The WSIB rules that affect contractors and subcontractors vary greatly from taxation and payroll rules because the liability for premiums extends beyond the initial contracting entity.  These rules generally apply to construction type contractors but they also apply to other industries such as couriers.

The general rule of WSIB premiums is that the principal contractor is responsible for premiums on all workers, whether employees, subcontractors or employees of subcontractors. 

A principal contractor is responsible for the premiums that are owing on the wages that are paid to the employees of subcontractors. The principal contractor can avoid liability for the premiums that are owed by subcontractors by obtaining a WSIB clearance certificate for the subcontractor, which states that the subcontractors are registered and they are paying WSIB premiums on all their workers. 

A WSIB clearance certificate is generally valid for a period of up to two months.  A contractor will pay premiums that are based on the wages paid to all employees except executive officers of a corporation and on all payments to subcontractors less the cost for major building materials or specialized equipment that are used directly in the performance of the contract.

Any construction subcontractors who are hiring employees must register with WSIB and pay premiums that are based on paid wages. 

Premiums are also due on any payments to self-employed individuals unless the individual is able to register with WSIB as an independent operator in which case WSIB coverage is not mandatory.  An individual can only be an independent operator if they carry on a business that is separate from that of the contractor.  This means that they must offer services to various firms, report their business to Canada Revenue that are used to provide the service. An independent operator may register with WSIB to obtain optional insurance for him or herself. An independent operator who does not obtain WSIB optional coverage may sue the contractor or any other person for negligence in the event of an accident to him or herself.

The only safe way to operate is to ensure that all subcontractors provide a WSIB clearance certificate to you before you pay them for their services.