The Canadian Federation of Independent Business (CFIB) has called on six overfunded workers’ compensation boards (WCBs) across Canada to return excess funds totalling almost $5 billion to small businesses.
WCBs in BC, Manitoba, Ontario, New Brunswick, Prince Edward Island, and the Yukon are holding these surpluses, the CFIB's recent research revealed. Manitoba has the most overfunded WCB – the board's funding ratio stands at 160 percent, exceeding its funding target of 130 percent, the research showed.
Marvin Cruz, the CFIB’s director of research, said that the excess funds could significantly benefit struggling small businesses by allowing them to pay down debt, to invest in measures such as employee health and safety initiatives, to survive amid lower consumer demand, and to offset the growing cost of doing business.
“Overfunded boards are in a strong financial position to issue rebates to small businesses without coming close to affecting worker payouts,” said Cruz in the CFIB's news release.
The CFIB suggested that returning the surpluses could result in substantial rebates for small businesses. A small business in New Brunswick with five employees could receive a rebate of $5,360, while in Ontario the rebate amount would be $1,745, according to the CFIB’s estimates.
While some provinces have already started returning surplus funds, the CFIB is advocating for broader action. Manitoba, for instance, returned $118 million this year. The province expressed its intention to continue issuing rebates through 2026 to bring its funding ratio down to the 130-percent target, the CFIB noted.
On the other hand, PEI gave back $21 million in surplus funds last year, while Ontario distributed $1.2 billion the year before that, the CFIB said. The CFIB noted that PEI had yet to announce a 2024 rebate plan despite the overfunding of its WCB last year.
The CFI pointed out that Ontario was the only province that enacted legislation mandating the return of surplus funds to employers. The law requires Ontario’s Workplace Safety and Insurance Board to issue rebates when its funding level reaches 125 percent.
Recommendations to governments
“CFIB encourages all provinces to follow Ontario’s lead and make the return of WCB surplus funds law,” said Julie Kwiecinski, the CFIB’s director of provincial affairs for Ontario, in the news release.
Kwiecinski also called on other provincial and territorial governments with overfunded boards to immediately grant rebates to employers and to continue doing so on a regular basis from this point onward.
To address WCB surpluses, the CFIB put forward the following recommendations to promote fairness, consistency, and transparency. The CFIB urged governments to:
- give back surplus funds to employers or reduce premiums when the funding ratio exceeds the target
- pass legislation requiring the return of surplus funds to eligible employers
- put in place mandatory distribution policies to ensure the regular return of surpluses
- set dates for the publicly release of WCB funding levels
“Most employers say that workers’ compensation premiums are one of the most harmful taxes to their business, because as a payroll tax, they’re profit insensitive,” said Kwiecinski in the news release.