Business & Policy
Hiring uninsured contractors exposes farm to risk
By Theresa Whalen
Jan. 5, 2011 - Hiring contractors who are not covered by your province’s worker’s compensation might save a little money but it could ruin your farm business.
Helping farmers and ranchers reduce the risks in their operations is the core message of the theme Plan • Farm • Safety, a three-year focus for the Canadian agricultural safety campaign. In 2010, the campaign promoted "Plan" with safety walkabouts and planning for safety. This year, the focus is on "Farm" including implementation, documentation and training. And in 2012, emphasis will be on "Safety" including assessment, improvement and further development of safety systems. More information on the campaign is available at www.planfarmsafety.ca.
Some farm operators mistakenly think that if they hire services from an independent contractor or an occasional day worker, any follow-up safety or disability costs won’t be on their books. Wrong. Here is why. First you must distinguish between a self-employed, independent contractor and someone who is your employee – even if only occasionally. Typically, an independent contractor must meet all three of the following criteria: a) offer service to various clients; b) report to the government as a self-employed business; and, c) own and operate his or her own equipment.
If workers‘ compensation coverage is required in the agriculture sector in your province, contractors who don’t meet all three criteria are automatically covered by their employer’s premiums – and that is you! Even if worker’s compensation coverage is not required and an injury occurs, the contractor could sue you.
If your independent contractor meets the criteria and is a one-person operation, you should confirm that he does have the required worker’s compensation coverage or some other approved form of disability/liability insurance. You also should discuss and document your farm’s health and safety policies with the contractor and outline the contractor’s responsibilities for health and safety.
Furthermore, independent contractors may hire helpers. In that case, the contractor is an employer and must pay workers’ compensation premiums for those employees. However, if you hire an independent contractor, it is still your responsibility to ensure that he or she is registered with the provincial workers’ compensation authority and that premiums for employees are in good standing.
Ask the contractor to supply you with a clearance certificate. You will then need to verify the clearance certificate with the provincial workers’ compensation body to ensure it is current and in good standing and to determine whether it includes or exempts the contractor.
If your independent contract is exempt from workers’ compensation, then you should request proof of coverage under other accident and sickness insurance and verify it with the insuring company.
It is also important to make sure all independent contractors carry public liability and property damage insurance. Again, do your homework by taking the time to check with the insurance agency to verify that the policy is currently effective and will continue throughout the duration of your engagement.
As a farm operator, you must manage risks to your business whether they are obvious or not. Knowing how your province’s workers’ compensation system works and your role within it is an important part of a successful farm business risk management strategy. For information specific to your farm operation, contact your provincial workers’ compensation authority.
For more information, check out the core Canada FarmSafe Plan at www.planfarmsafety.ca.