry of Labour charged the owner and his companies with failure to comply with orders, to which he pleaded guilty. He was fined $280,000 and ordered to spend nine months in prison.

If the owner had complied with the initial orders from the Ministry of Labour, he would certainly be in a much better position today. Perhaps he ignored the orders because he had too much to do and felt that ESA violations were not a big deal.

You don't have to spend a lot of time and resources complying with the ESA. But if you feel you don’t personally have the time to read through the workbook and answer all the questions, the specialists at The Payroll Edge can take care of that for you. Or if you've already found yourself involved with ESA violations, we can help you with that as well, mediating with the Ministry of Labour and helping you to resolve past infractions, while making sure your programs and policies will keep you in the clear in the future.

To find out more about ESA violations, contact us at The Payroll Edge.

7 Signs It's Time to Outsource Payroll

Topics: Ministry of Labour, Payroll Service Provider, Outsourced Payroll Service, Employment Standards Act, Employee Policies, MOL, ESA, ESA Violations, ESA Compliant

Why You Could Be on Your Own Interpreting MOL Regulations and Rulings

Posted by Ray Gonder

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Jul 5, 2013 9:00:00 AM

Ministry of Labour RegulationsThe last thing any business wants is to be visited by a Ministry of Labour inspector and be found non-compliant with any of the hundreds of MOL (Ministry of Labour), ESA (Employee Standards Act) or OHSA (Occupational Health and Safety Act) regulations. Especially if it results in an order or a fine.

But sometimes, despite best efforts, employers may find themselves being called out for being non-compliant, even in the face of there being no specific regulation.

A recent Ontario Labour Relations Board case illustrates how employers can sometimes face confusing direction from the Ministry of Labour. An Ontario book distributor received a compliance order from a Ministry of Labour inspector, stating that the "push forces" necessary for moving a wheeled cart up an eight-foot ramp put employees at risk for developing a musculoskeletal problem.

Wanting to comply with MOL regulations, the company sought out the ergonomic thresholds in the Occupational Health and Safety Act (OHSA). Was the ramp too steep? Was the cart too heavy? But there were no specifications in the Act stating any ergonomic threshold requirement, making complying with the order next to impossible. How much would the angle of the ramp need to be adjusted, or how much lighter would the cart need to be, to be compliant? And would either of these modifications be enough to satisfy the MOL – maybe there was something else they should be looking at? It also made them wonder how the Inspector could claim non-compliance in the face of there being no specific regulation about the matter.

When they contacted the MOL for further guidance, they were needless to say surprised when the Inspector refused to identify ways or means for the company to comply with the order.

So the company went to the OLRB (Ontario Labour Relations Board) to complain that the MOL inspector wouldn't help them, arguing a MOL inspector ought to offer guidance to help them properly comply with MOL regulations. The OLRB ruled "the Inspector was under no obligation to do so" and stated that it was the employer's responsibility to "derive a compliance plan that is the most sensible for its operations," and upheld the Inspector’s order.

Any responsible employer is clearly always trying to make plans that are "the most sensible for its operations." That's what responsible employers do. The problem comes when you're told by a government agency that you're not in compliance, but then not given any guidance as to how to comply.

How does a company proceed under such ambiguity? How do you know when you're complying with MOL regulations and when you're not? If you can't ask the MOL questions about your company's ESA/MOL compliance, where can you turn for support?

Like the book distributor, you could hire an expensive HR consultant and a lawyer, and hope they can make such bureaucratic insanity disappear. But you could spend a fortune having them second-guess every possible non-compliance scenario.

But if you were a member of The Payroll Edge, though, you could quickly get the answers you needed without the huge expense. More than just payroll processing, The Payroll Edge has experts on staff who study and work with the practical applications of MOL regulations all the time. They can help you decipher ambiguous calls for compliance and give you peace of mind regarding your company's standing with the Ministry of Labour. You can pick up the phone anytime and benefit from the years of experience helping all kinds of Canadian businesses all across the country.

Contact us at The Payroll Edge for more information about how we can assist you with deciphering MOL regulations and rulings.

7 Signs It's Time to Outsource Payroll

Topics: Ministry of Labour, Payroll Service Provider, Payroll Service, Payroll Calculator, MOL, Payroll Deductions, Dependable Payroll Service, Compliance

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