New Year Construction Projects: Not Before A Clearance Certificate

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In the New Year, condo corporations and their managers should pay close attention to new rules from the Workplace Safety and Insurance Board (“WSIB”) requiring them to obtain clearance certificates from the contractors they might hire to carry out construction work.

Since January 1, 2013, independent operators, sole proprietors, partners in a partnership, and executive officers of corporations in the construction industry are required to register with the WSIB. These individuals must now register for mandatory coverage. To ensure compliance with this new requirement, the WSIB also requires a principal (which includes condominium corporations) hiring any contractor for a construction project to obtain a clearance certificate before construction work begins.

Until December 31, 2013, the WSIB will continue to refrain from prosecuting anyone for failing to register and failing to obtain clearance certificates. But as of January 1, 2014, the WSIB will begin investigating and laying charges for non-compliance.

What are Clearance Certificates?

The purpose of a clearance certificate is to ensure that the contractor is in compliance with the new mandatory coverage requirements and that their accounts with the WSIB are in good standing.

A clearance certificate must be valid for the entire period during which construction is undertaken. Clearance certificates are only valid for 90 days, but are subject to renewal. Principals and contractors must keep copies of clearance certificates for a period of 3 years.

Obtaining a clearance certificate absolves the principal from any liability arising from potential outstanding amounts owed by the contractor to the WSIB. Through the clearance certificate program, the WSIB is effectively waiving its right to pursue payment from the principal for any outstanding amounts owed by a contractor or subcontractor.

A principal must request a clearance certificate from contractors before any construction work begins. Not requesting a clearance certificate or allowing construction work to begin before one is issued are offences under the Workplace Safety and Insurance Act (“WSIA”).

Exemptions

Some contractors are not required to register with the WSIB. For example, mandatory coverage does not apply if the independent operator, sole proprietor, partner in a partnership, and executive officer of construction corporations undertakes exclusively home renovation construction. A contractor working in a condominium building is likely not carrying out exclusively home renovation work and the exemption would not apply.

Penalties

Penalties for non-compliance under the WSIA are hefty. If an individual commits an offence, the penalty is a fine not exceeding $25,000 or imprisonment not exceeding six months, or both. If a corporation commits an offence, the penalty is a fine not exceeding $100,000.

Topics:  Canada, Clearance, Condominiums, Contractors, WSIB

Published In: Business Organization Updates, Construction Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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