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Is it Good Policy That Temp Agencies are Treated as Employers Under Workers Compensation Legislation?

One of the useful takeaways from the Toronto Star’s recent undercover story on Feira Foods was its exposure of how employers use temporary placement agencies to avoid responsibility for workers.   A particular thorn in the side of worker advocates is the policy in Ontario of treating the temporary placement agency as the employer for the purposes of employment regulation and in particular for workers’ compensation purposes.

This latest story by the Star’s Regg Cohn focuses on this issue, noting that the Ontario government seems oddly resistant to the logic of making the business where the worker is actually injured the responsible party for workers’ compensation purposes.

Worker advocate organizations have long argued that the current policy of deeming the temp agency the

Is the Wrong Employer Responsible for Workers' Compensation in Ontario?

Is the Wrong Employer Responsible for Workers’ Compensation in Ontario?

employer is perverse, because: (1) it shifts responsibility for the safety of the jobs to a party (the temp agency) which has zero control over the workplace itself, skewing the experience rating system and the incentives to create safe workplaces; and (2) it creates a financial incentive for businesses to use “perma-temps rather than hire their own employees, since the cost of workers’ compensation (including premium payments) and responsibility for finding alternative work are hived off to a third party.

The Workers’ Action Centre and Parkdale Community Legal Services (where I was once a student in the workers’ rights division and years later the Osgoode Dean’s Rep on the Board of Directors) explained the matter this way:

Employers generally pay WSIB premiums based on experience rating – higher or lower premiums are based on an employer’s accident record. In the case of assignment workers, it is the agency that is deemed the employer and pays WSIB premiums. These premiums are generally lower than those of the client. Assignment workers’ injuries occur at the client company, under the control of the client company. Yet the client company does not face the consequences of injuries and accidents involving assignment workers, as the experience rating premium costs are born by the agency not the company. In effect, this creates economic incentives for clients to use assignment workers for more dangerous work. Further, we believe that this shifting of employer liabilities for WSIB premiums is one of the services that agencies provide to its clients, and is allowed by the current statutes.

The Workplace Safety and Insurance Act defines a “temporary help agencyas “an employer referred to in section 72 who primarily engages in the business of lending or hiring out the services of its workers to other employers on a temporary basis for a fee”

Section 72 then provides:  If an employer temporarily lends or hires out the services of a worker to another employer, the first employer shall be deemed to be the employer of the worker while he or she is working for the other employer.  

The government could easily change the status quo by deeming the employer to which the temp workers are assigned the employer.   This would have the twin benefit of placing responsibly on the party that actually controls the risks of injury and remove the financial incentive to use temp agency workers rather than hire their own employees.  Given that the stated objective of the present project of work law reforms is to encourage more and better jobs and to address the rising precarity of work, this seems like a no brainer of an idea.

And yet the Liberals are resistant.

Question for Discussion

Can you think of any arguments against the proposal to deem the company where the work is performed the employer for the purposes of workers’ compensation responsibilities?

Both the business lobby and the temp placement industry have argued against changing the present model that places responsibility for workers’ compensation on the temp agency.  What arguments do you think they make?  Can you find any publications where those arguments are set out?



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