If you or your company hires a contractor or subcontractor that does not have or may not be eligible for a WCB-Alberta account, you may be responsible for providing coverage and paying premiums on their behalf. Providing coverage not only protects the worker, it also protects your company from potential lawsuit.
There are several ways to limit your liability:
- Before a contractor or subcontractor starts, request a clearance letter which will confirm if they have WCB-Alberta coverage for their workers or the directors/business owners. A clearance letter identifies who is covered, the industry their coverage is in and if they are in good standing. If a contractor or subcontractor operates in an exempt industry, they are not required to carry coverage for their workers or the directors/business owners. Please note: you can ask the subcontractor for a clearance letter, or request it yourself through your myWCB account accessible from your desktop or through our myWCB employer mobile app.
- You can make coverage a condition of the contract or hire contractors and subcontractors that already hold coverage. Always request a clearance letter at the start of the contract to ensure the right coverage is in place in the right industry.
- Ensure the owner or director of your business has personal coverage. Without optional personal coverage, your business owner is not protected from lawsuit if a deemed worker, contractor or subcontractor is injured, or one of your own workers.
- Request another clearance letter before making payment. If you pay your contractor or subcontractor when they have an outstanding balance on their account, you can become responsible for the outstanding premiums. You can sign up for an automated clearance so you are notified when their status changes.
- If their operations are exempt or the contractor or subcontractor does not have optional coverage, WCB-Alberta may consider them to be your worker or you can apply for a deeming order to cover them as your workers. Once approved, you will be protected from lawsuit and in exchange they will become your responsibility. You will pay premiums on their earnings and if they are injured, the claim will be charged to your account. Make sure you include the directors or business owners of the contractors or subcontractors in your deeming order to ensure you have full protection.
The potential for liability depends on the legal status of the contractor or subcontractor you hire and whether or not they hold coverage. The following table outlines whether you are responsible for covering contractors or subcontractors you hire:
How do I determine my responsibilities when hiring contractors/subcontractors?
Policy 06-01, Part II, Application 2 (in part) includes the business test to determine account eligibility. This includes corporations, partners, trade name companies and proprietors.
|WCB Status||Principal responsibilities|
Contractor meets the business test and has their own WCB-Alberta account.
||They are not considered a worker of the principal. Therefore, the principal is not required to report and pay premiums on their earnings. If the contactor is injured, the claim is their own responsibility. The principal would be protected from lawsuit if both the principal and the contractor have active WCB coverage in place for the director(s)/business owner(s) and workers.|
|Incorporated contractor meets the business test and has declined an optional WCB-Alberta account.||
They are not considered a worker of the principal, as the director has opted out of the optional personal coverage (PC only account) or is in an exempt industry. Therefore, the principal is not required to report and pay premiums on their earnings.
If the contractor is injured, they would not be covered under the Workers' Compensation Act and the principal would not be protected from lawsuit since the contractor has no active WCB coverage in place.
|Contractor does not meet the business test and is not eligible for a WCB-Alberta account.||They are considered a worker of the principal and earnings must be reported. If the contractor is injured, the claim is the responsibility of the principal and would also protect the principal from lawsuit.|
|Contractor has not applied for a WCB-Alberta account (Business test eligibility is unknown).||
When the account eligibility is unknown, the principal should ask the contractor for a clearance letter. This will encourage the contractor to apply for a WCB-Alberta account and confirm if they are eligible. A clearance letter can be issued for either outcome and would confirm the principal’s responsibility for the contractor. The principal may be open to lawsuit if the contractor has declined coverage.
The principal does have the option to apply for a deeming order to cover the contractor as a worker. If approved, the principal would report and pay premiums on their earnings. In addition, the principal is protected from lawsuit since the contractor is deemed their worker.
If you're a contractor or subcontractor, you may qualify for your own WCB account.
Requesting clearance letters
We encourage you to obtain clearance letters for the contractors and subcontractors you hire. This is another way of limiting your liability. It is important to obtain a clearance letter before the work starts, during the contract and before issuing final payment. You can request the clearance letters from your myWCB account or ask your contractor/subcontractor to provide one.
It is important to remember it is illegal for you to deduct the cost of workers’ compensation from your workers, contractors and subcontractors under section 139 of the Workers' Compensation Act.