Assigning insurable earnings
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We set an annual maximum for insurable earnings. For 2023, the annual maximum was $110,000. If you're closing an account in 2024, please use the annual insurable earnings maximum of $112,500.
North American Industry Classification System (NAICS) codes are assigned to your account based on your business activity(ies), and insurable earnings are reported under the NAICS codes.
For accounts with only one NAICS code, all earnings are direct earnings and are reported under the one NAICS code.
Segregated earnings records
To assign insurable earnings when an account has multiple NAICS codes, you must maintain properly segregated earnings records for each NAICS code.
The proper segregation of earnings must be based on the direct labour time spent on each business activity and must be verifiable through earnings records.
- for employees who work in one business activity, all earnings are assigned to the NAICS code for that business activity
- for employees who divide their time among two or more business activities, you must use your segregated records to assign the earnings to the appropriate NAICS codes according to the direct labour time spent in each NAICS code
Example 1
Segregating earnings based on labour time spent in the business activity of the NAICS code
A business does four different business activities and is classified in four different NAICS codes. Some employees do work only related to one NAICS code. Others do work related to more than one NAICS code.
You must keep segregated records that show the amount of direct earnings each employee has for each NAICS code. This way, the business can directly assign the insurable earnings of each employee to the appropriate NAICS code based on labour time spent in each business activity.
Optional insurance amounts or earnings from ancillary operations that can be directly assigned to a NAICS code.
Assign these earnings directly to the appropriate NAICS code if:
- they support more than one NAICS code, and
- their earnings records are segregated by the NAICS code
Example 2
How to assign direct earnings for ancillary operations
The business in the previous example has three office staff whose work supports all four business activities. The business keeps segregated earnings records for each office employee.
The business assigns each person's earnings to all the NAICS codes according to the direct labour time spent supporting the business activity in each NAICS code. All the earnings of the ancillary operation in this case are direct earnings and can be directly assigned to a NAICS code.
See our policy on Classification Scheme for more information on ancillary operations.
Common earnings
For businesses with more than one NAICS code, common earnings are any earnings from ancillary operations or optional insurance amounts that cannot be directly assigned to a single NAICS code, and cannot be supported by segregated earnings records. These are called common ancillary earnings as they support more than one business activity and must be assigned to the relevant NAICS code on a prorated basis.
If the business in example 2 in the segregated earnings records section wasn't able to segregate the earnings of the three office staff performing ancillary work to support the four business activities, then the insurable earnings for the office employees would be considered common ancillary earnings.
The business will have to prorate the common earnings based on the direct earnings for each NAICS code and then assign the appropriate prorated amount to each NAICS code.
Assigning common earnings
For businesses with multiple NAICS codes and common earnings, the total insurable earnings for a NAICS code equals the NAICS code's direct earnings plus the prorated common earnings for the NAICS code.
Example
You can determine how much to assign to each NAICS code by using the
to calculate and allocate common earnings. For each step, the corresponding calculation in the example is explained in the chart.
In the example account, there are four NAICS codes with both direct and common earnings: 314110, 314910, 314120, and 314990.
| Step | Example |
|---|
- Determine the direct earnings for each NAICS code. Write the amounts in column 1 beside the NAICS code description.
| Review column 1. |
- Add together the direct earnings from all NAICS codes. Write the total in box 1.
| Total direct earnings is $500,000 (review box 1). |
- Determine the total common earnings. Write the total in box 2.
| Total common earnings is $48,000 (review box 2). |
- Divide the direct earnings for each NAICS code by the total direct earnings for all NAICS codes. This results in the proportion of common earnings to use for each NAICS code. Then multiply each amount by 100 to get the percentage. Write the percentages in column 2 beside the applicable NAICS code description (complete this calculation for each NAICS code).
| For NAICS code 314110, the direct earnings ($100,000) in column 1 is divided by the total direct earnings ($500,000) in box 1 and multiplied by 100. This gives the percentage (20%) in Column 2, which is used to determine the amount of common earnings to assign to each NAICS code. |
- Multiply the percentage for each NAICS code by the total common earnings box 2. This gives the amount of common earnings to assign to each NAICS code. Write the amounts in column 3 beside the applicable NAICS code description, (do this calculation for each NAICS code).
| For NAICS code 314110, multiply the percentage (20%) in column 2 by the total common earnings of $48,000 in box 2. This gives the amount of common earnings of -$9,600- in Column 3. |
- Add together the common earnings entered in column 3. Write the total in box B.
| Total prorated common earnings is $48,000 (review box 3). The amounts in box 2 and 3 should match. |
- Add the common earnings amount in column 3 plus the direct earnings in column 1 for each NAICS code. Write the totals in column 4 beside the applicable NAICS code (complete this calculation for each NAICS code).
| For NAICS code 314110, the common earnings $9,600 in Column 3 plus direct earnings ($100,000) in column 1 equals insurable earnings of $109,600 in Column 4. |
- Add together the insurable earnings in column 4 for each NAICS code. Write the total in box 4. This total equals the total direct box 1 plus common earnings box 2.
| Total insurable earnings is $548,000 (see Box 4). This total equals the direct earnings ($500,000) in box 1 plus the common earnings ($48,000) in box 3. |
- Transfer your calculations from the worksheet to your reconciliation form.
| |
Worksheet example:
Calculating and allocating common earnings
| | Column 1 | Column 2 | Column 3 | Column 4 |
|---|
| Classification | Direct earnings | Percentage of total
direct earnings | Prorated common
earnings | Insurable
earnings |
NAICS
code | NAICS code description | | Column 1 ÷ Box 1
x 100 | Box 2 x Column 2
÷ 100 | Column 1 + Column 3 |
| 314110 | Carpet and rug mills | $100,000 | 20% | $9,600 | $109,600 |
| 314910 | Textile bag and canvas mills | $250,000 | 50% | $24,000 | $274,000 |
| 314120 | Curtain and linen mills | $60,000 | 12% | $5,760 | $65,760 |
| 314990 | All other textile product mills | $90,000 | 18% | $8,640 | $98,640 |
| Total | | 100% | | |
| Total common earnings | | | | |
Assigning insurable earnings for construction
Multiple NAICS codes
If you have more than one NAICS code, the insurable earnings may be considered either 'common' or 'direct'. The insurable earnings of sole proprietors, partners and executive officers are considered common earnings if they cannot be segregated properly.
The earnings in the reduced premium rate for non-exempt partners and executive officers are an exception to the rules for prorating common earnings. Insurable earnings for the eligible partners or executive officers are assigned the reduced premium rate and aren't considered common earnings. The reduced premium rate for non-exempt partners and executive officers is not to be used for the purpose of prorating common earnings.
Learn more about mandatory coverage in construction.
Example: Corporation with multiple NAICS codes including non-exempt partners and executive officers
The Riel Construction Inc. has two executive officers. The corporation takes commercial roofing contracts and siding contracts and has dedicated employees for each business activity.
One executive officer attends job sites with the employees. The other executive officer does not perform any construction work, but has chosen not to be exempt from WSIB coverage. The WSIB has confirmed the addition of the reduced premium rate for the non-exempt executive officer who does not perform any construction work.
For this example only, the premium rate for roofing (NAICS code 1) is $8 per $100 of insurable earnings, the premium rate for siding (NAICS code 2) is $10 per $100 of insurable earnings, and the reduced premium rate for non-exempt partners and executive officers (NAICS code 3) is $0.25 per $100 of insurable earnings.
The direct insurable earnings is $200,000 for the roofing employees and $50,000 for the siding employees. The insurable earnings for the non-exempt executive officer who does not perform construction work is $70,000 (box 2A – Separate Earnings). The insurable earnings for the executive officer performing construction work is $80,000 (box 2 – Common earnings).
In the example, there are three NAICS codes with both direct and common earnings:
| Step | Example |
|---|
| 1. Determine the direct earnings for each NAICS code, excluding non-exempt partners and executive officers for the year. Write the amounts in column 1 beside the NAICS code description | NAICS code 1= $200,000
NAICS code 2 = $50,000 |
| 2. Add together the direct earnings from all NAICS codes for the year. Write the total in box 1. | The corporation's total direct earnings are $250,000. |
| 3. Determine the total common earnings including insurable earnings for the executive officers working in construction, if they cannot properly segregate their earnings. Write the total in box 2. | For this example, the common earnings are for the one executive officer performing construction work who cannot segregate their earnings. Total common earnings is $80,000 for 2022. (review box 2). |
| 4. Determine the total insurable earnings for non-exempt partners and executive officers. Write the total in box 2A and in column 4, opposite the NAICS code description for this rate. | The total insurable earnings for the executive officer under non-exempt partners and executive officers. NAICS code 3 = $70,000. |
| 5. Calculate the proportion of common earnings to use for each NAICS code by dividing each NAICS code by the total direct earnings calculated in step 1. | NAICS code 1: divide the direct earnings ($200,000) in column 1 by the total direct earnings ($250,000) in box 1 and multiply by 100. Use the percentage (80%) in column 2 to determine the amount of common earnings to assign to NAICS code 1. NAICS code 2: divide the direct earnings ($50,000) in column 1 by the total direct earnings ($250,000) in box 1 and multiply by 100. Use the percentage (20%) in column 2 to determine the amount of common earnings to assign to NAICS code 2. |
| 6. Multiply the percentage for each NAICS code by the total common earnings box 2. Write the amounts in column 3 beside the applicable NAICS code description. | For NAICS code 1:
(80 X 80,000 ÷100 = 64,000) For NAICS code 2:
(20 X 80,000 ÷100 = 16,000) |
| 7. Add together all the common earnings entered in column 3. Write the total in box 3. This should equal the amount from step 3. | The total prorated common earnings for the corporation is $80,000. |
8. Add the common earnings amount in column 3 plus the direct earnings in column 1 for each NAICS code, excluding non-exempt partners and executive officers. Write the totals in column 4 beside the applicable NAICS code. | NAICS code 1: the common earnings plus direct earnings equals insurable earnings.
(64,000 + 200,000 = 264,000) NAICS code 2: the common earnings plus direct earnings equals insurable earnings.
(16,000 + 50,000 = 66,000) |
10. Calculate the total premium rate. | NAICS code 1: (264,000 X 8 ÷100 = 21,120)
NAICS code 2: (66,000 X 10 ÷100 = 6,600)
NAICS code 3: (70,000 X .25 ÷100 = 175)
Total premium due: (21,120 + 6,600 +175 = 27,895) |
Worksheet example: Calculating and allocating common earnings - construction
| | Column 1 | Column 2 | Column 3 | Column 4 |
|---|
| Classification | Direct earnings | Percentage of total
direct earnings | Prorated common
earnings | Insurable
earnings |
NAICS
code | NAICS code description | | Column 1 ÷ Box 1
x 100 | Box 2 x Column 2
÷ 100 | Column 1 + Column 3 |
| NAICS code 1 | Roofing | $200,000 | 80% | $64,000 | $264,000 |
| NAICS code 2 | Siding | $50,000 | 20% | $16,000 | $66,000 |
| NAICS code 3 | Reduced premium rate for non-exempt partners and executive officers | | | | $70,000 |
| | | | | | |
| Total | | 100% | | |
| Total common earnings | | | | |
| Total separate earnings | | | | |
Apply these steps for calculating your premiums for the reconciliation period (calendar year). Riel Construction Inc.’s premium is $27,895 for 2023.
Use the blank worksheet (PDF) to calculate amounts for Section B of the reconciliation form. If you're in the construction industry, refer to the worksheet for calculating and allocating common earnings in construction (PDF).
