Identifying Independent Operators (IOs)
People who work under contracts for service and do not employ any workers are considered IOs. An IO agrees to do specific work in return for payment. The payer does not necessarily control the way in which the work is done, or the times and places it is done.
Ensure an IO you hire is not treated as a worker by the WSIB
If you are planning to hire an IO, both the principal (you) and the IO must complete and sign the appropriate questionnaire, and submit it to the WSIB, before the IO does any contract work for you. The questionnaire is necessary even if the IO is incorporated. The WSIB has five industry-specific questionnaires (for trucking, taxis, retail, couriers and logging), and a general questionnaire for individuals working in all other industries. These questionnaires are in the Businesses – Forms: Businesses section of the WSIB’s website.
WSIB decision-makers review the questionnaire, and any other information that is relevant to the terms and conditions for service, i.e., invoices, contracts, purchase orders, business cards, etc. When all of the criteria considered together indicate the person has a separate business that is not integrated into the employer’s business, the WSIB considers that person to be an IO. If, however, the WSIB concludes the person is a worker, you will need to pay premiums to the WSIB for that worker’s wages and comply with all other WSIB policies. If the person is an IO, you need to take action to protect yourself and your business from financial risk.
Get a valid clearance
Employers who contract with other companies to provide services such as janitorial or security will be held responsible for the unpaid premiums and other outstanding amounts a contractor owes the WSIB, up to the value of the labour portion of the contract with the employer. The only way to ensure this will not happen is to require a clearance from contractors.
Ask the contractor if he/she has purchased optional insurance from the WSIB, and get a clearance from the WSIB that confirms the contractor is registered with the WSIB and has met all payment and reporting obligations. As of September 2019, each contractor with a WSIB account that remains in good standing will have one generic clearance that will be valid for all of its contracts. It waives the WSIB’s right to hold the principal responsible for any payment obligations charged to the contractor’s WSIB account during the time the clearance is valid.
The WSIB may make an adjustment to an employer’s account if, following an audit of a principal, the WSIB discovers that the principal failed to get a clearance for a contractor. In such a case, the principal may be liable for some or all of the contractor’s payment obligations to the WSIB. You may deduct from money payable to the contractor the amount for which the contractor is liable.
A clearance is mandatory if you hire a construction contractor or IO
There is no IO questionnaire in the construction industry. Construction IOs are required to have WSIB coverage, and to report and pay their WSIB premiums on time, to be eligible for a clearance.
A principal/employer who hires a construction contractor or IO must get a clearance before allowing the contractor or IO to do any work. Failure to do so is an offence and could expose the principal to financial risk for the IO’s non-payment/non-compliance. If a clearance expires or is revoked the work must stop, and you must receive notification that the clearance has been renewed before allowing the non-compliant contractor to resume work.
Using the WSIB’s eClearance program
The WSIB’s eClearance program is a free online service available through the WSIB’s website. It allows contractors to obtain a generic clearance that can be used for all of their contracts. It allows employers to easily check the validity of a potential contractor’s clearance and manage their list of contractors.
A clearance is valid for up to 90 days, and will be automatically renewed as long as the contractor’s account remains in good standing.
If you have questions about the eClearance system, or would prefer to request a clearance over the phone, call the WSIB at 1-800-387-0750.
An employer must keep all clearances for at least three years and will be asked to provide them to the WSIB if an audit takes place.