How do I check a seller’s WorkplaceNL account before buying a business in Newfoundland and Labrador?

Newfoundland and Labrador’s Workplace Health, Safety and Compensation Act, 2022 lets legal counsel request an employer’s account status, which the commission must provide not more than 21 days after it receives the request. An account status given to legal counsel is valid for 45 days. The Act also makes an amount certified as being in default under section 140 a first lien on the person’s entire assets, subject to the exceptions in section 142, so ask your lawyer to check the seller’s account before closing.

What the Act says about the request

Under the Act, where a person requests information about an employer’s account status, the commission may disclose it by electronic means. The request must come with the information the commission requires to identify the transaction it concerns. Where the request is made by legal counsel, the commission shall provide the requested account status not more than 21 days after it receives the request. The commission may charge a fee for providing account status and may set different fees, or waive fees, for different categories of people asking. Ask your lawyer or WorkplaceNL how to file the request and what it will cost.

Why the account matters to a buyer

The 2022 Act says an amount certified as being in default under section 140 is, until paid, a first lien upon the entire assets of the person. It has priority over all other claims except a claim for unpaid wages under the Labour Standards Act and a mechanics lien registered under the Mechanics’ Lien Act. Section 146(2) separately says that, subject to municipal taxes and a lien with respect to wages under the Mechanics’ Lien Act, the amount of an assessment, or a judgment entered in relation to one, is a first lien on all property, real and personal, of the person to whom the assessment is charged and on all property used in or in connection with or produced in or by the industry for which the employer has been assessed that is owned by another person. If the seller owes assessments, ask your lawyer whether a lien under the Act could attach to the assets you are buying. The account status tells your lawyer what the seller’s account shows before the deal closes.

If the commission does not answer in time

The Act has a rule for a late answer, and it applies where three things are true. Legal counsel made the request, the commission did not provide the account status within 21 days of receiving it, and a transaction for which the request was made was completed after that 21-day period but before the commission provided the status. In that case the assets in the transaction are considered free and clear of a lien imposed under the Act, and a security interest in the transaction has priority over such a lien. Do not plan around this rule. Ask your lawyer to file early and to track the 21 days.

How long the result lasts, and the clearance policy

The Act says an account status given to legal counsel is valid for 45 days after it was provided to the counsel who asked. If closing slips past that, ask your lawyer whether a fresh request is needed. WorkplaceNL’s clearance policy, ES-16, says a clearance states that an employer is in good standing and has met the reporting and payment requirements of the Act to date, and that by issuing a clearance for a change of ownership or sale of a business it waives its lien on the assets transferred to the purchaser in that transaction. That policy predates the 2022 Act, which the Association of Workers’ Compensation Boards of Canada lists as in effect, so confirm the current policy with WorkplaceNL.