WORKPLACE SAFETY AND INSURANCE APPEALS TRIBUNAL DECISION NO. 2507/11

Transcription

1 WORKPLACE SAFETY AND INSURANCE APPEALS TRIBUNAL DECISION NO. 2507/11 BEFORE: E. J. Smith : Vice-Chair HEARING: December 14, 2011, at Toronto Oral Post-hearing activity completed on July 18, 2012 DATE OF DECISION: August 2, 2012 NEUTRAL CITATION: 2012 ONWSIAT 1733 DECISION(S) UNDER APPEAL: WSIB ARO decision dated July 19, 2010 APPEARANCES: For the worker: For the employer: Interpreter: Not applicable Mr. J. Young, Paralegal Not applicable Workplace Safety and Insurance Appeals Tribunal Tribunal d appel de la sécurité professionnelle et de l assurance contre les accidents du travail 505 University Avenue 7 th Floor 505, avenue University, 7 e étage Toronto ON M5G 2P2 Toronto ON M5G 2P2

2 Decision No. 2507/11 REASONS (i) The issue [1] The issue is whether the taxi-cab drivers who drive under contract with the appellant company are workers or independent operators. Mr. Young submits that they are independent operators. The Board has determined they are workers. [2] I have considered the issue first under the provisions of the questionnaire that the Board uses as a tool in determining worker/independent operator status. That questionnaire is helpful because its application ensures some consistency in how the Board addresses this issue. However, it is not Board policy. Therefore I have considered, secondly, the implications of Board policy and of the Tribunal s case law on this issue as well as Mr. Young s submissions about whether the questionnaire fairly reflects the relationship between the parties. [3] I have found that the persons whose status is in issue are workers. [4] The appellant also objects to the ARO s application of the status finding for the time period two years prior to the year of the Board s decision to add the taxi driver rate group to the appellant s account, or from January 1, It relies on the principles of detrimental reliance. I have found that the status decision should be applied only for the time period from January 1, 2009, or the commencement of the year that the Board added the taxi driver rate group to the appellant s accounts. [5] I heard testimony from four witnesses for the appellant: from the owner, from two taxicab drivers, and from the person who was the company s accountant at the time of prior interactions with the Board. I have referred to their testimony as relevant to the issues addressed by the questionnaire and/or Board policy. (ii) Background [6] The taxi-cab drivers who work for the appellant lease their taxi-cabs from the company for the term of each shift. The shifts are generally 12 hours but may be shorter. [7] The owner testified that she would be unlikely to let a taxi driver drive more than a twelve hour shift because she would be concerned about the insurance. She would be concerned that the situation would not be safe. [8] The company carries the insurance for the business operation. The taxi-cab driver does not carry any insurance for the car or for third party liability. The driver may carry disability insurance but the company does not require the driver to do so and has no information about whether this is done. [9] The company carries a large deductable on the insurance and is to that extent selfinsured. However, it has a body shop and can do many repairs to its cabs itself. If there is an accident and the cab is too badly damaged to repair, it will simply scrap the car. [10] All the witnesses testified that the drivers would need the approval of the company to arrange for someone else to drive their car, because of the licensing and insurance requirements. None of the witnesses knew of this ever occurring. None knew of a case in which a driver drove taxis for more than one company at a time, although they were not aware of any explicit prohibition. However, the driver s license to drive was specific to the company for which the

3 Page: 2 Decision No. 2507/11 driver was driving and none of the witnesses were aware of a case in which a driver had applied for licenses to drive for more than one company at the same time. [11] The witnesses testified that the drivers may choose the time period for which they take the cab. When the driver s shift is over, he or she returns the car to the company and it is leased for the remainder of the day to another driver. Therefore the drivers use their own transportation to get to the company site to pick up the vehicle and to get home after their shifts. The drivers are required to let the dispatcher know if they are not available for any period of time during the shift. If a driver does a personal chore during a shift, he or she is expected to park the taxi and use his or her own car to travel, as well as to let the dispatcher know that he is not available to drive. [12] The taxi driver turns in his receipts when he brings the car back. Generally, this is at the end of the shift. He or she may occasionally keep the car and paper work over night, but this would have to be specially arranged with the company. [13] However, the drivers are free to drive or not as they choose. Therefore they can take vacation as they choose. They can take time off as they please. Either party can also end the relationship without notice. There is a lot of turnover among the taxi drivers. [14] None of the taxi drivers make in excess of $30,000 a year, and therefore none are required to have GST numbers. [15] The owner testified that the company pays for the gas, the oil, and the maintenance. There is propane available at the employer s site and the drivers fill their tanks there. There is also a car wash available at the site. The company pays for this and the drivers can take the cars through the car wash as the need arises. [16] The owner testified that she has spoken to the drivers about their appearance and has suggested to them on occasion that they go home and change before starting the shift with the taxi. She has let them take the taxi, and trusted them to go home and change. Nobody has ever objected or, to her knowledge, failed to comply. [17] The worker pays 65% of his earnings to the company, which is understood to in part be for the purpose of covering the above expenses. [18] The plate license for the cab is owned by the Police Services Board and is, in effect, leased to the company on an annual basis. The taxi-cab drivers, in effect, lease the right to use the plate license shift by shift when they lease the cab. The taxi-cab driver must also hold an individual taxi-cab license to drive. The drivers are checked for criminal records and also attend an educational session as part of the license requirement. Currently, the session takes about half a day. In the past it took up to two days. [19] The drivers have been accepted as independent operators for the purposes of Revenue Canada. The company does not withhold tax or pay CPP. [20] There is a written contract that covers the arrangement between the company and the drivers. It states expressly that the drivers are not employees of the company. It also states the contractor warrants that they are properly licensed and have the expertise to drive and that they may be liable for damages incurred, considering the circumstances. The contract provides that the contractor shall maintain a high standard of cleanliness in their personal appearance, hygiene, clothing and automobile and that, if that standard is not met, the Contractor will be deemed to

4 Page: 3 Decision No. 2507/11 have declined to offer services to the company. The contract provides that the contractors will notify the company each day with respect to whether they wish to provide services. (iii) The Board questionnaire [21] The questionnaire used by the Board for the taxi-cab industry has four parts. The first part merely asks for a description of the nature of the business activity. The response is not weighted directly, as relevant to status, under the criteria of the policy. There are then three parts which do provide criteria used to identify status: Parts 2, 3 and 4. The criteria provide that to be considered an independent operator the taxi-cab driver must meet the criteria set out for two of the three Parts. [22] Mr. Young concedes that the taxi-cab drivers for this employer cannot meet the criteria set out in Part 3, because virtually all the costs that the taxi drivers incur in operating the taxis are paid by the employer and repaid by the employee to the employer in the form of the lease cost for the taxi. The taxis are owned by the employer. The leases to the taxi drivers are shift specific. [23] Therefore, to meet the criteria of the Board questionnaire, the taxi-cab drivers must meet the criteria of both Part 2 and Part 4. [24] Part 2 requires that the person whose status is in issue meet four of the seven criteria that reflect independent status. In my view, it is clear that the taxi-cab drivers in this arrangement meet two of the criteria of Part 2 that support worker status: The driver is not required to do other work for the company. The company does not train or supervise the driver. [25] I am satisfied that the company does not train the driver to operate the taxi and the company does not confine the driver to any geographic or designated area within the boundary covered by the plate licence, which is also a consideration identified under this criteria. [26] Given that these two answers are no, it is not necessary for me to consider whether the company disciplines the driver or withholds calls. [27] However, with respect to the other five criteria included in Part 2, in my view, the evidence supports worker status and not independent operator status in the following four respects: The drivers do not meet the criteria with respect to set hours of work. [28] I realize that, in some respects, the drivers do not work set hours of work. They choose their own hours of work. However, on careful review, that is not all that is required under this provision of the questionnaire to support independent status. In my view, the drivers do drive set hours in the sense that the company requires the vehicle to be returned at the end of the preagreed shift. That arrangement is specifically referred to in the questionnaire. In addition, the testimony was that if the worker decides not to drive during any time that he has the car out on his shift, he must let the dispatcher know. If he is not responding to calls and he has not informed the dispatcher that he has ceased to be available, the police may be called because it may be assumed that he has suffered harm. Therefore he is not free to drive as he pleases without informing the company. The driver is also required to let the dispatcher know when he completes his shift and is required to turn in his receipts. He might occasionally do this the next day, but that would be by agreement. In my view, the drivers have set hours of work.

5 Page: 4 Decision No. 2507/11 The drivers do not meet the criteria for independent status with respect to service to the public. [29] The drivers drive vehicles that have the company s name, logo and colours on it, and provide receipts that bear the company name. The drivers do not meet the criteria of the policy for independent status with respect to their licenses. [30] While the company does not hold the title to the taxi-plate license, the plate is, in effect, leased to the company. The drivers, in effect, sub-lease the taxi-plate license from the company under the terms of the contract arrangement. I consider the reference to a lease in this provision of the questionnaire broad enough to include a sub-lease arrangement of the type involved here. The services are also rendered personally. [31] The witnesses testified that the drivers would need the company s approval to hire someone else to drive the taxi. The witnesses testified that this would be required because the company would need to ensure that the insurance covered that person. The employer carries the insurance coverage for the work activity. The taxi-cab drivers are not under any contractual obligation to carry insurance. [32] Given my findings on the above issues, it is not necessary for me to decide if the drivers are required to follow company rules. Mr. Young disputes the finding of the ARO that the requirements of the contract for safety and cleanliness constituted rules because he submits that the safety practices are required by law and it is in the driver s interest to maintain a clean car. If the company is not happy with a driver, it may cease to use him. There was little evidence of practices such as progressive discipline. On the other hand I note that, in this provision of the questionnaire, the Board refers to examples of rules as rules for maintaining the appearance of the vehicle and safety practices. In my view, the questionnaire expressly contemplates the type of contractual provisions that are specified in these contracts. [33] However, given my other findings, it is not necessary for me to consider whether these provisions of the contract constitute rules per se. The taxi drivers do not meet the criteria for independence established under Part 2 in any event. [34] Given my findings about Part 2, it is not directly necessary for me to consider Part 4. However, I have considered that Part for completeness. In my view, the taxi drivers do not meet the criteria for independence of that Part either. The questionnaire requires that five answers support independence in Part 4. I accept that three answers do meet the criteria: there is no Union; I accept that the Canada Revenue Agency has ruled that the taxi-cab drivers are independent operators for income tax purposes; and I accept that the drivers are not paid by the company. They collect the fares from the passengers and pay the appellant a percentage. [35] However, in my view, the following criteria are not met; The drivers do not work for more than one company at a time. [36] I understand the reference in the questionnaire to be with respect to the business activity in issue, i.e., the business of driving a cab. While the witnesses testified about work that they had sometimes done in other employment, there was no evidence of a driver driving for more than one taxi company at a time in the usual manner of a person who is operating his own business.

6 Page: 5 Decision No. 2507/11 The employer has a continuing need for the service that the drivers provide. [37] In my view, also, the witnesses who testified had a continuing relationship with this company for many years. That is despite the fact that they answered this question in the negative when providing their questionnaires. In my view, the response given on that matter was in error. It is not clear what the drivers thought that the word continuous meant. However, in a situation in which a driver has had contracts renewed for ongoing renewal periods with the same company, in my view that means that the relationship is continuous. There may be cases of drivers for whom the relationship was not continuous. However, I have not been provided with evidence about those drivers. The witnesses who testified had worked for the company for many years. In any event, even if this response were different in a particular case, it would not be sufficient to meet the requirements of the questionnaire on these facts. The drivers have never employed assistants. [38] The drivers testified that they never employed assistants. [39] Given my findings, it is not necessary for me to consider whether the contractual terms with respect to termination are more consistent with an independent relationship than with an employee relationship. [40] In summary, the evidence does not establish that the taxi drivers of this company meet the criteria for independence under any of the three Parts of the Board questionnaire. Under the questionnaire, the drivers are workers. [41] I have considered next whether that result is consistent with the terms of Board policy and the Tribunal s case law. (iv) The Board policy; Tribunal case law [42] I have also considered the case under the Board s Operational Policy Manual Document No as well as under the case law in general. [43] Mr. Young submits that the Board s questionnaire is heavily weighted towards worker status. He submits that it does not place proper weight on the fact that the Canada Revenue Agency has accepted that these taxi drivers are independent operators. He submits that considerable weight should be given to the terms of the contract, which provide that the drivers are not employees of the company. The intention of the parties is important. [44] He also relies on the analysis of Decision No. 354/11. In that case the Vice-Chair was satisfied that the taxi drivers whose status was in issue had a genuine opportunity for profit or loss. However, I consider the facts of that case quite different from the facts of this case. In that case, the drivers paid the company a flat fee for the use of the vehicle and for dispatch services. The company was not paid a percentage of the fares. The person whose status was in issue (S) worked the day shift and had an arrangement with another person who drove the night shift. The other person paid S a flat amount for the use of the car as well as paying for the gas and car washes. I note that the other driver paid S and not the taxi-cab company who leased the vehicle to S. [45] In my view, there was considerably more opportunity for profit and loss on the facts of Decision No. 354/11 than in this case, both because S paid only a flat fee for the use of the

7 Page: 6 Decision No. 2507/11 vehicle and because it was possible for him to make a profit or loss from the subcontract arrangement. [46] I also consider the facts of Decision No. 1270/06 quite different from this appeal. In that case, the taxi driver was found to be an independent operator despite the fact that the relationship with the company had, for a time, been subject to a collective agreement which contained rules governing the relationship. The driver was also prohibited from driving for a competitor while working under the banner of the company. On the other hand, the driver in that case paid a set fee for dispatching services. He also paid for his car washes and gas, which was not the case for the taxi drivers in this appeal. The taxi driver in Decision No. 1270/06 leased the taxi-cab from a different person than the dispatcher and he was making payments with a view to taking over the lease. In my view, those arrangements meant that he had a greater opportunity for profit and loss than the drivers in this case. [47] In this case, the only substantive way in which the drivers could increase their profit was to drive more hours. In my view, that fact can be given little weight as evidence of independent status. Employees can often increase their earnings by working more hours. The drivers in this appeal had not made any investment in their business sufficient to increase their chance of profit or that put them at a risk of loss. All the risks were borne by the company. The company was at risk if the gas prices went up, or if the insurance costs went up, or if damages occurred that were not covered by the insurance, or if the cost of vehicle maintenance went up. The drivers did not make any substantive investment in the business activity and did not incur any risk of the loss of that investment. Further, they operated in an environment in which the company had substantial control of the work activity. They leased the cars for no more than 12 hours at a time and were required to keep the dispatcher aware of when they went off work. They were contractually required to maintain clean cars and a clean appearance. If the company was not satisfied with their compliance with these requirements it was under no obligation to continue to use them. The drivers were required to return the cars to the company site when they were not driving. The company owned the cars. [48] The strongest factors supporting independent status are: 1) the fact that the contract specified that the drivers were not workers and 2) that Canada Revenue has accepted that they are not workers for its purposes. However, while, in my view, these factors are important, they ares not conclusive. The evidence about the substance of the relationship is also important. I note that, in this case, the business arrangements of the taxi drivers were not of sufficient substance for any of the drivers to be required to have a GST number. I find it unclear that they had sufficient earnings or business substance for me to infer that they had equal bargaining power in entering into the contract arrangements. [49] Further, it is almost twenty years since the Board first adopted its organizational test. It has used questionnaires for various industry segments since about The company could or should have been aware that a ruling by the CRA does not necessarily mean that the Board s ruling will be the same. The law and policy provisions applicable to the Board are different. [50] I consider the substance of the relationship in this case to be consistent with the status determined under the questionnaire: that the drivers are workers and not independent operators.

8 Page: 7 Decision No. 2507/11 (v) The issue of the retroactive application of the status change [51] Mr. Young submits that even if the drivers are workers, the employer should not be assessed for the time period prior to March 2009, when the appellant was informed of the Board s determination. He relies on the Tribunal decisions, such as Decision No. 195/00, that have recognized the principles of detrimental reliance. [52] I have determined that the change in status is to have effect from January 1, 2009, the commencement of the year that the appellant was notified of the general change in status, for the reasons set out below. [53] I have first considered the evidence of the employer s prior relationship with the Board. I have then considered the Board policy. I have then considered how the policy is to be applied. (a) The evidence about the 2001 Board processes [54] Mr. Young refers me to the testimony of the employer s accountant about his interactions with the Board in The witness E. P. testified that he was the company s comptroller for many years. He dealt with the Board when the issue of the status of the company s taxi drivers was raised in He attended a meeting with WSIB personnel on December 12, The Board held this meeting with the employer to discuss whether the drivers were workers or independent operators. The employer was aware of earlier Board policies, prior to the early 1990s, under which its arrangements with its drivers had met the criteria for independence. The witness indicated that the company s contract had been based on a sample contract provided by the Board. However, in 2001, the Board asked the company to have the drivers complete its questionnaires. The company declined to complete the questionnaires at that time because it felt that they were biased towards worker status. After the meeting with the WSIB, the company was told the WSIB would look into the issue. It sent the WSIB information that was requested. [55] The witness testified that he never heard further. Canada Revenue had agreed that the taxi drivers were independent operators, and so he understood from this silence that the Board had also agreed. [56] Mr. Young refers me to the letter sent to the company by the Board dated November 13, 2001, which states: This information provided will be reviewed by Employer Audit Services Management. If additional information is required, then your firm will be contacted directly. [57] Mr. Young submits that the employer was entitled to rely on the fact that it did not hear further to mean that the Board had accepted its position that the drivers were not its workers. (b) The 4 claims made by taxi drivers in the time period from 2001 to 2006 [58] It is also relevant that several taxi drivers made claims to the Board for injuries. In particular, claims were made by C.D. based on an accident date of November 29, 2003, by D.B., based on an accident date of June 1, 2004, by G.K. with an accident date in March/April 2005, and by J. U. based on an accident date of June 30, [59] In each case, the appellant informed the Board that the taxi drivers were not workers. In each case, from the file, the claim was abandoned by the taxi driver. The status issue was not formally adjudicated. I infer from the file that the taxi drivers acquiesced in the view of the appellant that there was no employment relationship. That provision was expressly stated in the

9 Page: 8 Decision No. 2507/11 contract that had been signed, and so it would not have been unusual for the taxi driver to have acquiesced on that basis. However, in my view, the Board also acquiesced in that view. It did not find it necessary to make a status ruling and the fact that these claims were made was not of sufficient concern for it to commence a general review of the status issue or an audit. It also did not make a new request for questionnaires to be completed by the appellant s taxi drivers. (c) The Canada Revenue Agency Ruling of December 29, 2005 [60] On December 29, 2005, the employer received a ruling from CRA confirming that its taxi drivers were not workers. Mr. Young submits that this fact also confirmed the appellant in its belief that the taxi drivers were not its employees. (d) The claim of H.B. in 2006 [61] There was no further relevant communication from the Board until one of the appellant s taxi drivers, H. B., made a claim in [62] The claim was with respect to an accident that had occurred on December 21, A Board manager, Ms. K. Orth, initially wrote H.B. in a letter dated September 21, 2006 that she was an independent operator. The letter reflected information from the appellant that that was the case. However, Ms. Oath s letter states that the decision was subject to review at any time. [63] From the file, the appellant was then sent a further letter dated January 8, 2007, by an account manager, Ms. L. Muia, overturning the prior decision and informing H.B. and the appellant that H.B. was a worker. That letter indicates that this decision was based on a consideration of the contract, of a record of employment form issued to H.B. in 2004, when she terminated her employment with the appellant, on a T4 form that had been issued to H.B. and on a questionnaire completed by H.B. It appears that H.B. had provided the Board with further information leading to a reconsideration of the initial finding. [64] Mr. Young notes that the questionnaire completed by H.B. is not found in the Board file and that the appellant was never given the opportunity to respond to it. He submits that the record of employment and T-4 issued were in the form used by CRA for independent operators. CRA had accepted that the taxi drivers were independent operators. He submits that Ms. Muia had apparently confused the import of those forms. [65] Mr. Young submits that Ms. Muia s position, of account manager, is a job that has since been renamed account specialist and is a more junior position and that that of a manager of a group. He submits that Ms. Muia should not have overturned (or reconsidered) the letter of Ms. Orth, who was the manager of the group. If the September 21, 2006 was to be reconsidered, he submits it should have been done by someone at the same level of authority as Ms. Orth. [66] However, I have found that the taxi drivers were workers based on my consideration of the substance of this issue. In any event, the letter of Ms. Muia was not appealed. Therefore these submissions are relevant to this aspect of the appeal only because I must address whether the letter of January 8, 2007 was sufficient to put the appellant on notice that its taxi drivers were workers. That is relevant to its claim of detrimental reliance. The company did not appeal the determination that H.B. was a worker.

10 Page: 9 Decision No. 2507/11 [67] However, after the Board investigated H.B. s claim, the Board denied the claim. In a letter dated December 23, 2008, the Board determined that it was not able to relate the worker s diagnosis of February 13, 2006 to the 2003 accident claimed. Therefore the employer s cost account was never charged any benefits for this claim. [68] Mr. Young submits that while the company was aware that this person was found to be a worker, it was not aware of the implications of that finding for its other taxi drivers. The Board did not take any steps with respect to the general question of the status of the drivers. It did not refer the matter for an audit or for investigation and it did not make a more general ruling at that time. [69] The appellant continued not to pay assessments for its taxi drivers. The Board took no steps in that regard. (e) The 5 claims made after 2006 [70] There were also several claims made by taxi drivers after the date on which H.B. made her claim. (1) The claim of F.A: accident date May 15, 2007 [71] A claim was filed by F. A. for an accident on May 15, However, the file notes indicate that the claims adjudicator was told (once more) by the employer that the taxi driver was an independent operator. The claims adjudicator did not take any further steps. From the file, the claim was abandoned. While there is again no formal adjudication of the status issue, it appears that, once again, both the claimant and the Board acquiesced in the position taken by the employer, that the taxi drivers were not workers. [72] The appellant continued not to pay assessments for its taxi drivers. The Board did not add the taxi driver classification to the appellant s accounts. (2) The claim of J. U.: accident date November 18, 2007 [73] A second claim was filed by J.U., the taxi driver who had previously abandoned a claim in This claim was based on an accident date of November 18, However, this claim was also abandoned. It is not clear from the file materials that this claim was ever brought to the appellant s attention. [74] Again the Board did not make a formal status decision and did not refer the status question for further investigation or for an audit. The appellant continued not to pay assessments. (3) The claim of D. W. : accident date March 15, 2008 [75] Another taxi driver, D.W., made a claim for an accident on March 15, [76] On April 24, 2008, the claims adjudicator notes in a memo that he has applied a late reporting penalty because the Form 7 is outstanding. However there is nothing to indicate that this claims adjudicator had determined the status issue at this date, or even considered it. Mr. Young also submits that there is nothing in the claim file to indicate that the employer had been informed of this accident. The claim was commenced by a Form 8 filed by the worker s doctor. No Form 6 was filed. [77] This claim also was not pursued by D.W. Again, it was abandoned.

11 Page: 10 Decision No. 2507/11 (4) The claim of Z. I.: accident date of September 25, 2008 [78] Z. I. made a claim to the Board based on an accident date of September 25, When the employer was informed of this claim, it wrote the WSIB a letter dated October 8, 2008 that Z. I. was self employed and was not its employee. The letter states: [Z.I. ] is a self-employed service contract provider. See the enclosed signed Service Contract. He was never employed by [the appellant]. He only rented the vehicle [79] Again, the claim did not proceed and was apparently abandoned. The Board did not commence any inquiries or take any action. (5) The claim of M. W.: accident date of December 10, 2008 [80] M.W. also made a claim for an accident on December 10, When the appellant was notified of the claim, it sent a letter dated December 22, 2008, to the effect that M.W. was not its employee and was self-employed. The letter states: Please be advised that [M.W.} is a self employed service contract provider. See the enclosed signed Service Contract. He was never employed by the [appellant]. He only rented the vehicle from [the appellant]. We are constantly penalized for these types of claims and would appreciate any advice you may have to help assist us in avoiding this unpleasant action. [81] There is then, for the first time, some evidence that the Board is beginning to address the general issue of the status of these taxi drivers. In an internal dated 1/02/09 that the account specialist, J. Pierce, sent to the operations branch, Ms. Pierce states: I just inherited all the taxi businesses here in [the appellant s city area] I am currently working with another taxi company to determine [independent operator status or workers] and they have been persistent in their opinion that their drivers are [independent operators]. We ve had a couple of meetings, and right now they are resisting my attempt to get the questionnaires completed. From what I understand [this other taxi company] is the most co-operative firm to be dealing with [in this city area] and I have yet to approach or have any interaction with [the appellant]. I ve reviewed the firm file, and there are worker status rulings done by previous account managers, yet there is no taxi rate account, and there should be. I am tempted to go back to one of the decision dates [2006] and add the taxi rate, but I d have to look at it. At the least, they should have it in [82] While the account specialist states in this memo that there had been prior worker status rulings, that is not correct. From the material on file in this appeal, there had only been one prior ruling to this date, with respect to H.B. The letter to the appellant informing it that H.B. was a worker was dated January 8, [83] Again, in the end, the claim of M.W. was abandoned by the claimant. Despite the account specialist s memo to the effect that she considered the taxi driver to be a worker, the Board did not send a letter to either the worker or the appellant making a status determination. There is nothing in this claim file to indicate that the Board responded specifically to the employer s letter of December 22, No benefits were paid.

12 Page: 11 Decision No. 2507/11 (f) The Board s communication about the status issue in 2009 [84] However, the Board specialist s initiatives in this area did, it appears, lead to a more general review. The appellant received a letter dated March 20, 2009 from the account specialist indicating that from the material submitted the appellant s taxi drivers are deemed to be workers as a result of the January 2007 letter sent in the claim of H.B., which had not been appealed. The letter stated that a taxi driver account was being added to the appellant s accounts from January 1, That letter ultimately led to the ARO decision which is the subject of this appeal. [85] However, the ARO determined that the recognition of worker status should take effect as of January 1, 2007, in accordance with the two-prior-year rule of Board policy, and not from January 1, (g) The issue of retroactivity: the Board policy [86] Operational Policy Manual, Document No : Employer Premium Adjustments provides that: The WSIB makes debit or credit premium adjustments to employer accounts: From the notification date back to January 1 of the second prior year, or From the notification date back to the actual date of the change giving rise to the adjustment if the change occurred after January 1 of the second prior year. [87] There is an exception for classification changes. The policy provides that classification changes are limited to January 1 of the current year. The current year is the year of the notification date. For WSIB operating areas other than Employer Audit, the notification date for a premium adjustment is the date of a site visit documented in the employer s file. For the audit area, the date is the date of the audit visit indicated on the Notice of Audit. [88] Like all Board policy, these provisions are subject to the merits and justice of the case when there are exceptional circumstances. [89] The ARO identified the notification date as the account specialist s ruling in her letter of March 2009 that the appellant s taxi drivers were workers. There was no site visit. This finding was consistent with Mr. Young s submission for the purposes of that hearing. However, the ARO applied the general two prior year rule, with the result that the change took effect from January 1, [90] Mr. Young submits that change should take effect only from the date that the Board notified the appellant of the change in March He submits that the appellant relied on the Board s past acquiescence to its detriment. It cannot adjust its financial arrangements with its taxi drivers retroactively to reflect its increased costs. (h) Conclusions: the retroactive application of the status change [91] I have determined that the status change should apply from January 1, 2009, the commencement of the current year in which the employer was informed that its taxi drivers were workers. [92] In my view, until March 2009, the pattern evidenced by the adjudication in the claims made to the Board, and the Board s general handling of those claims, reflects, on the whole, a pattern of acquiescence in and acceptance of the appellant s position that the taxi drivers were

13 Page: 12 Decision No. 2507/11 independent operators. The employer s contract with its taxi drivers had initially been based on a contract form provided by the Board. In 2001, the issue was specifically raised, but the Board acquiesced in the position that the taxi drivers were not workers. The Board knew that the appellant was not paying assessments for its taxi drivers. It did not pursue that matter. [93] Over the seven or eight years after 2001, there were ten claims made to the Board by the appellant s taxi drivers. The appellant consistently took the position in its communications to the Board about these claims that the taxi drivers were not workers. It was never charged any claim costs for these workers. In my view, for the most part, the Board acquiesced in the appellant s position. It did not proceed to review the issue generally. It did not require that the appellant start paying assessments. It did not add an account for the taxi drivers to the appellant s accounts. [94] It is true that in 2006 a ruling was made with respect to H.B. that she was a worker, and the employer was informed of that ruling. I accept that the employer did not formally appeal that ruling. However, the claim was denied for other reasons. The appellant was never charged any claim costs. It had little reason to undergo the expense of an appeal. The Board did not proceed to review the status of the appellant s taxi drivers generally. It did not request that the appellant start paying assessments for its taxi drivers, and the appellant did not do so. [95] Further, the case of H.B. was an anomaly. The Board continued, by its acquiescence, to appear to accept the employer s information that the taxi drivers were not workers in other cases, after 2006, until [96] I have also considered the fact that the Board appears to have applied a penalty against the appellant for not filing a Form 7 in the case of D.W. in However, the Board did this without formally addressing the status issue. I have considered whether, in that context, the fact that the penalty may have been paid without protest is a basis to mean that the appellant knew or ought to have known that its taxi drivers were workers. However, the appellant was reporting to the Board for its office employees, and so their making payments to the Board would not have been unusual. It is not clear to what extent it addressed its mind to the implications of that small charge. If the appellant had wanted to protest this penalty, it could have done so not only because of the status issue, but also because, from the file, it had never been told of the claim. Therefore I cannot infer from the fact that it may have paid this penalty without protest that it was acquiescing in a status ruling. There had not been a status ruling. I note also Decision No. 428/02. That is a case in which the Board took the position that it had the authority to assess an employer for a penalty for late filing of the Form 7 even when there was no compensable accident, in the circumstance that a claim had been made for an alleged compensable accident. On these facts, I cannot infer from the fact of the penalty that the Board had addressed its mind to the status issue in this case, or that the employer was implicitly informed that it had done so. [97] From the of the account specialist in early 2009, with respect to the claim of M.W., the Board was only then beginning a general review of the status issue as it related to taxidrivers in the appellant s city area. There were other taxi drivers working for at least one other taxi company whose alleged status as independent operators had not yet been adjudicated and for whom assessments were not being paid. Given that this is a matter that affects the competitive position of taxi companies generally, I am concerned about the implications of imposing a change retroactively during a time period that the Board was only commencing its general review of this business activity with other companies in the same city area.

14 Page: 13 Decision No. 2507/11 [98] I am aware that Board policy provides for the application of premium adjustments for two prior years in the general case. However, in my view, this principle applies most often in cases in which, at least on reasonable inquiry, the purported employer would have been in a position to know what assessments it should have paid for the time period in issue. It would generally apply in a situation in which it can be assumed that an employer who had not paid the correct assessments would have experienced a competitive advantage because of that nonpayment. However, given the Board s long-term substantial acquiescence in this case, and the likelihood that that acquiescence was affecting not only this taxi company but other companies, I cannot infer that that was the case here. [99] In this case, the issue of whether the appellant s taxi drivers were workers had been previously raised by the Board in The Board acquiesced in the appellant s position that they were not. Over the years, the appellant was persistent in letting the Board know of its position on this issue. At least one other taxi company in the same city area was taking the same position and was not paying assessments. It was only in 2009 that the Board proceeded to review the issue in a consistent way and to determine whether that approach was correct or not. It was only in 2009 that the Board acted to add a taxi driver classification to the employer s accounts, despite the fact that it had been receiving intermittent claims from the taxi drivers over the years. [100] Despite ten claims over the eight years between 2001 and 2009 and, admittedly, despite some varied approaches in the adjudication of the individual claims, the appellant had never been charged claim costs for any taxi driver and had never been asked to pay assessments for its taxi drivers. [101] In my view, the principles of detrimental reliance apply, on the merits and justice of the case. Given the Board s effective acquiescence in the appellant s position during the time period prior to 2009, I consider the case more analogous to cases that involve a change in the classification of workers than to situations that involve a failure on the part of an employer to pay proper assessments. In other words, until 2009, the appellant paid the assessments that the Board was charging it for the taxi drivers, based the appellant s understanding of how the taxi drivers were properly classified. The appellant understood that they were properly classified under no rate group and that the proper assessments paid for them was a zero amount. The policy provides that the effective date of a change in classification is January 1 of the current year in which the notice of audit is sent. I find that approach the fairest approach on the facts of this case. [102] I accept that the letter sent in March 2009 was equivalent in its impact to an audit notice. However, I consider it more equitable in the exceptional circumstances of the case for the change in the taxi drivers status to be recognized from January 1 of the current year than from January 1 of the year two years prior. [103] On these facts, I consider that the proper retroactivity date for the assessment of the taxi drivers as workers is January 1, (i) Debit and credit interest [104] The employer is entitled to relief of the premiums charged for 2007 and 2008 and of any associated debit interest charges. The employer is entitled to credit interest on the amounts to be refunded.

15 Page: 14 Decision No. 2507/11 DISPOSITION [105] The appeal is allowed in part. The taxi drivers are workers and not independent operators. However, the determination that the taxi drivers are workers is to have effect from January 1, 2009 and not January 1, The employer is entitled to be relieved of the premiums and debit interest charged with respect to payments for 2007 and 2008 and to credit interest on the amounts to be refunded by the Board. DATED: August 2, 2012 SIGNED: E.J. Smith