Northern Exposure

Putting Canadians first: overhaul of the temporary foreign worker program

By Isabelle Dongier

As we have repeatedly reported, there have been many changes to Canada’s immigration program in the past 18 months. Amendments to the Immigration and Refugee Protection Regulations were introduced in December 2013 to make it tougher and more costly for Canadian employers to hire foreign workers.

Earlier this year, Citizenship and Immigration Canada and Employment and Social Development Canada stepped up enforcement in response to increasing concerns about the Temporary Foreign Worker Program. And at least four employers (in British Columbia, Ontario, and Newfoundland) have had their Labour Market Opinions revoked or suspended.

Perhaps the most significant changes came last month, when the Canadian government introduced another series of changes to its Temporary Foreign Worker Program (TFWP). The goal of these June 20, 2014, changes? To reinforce the TFWP and ensure that Canadian workers are always given priority over foreign workers.

Changes in force immediately are those affecting the Labour Market Opinion process, now renamed Labour Market Impact Assessment (LMIA). Other changes will be implemented later this year or in 2015.

Most significant changes

So what’s all the fuss about? The most significant changes are as follows:

  • The LMIA process has become more comprehensive and rigorous. It will require more information from employers about their recruitment efforts within Canada and reasons for rejecting Canadian candidates for their available jobs.
  • Effective immediately, the LMIA processing fee is increased from $275 to $1,000.
  • The moratorium on LMIA applications for the Food Services sector in place since the end of April 2014 is now over.
  • The concept of “specialized knowledge” under the Intra-Company Transfer category is now more defined. To qualify under this category, applicants must demonstrate a high degree of both proprietary knowledge and advanced expertise. In addition, a wage floor has been imposed for foreign nationals from countries that Canada does not have a free trade agreement with, set at the prevailing wage for the worker’s occupation and region of destination.
  • These changes do not apply at this stage in the province of Quebec, with the exception of the increase in the LMIA processing fee.

New high wage/low wage distinction

The LMIA process will now be based on wage level instead of the National Occupation Classification, a matrix based on skill level. Temporary foreign workers will be divided into two groups:

  • “High wage” if paid at or above the provincial median hourly wage; and
  • “Low wage” if paid below the provincial median hourly wage.

Provincial median hourly wages vary between $17.26 (Prince Edward Island) and $32.53 (Northwest Territories). They are set at $20 (Quebec), $21 (Ontario), $24.23 (Alberta), and $21.79 (British Columbia).

Other changes relating to the new high wage/low wage distinction include:

  • In areas where the annual unemployment rate is over 6 percent, no LMIA applications will be processed for jobs in the Accommodation, Food Services, and Retail Sales sectors for 10 listed low-skill-level occupations.
  • The maximum duration of LMIA approved work permits for all low-wage occupations will be reduced from two years to one year (summer 2015). Employers will be required to reapply every year.
  • There is a new cap for employers with 10 or more employees applying for an LMIA. No more than 10 percent to 30 percent of the employer’s workforce can consist of low-wage temporary foreign workers. This measure aims at ensuring that the TFWP is used only as a last resort. The cap will be implemented progressively from 30 percent in 2014 to 10 percent in 2016.
  • With limited exceptions, employers wishing to hire temporary foreign workers in high-wage positions must now submit a transition plan with their LMIA application. The plan must describe the present and future activities and investments made to help Canadians and permanent residents develop new skills and competencies. It must also describe steps taken to help temporary workers transitioning to permanent residence status. Reports on the results of the transition plan will be requested when reapplying for an LMIA or in the course of an inspection.

Enforcement and compliance

Enforcement and compliance also will be beefed up:

  • The number and scope of employer inspections will be massively increased (March 2015). These inspections will be aimed at verifying employer compliance with the TFWP during the previous six years.
  • The “confidential tip line” launched in April 2014 to report abuse of the TFWP will continue. We are informed that any allegation of abuse will be investigated.
  • Additional financial resources will be granted to the Canada Border Services Agency for investigations (fall 2014).
  • New fines of up to $100,000 will be imposed on defaulting employers for violating the TFWP (fall 2014). These fines will be in addition to those already imposed for criminal offenses under the Immigration and Refugee Protection Act.

And that’s not all …

Although many of these changes have already taken place, there are more to come:

  • We are told that the reform will affect a number of LMIA-exempt work permits in the next year to 18 months. These include exemptions for North American Free Trade Agreement professionals, intra-company transferees, candidates qualifying under various provincial or international free trade agreements, or those providing significant benefits to Canada.
  • The government plans to introduce a new process requiring employers to file an application before a worker can apply for an LMIA-exempt work permit.
  • In addition, an even more robust employer compliance program is to be implemented in the summer of 2015. The program will include an increased number of inspections, penalties, bans from hiring foreign nationals, and criminal investigations.

It is clear that hiring temporary foreign workers is only becoming more complex. Canadian employers have more hoops to jump through, must acquire and disclose more information, and will be subject to increasing fines and penalties. If you are hiring such workers, be sure to pay attention to these more onerous obligations.

In the meantime, some limited good news—LMIAs will now be processed within 10 days for jobs for highest demand occupations (skilled trades), highest paid occupations (top 10 percent), or high-wage, short-duration jobs (120 days or less). This is significant progress compared to the current two- to three-month delay in some provinces.