Can WCB Nova Scotia make a buyer pay the seller’s unpaid assessments?

Yes, in some cases. Section 138 of the Workers’ Compensation Act applies where an employer has any amount of assessment unpaid and its business, or any part of it, has been sold, leased, transferred or disposed of, whether by operation of law or otherwise. Subject to subsection (2), the Board may then deem any person to be the successor of the employer and levy and collect from the successor any assessment that was outstanding before the event. The Act says “may”. The Board is not required to deem anyone a successor.

Other events the section covers

A sale is not the only trigger. Section 138(1) also names a business that has changed ownership, reincorporated or restructured in any other way, and a business that has been contracted out to avoid obligations under the Act. Either of those, like a sale, lets the Board consider treating a person as the successor where the employer has an assessment unpaid, subject to subsection (2). If the deal is a share purchase, a restructuring or a transfer of part of the operation, read the section against the facts with a lawyer rather than assuming it does not apply.

The limit in subsection 138(2)

The power is subject to subsection (2). No person shall be deemed the successor of an employer unless the person has, in the opinion of the Board, a real and substantial connection to the employer after the sale or other event. This page does not say how the Board applies that test. That is a question for the Board and for a lawyer licensed in Nova Scotia. Subsection (3) adds that an amount required to be paid under clause (1)(d) may be collected by the Board in the same manner as the collection of an assessment.

What a clearance letter shows

WCB Nova Scotia says a business’s WCB clearance status shows whether it’s in good standing. It describes a clearance letter as a document confirming that a business is, among other listed items, free of outstanding balances. The page does not say that a clearance letter protects a buyer from section 138, so do not assume it does. Ask WCB Nova Scotia directly before closing.

• What a clearance letter for the seller will and will not cover in a purchase of a business or part of one.
• Whether the seller’s account is registered and in good standing, and whether any balance is outstanding.
• How the Board would treat a share sale, a restructuring or an asset purchase of only part of the business.

A separate rule for employees’ length of service

Section 12 of the Labour Standards Code is a different rule. It deals with the period of employment of an employee when an activity, business, trade or undertaking is disposed of, transferred or sold in any manner or amalgamated. It is not part of the workers’ compensation system. See employees when you buy a business in Nova Scotia for that rule. This page covers Nova Scotia only; check the rules where you are.