New research published by the Canadian Federation of Independent Business (CFIB) suggests that several overfunded provincial workers' compensation boards are holding on to billions of excess funds that it says should be returned to small businesses.

The latest edition of the CFIB’s report annual Funding Fairness report suggests that the value of these excess funds could be as much as $4.9 billion.

"Little has changed since our report last year, and the same five boards – with a new addition of Ontario – are sitting on huge surpluses they don't need while small businesses struggle with lower consumer demand and rising costs on all levels. These surplus funds would allow business owners to pay down their debt, offset the elevated costs of doing business, invest in their employees through health and safety and other measures, and grow their business," said Marvin Cruz, CFIB's director of research. "Overfunded boards are in a strong financial position to issue rebates to small businesses without coming close to affecting worker payouts."

The CFIB says boards in British Columbia, Manitoba, Ontario, New Brunswick, Prince Edward Island, and the Yukon are overfunded, meaning they exceeded their desired funding target. Manitoba's board is the most overfunded at 160% when its own funding target is 130%.

Nine out of 12 boards now have rebate policies in place to return surplus funds to employers. CFIB estimates that returning excess WCB money to employers could provide a small business with five employees a rebate ranging from $1,745 in Ontario to $5,360 in New Brunswick.

In recent years, boards have distributed surplus funds to employers, with Manitoba returning $118 million in 2024, Prince Edward Island $21 million in 2023, and Ontario $1.2 billion in 2022. Looking forward, Manitoba anticipates rebates to employers through 2026 with the goal of reducing their funding ratio to the funding target of 130%. Prince Edward Island has yet to announce a 2024 rebate plan, despite being overfunded last year.

Ontario is the only province that legislates the return of board surplus funds to employers, including mandatory rebates when the Workplace Safety and Insurance Board (WSIB)'s funding level is at least 125%. In April 2022, the WSIB distributed $1.2 billion in surplus funds to almost 300,000 eligible Ontario businesses when the WSIB's funding level was within the discretionary range for surplus rebates allowed under the legislation (115%-124.99%).

"CFIB encourages all provinces to follow Ontario's lead and make the return of WCB surplus funds law," said Julie Kwiecinski, CFIB's director of provincial affairs for Ontario. "We also urge all governments that have boards with surpluses over their funding targets to issue employer rebates now, and regularly in the future."

To ensure fairness, consistency and certainty for employers, CFIB recommends that provincial and territorial governments:

• Return surplus funds to employers or lower employer premiums where the funding ratio exceeds the board's funding target, with a stronger preference for a rebate to eligible employers.
• Legislate the return of WCB surplus funds to eligible employers.
• Implement mandatory distribution policies, so surplus funds are returned on a regular basis.
• Enhance WCB transparency and accessibility by setting dates to publicly release board funding levels.

"Most employers say that workers' compensation premiums are one of the most harmful taxes to their business, because as a payroll tax, they're profit insensitive," said Kwiecinski. "WCBs are directly funded by employers, so we're just asking governments to return surplus money that belongs to businesses that pay into WCBs."