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December
24, 2009
Administrative
Penalties - Amount of Penalty Amendments
A Vice Chair of the Workers' Compensation Appeal Tribunal
("WCAT") recommended that "the policy
concerning repeat penalties be reviewed to ensure that
the wording of the policy reflects the intent of the
policy-makers."
A repeat penalty is calculated at a higher level than
a regular penalty and is imposed when a prior penalty
has been imposed for the same or similar violation within
the preceding three-year period. A higher repeat penalty
provides additional motivation for an employer who was
not motivated to comply by the regular penalty amount.
Policy D12-196-6 of the Prevention Manual sets
out when a repeat penalty is imposed and how it is calculated.
The Vice Chair at WCAT said this policy allows for some
arbitrariness as it allows a repeat penalty to be imposed
in circumstances where the employer would not have had
an opportunity to modify its behaviour prior to receiving
the increased penalty.
Based on the facts of the case, the Vice Chair at WCAT
upheld the repeat penalty that had been imposed. The
comments made by the Vice Chair have not resulted in
a referral under section 251 of the Workers Compensation
Act. However, with a slight change in the facts,
a similar case could result in a formal referral. It
was determined that it was prudent to amend the policy
at this time to address the concerns raised by the Vice
Chair.
The existing repeat penalty policy is based on a three-year
time frame. The triggering event for starting that time
frame is the date the first penalty is imposed. Most
of the arbitrary results that can occur under the policy
flow from the differing amount of time it can take to
impose an administrative penalty due to factors such
as complexity, the involvement of other agencies, administrative
delay, and time provided to an employer to respond to
a proposed penalty. This can mean that a penalty is
not imposed until many months after the violation. This
can give rise to results that appear arbitrary, such
as:
- If
two violations occur days or weeks apart, but the
penalty for the second violation is imposed first,
the penalty for the first violation will then become
a repeat penalty;
- If
two violations occur on the same day, but the penalties
are not imposed on the same day, the later penalty
will be a repeat penalty;
- If
two violations occur within three years of one another,
but the penalty for the second violation is imposed
more than three years after the penalty is imposed
for the first violation, it will not be a repeat penalty;
- If
two violations occur more than three years apart,
but the penalty for the second violation is imposed
less than three years after the penalty is imposed
for the first violation, it will be a repeat penalty.
It
was determined that these arbitrary results will be
significantly reduced and the policy will better achieve
its objective if repeat penalties are based on the dates
of the violations giving rise to the penalties, rather
than on the dates the penalties are imposed. Thus, the
policy has been amended to provide that a repeat penalty
will be imposed for similar violations that occurred
within three years of one another and resulted in a
prior penalty, provided the employer was provided at
least 14 days notice that a penalty had been imposed
or was being considered for the earlier violation.
A
second issue in the same policy, not raised by the WCAT
case but identified by staff, is a typographical error
in the table used to calculate Category A Penalties.
This could result in some unfairness between employers
in calculating the amount of a penalty. The policy has
been amended to correct this error and eliminate this
potential unfairness. The starting point for calculating
a penalty with a payroll above $5 million dollars has
been changed to $68,750 from $68,250.
These
amendments become effective on January 2, 2010.
Link
to resolution and amended policy
Sincerely,
Anne Burch,
Director, Prevention Policy and Regulation Review
Policy and Research Division
WorkSafeBC-WCB
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