In the recent WSIAT case of Decision No. 1462/23, the Tribunal had to consider whether the respondent could avail himself of the “executive officer exception” in a Right To Sue Application arising from an action commenced by the respondent with respect to injuries he sustained from a motor vehicle accident. In this case, the respondent was operating a car-hauler transport vehicle, which was parked on the side of a highway due to tire repair.

During this time, a transport vehicle being operated by the applicant collided with the respondent’s parked vehicle, resulting in injuries to the respondent. The respondent initiated a lawsuit against the applicant who then commenced a Right To Sue Application to bar the respondent’s action under section 28 of the Workplace Safety and Insurance Act (“WSIA”).

The Application was granted, affirming the respondent’s entitlement to benefits under the insurance plan and precluding further pursuit of a civil action under section 28 of the WSIA, which prohibits “workers” from commencing an action against any other Schedule 1 “worker”, “employer” or “executive officer.”

The respondent argued that he was not barred by section 28 of the WSIA because he was an “executive officer” at the time of the accident. Section 11(2) of the WSIA specifies that “the insurance plan does not apply to workers who are executive officers of a corporation.” This is known as the “Executive Officer Exception.” In this case, the respondent was the sole executive officer of his corporation with no employees.

The applicant contended that the Executive Officer Exception does not simply apply to anyone who unilaterally designates themselves as an executive officer of a corporation. The Tribunal must still look at the Organizational Test outlined in OPM Document No. 12-02-01, “Workers and Independent Operators,” to determine whether the individual in question is a “worker” for the purposes of the WSIA.

The Vice Chair concurred with the applicant, finding that merely holding the title of an “executive officer” in a company’s articles of incorporation is insufficient to find that the exception applies; individual must be an executive officer “in substance” as well. Specifically, the Tribunal must assess whether the individual is operating a business or solely using an incorporated structure, with the parties’ intentions at the time of the incident being pertinent. Based on the Organizational Test, the Vice-Chair determined that the respondent was under a “contract of service” and qualified as a “worker” as defined by the WSIA. The respondent did not own the truck they operated and did not have the potential to earn a profit, which strongly suggest that the respondent was a “worker”.

Also, the respondent did not have control of his work schedule. He had to “comply with instructions on what, when, where, and how to perform the work.” He worked exclusively for one company on a full-time basis. He could not refuse a job and could not have someone else complete a job for him i.e., he could not subcontract work. These examples are all strong indicators that the respondent was a “worker”.

The respondent argued that even though there was no potential for profit there was a risk of loss as he had to pay for any damage sustained to the vehicle while he was operating it. The Vice-Chair concluded:

I do not find, however, that a risk of loss absent an opportunity for profit supports a finding of independent operator status; in my view, it is merely a contract of service with an unfavorable term which shifts risk to the worker.

The Vice-Chair also concluded that even though the respondent was paid by cheque, without any deductions, did not outweigh the other factual elements which support a determination that the Respondent was in a “contract for service” and therefore, a “worker.”

Key Takeaways

This case shows that the Tribunal is not afraid to pierce the corporate veil to reveal a “worker” in an executive’s clothing. Just because an individual may purport to be an “executive officer” does not mean they are an “executive officer” under the WSIA. It is important to look at the relationship, role, and responsibilities an individual has in their business and employment. The Executive Officer Exclusion is intended to exclude from the insurance plan individuals in Schedule 1 companies that perform managerial or administrative roles where the risk of a workplace injury is significantly less than that of a Schedule 1 “worker”.

Also, it is important to note that the Executive Officer Exclusion does not go both ways. In other words, Section 28 still bars Schedule 1 “workers” from suing Schedule 1 “executive officers”, regardless of the exclusion (see my previous blog: Executive Protection)

Lastly, the Executive Officer Exclusion will not apply to “executive officers” who work for a Schedule 1 employer in the business of construction. Under most circumstances, coverage under the insurance plan is mandatory for “executive officers” in the construction business.

Decision No. 1462/23, 2023 ONWSIAT 1820 (CanLII)

Author

  • Ryland MacDonald

    Ryland is an experienced litigator in defending insurance claims arising from tort actions and accident benefits disputes, including complicated catastrophic impairment claims, WSIAT disputes, loss transfer and priority disputes.

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