As of January 1, 2013, almost every construction worker in the province of Ontario is required to be covered by the Workplace Safety and Insurance Board (WSIB). The Ontario Construction Secretariat (OCS) applauds the changes, saying they will help to combat the underground economy since the new rules close a loophole that allowed many contractors to style their employees as independent contractors.
“Before mandatory WSIB coverage, many Ontario construction workers were able to not only evade their taxes which fund important public services, but to also avoid making contributions to the funds that compensate injured workers,” says Sean Strickland, chief executive officer of the OCS.
The OCS has conducted several studies on the underground construction economy in response to growing concerns expressed by contractors and construction unions. The studies found that underground construction activity amounts to between $1.4 billion to $2.4 billion in evaded taxes and WSIB fees. They also showed that by classing employees as ‘independent operators’ contractors gain an illegitimate advantage ranging from 20% to 50% of labour costs.
As well, OCS points out that the underground economy weakens support for apprenticeship and training.