LMIA Cap on Low Wage Employees

Canada’s Temporary Foreign Worker Program (the “TFWP“) allows employers to bring foreign workers to Canada to temporarily fill jobs for which qualified Canadians are not available. After the program became increasingly controversial in 2012-13, the Department of Employment and Social Development Canada (“ESDC“) on June 20, 2014 imposed a cap limiting the proportion of low-wage foreign workers that businesses can employ.

How the Cap Works

Employers with a company-wide business size of 10 or more employees are subject to the cap.  The cap percentage is determined for each individual worksite location and is based on paid positions and total hours worked at that worksite.

Employers that are new to the TFWP or returning employers who did not have any foreign workers on staff on June 20, 2014 are capped at 10% low-wage foreign workers for each work location.

The cap, implemented on June 20, 2014, was phased in to provide employers time to transition to a Canadian workforce which means that they are limited to a:

  • 20 percent cap on the number of foreign workers in low-wage positions, or the employer’s established estimated cap (whichever is lower), if the employer hired a TFW in a low-wage position prior to June 20, 2014; or
  • 10 percent cap on the number of foreign workers in low-wage positions if the employers did not employ a TFW in a low-wage position prior to June 20, 2014.

Effectively, companies are limited to a 10% cap on the proportion of low-wage foreign workers that they can have.  The low-wage is based on a province’s median wage, which as of writing is as follows:

Province/Territory Wages prior to

April 29, 2016

2014 Wage ($/hour)

Wages as of

April 29, 2016

2015 Wage ($/hour)

Alberta $25.00 $25.38
British Columbia $22.00 $22.60
Manitoba $19.50 $20.00
New Brunswick $18.00 $18.50
Newfoundland and Labrador $21.12 $20.91
Northwest Territories $30.00 $31.25
Nova Scotia $18.85 $19.00
Nunavut $29.00 $28.92
Ontario $21.15 $22.00
Prince Edward Island $17.49 $18.00
Quebec $20.00 $20.60
Saskatchewan $22.00 $22.80
Yukon $27.50 $28.51

The calculation of the cap can be complicated, and is perhaps best summarized by this portion of ESDC’s Schedule E – Cap for Low-Wage Positions.
schedulee

The Schedule E also contains sections on how the addition of foreign workers would impact the cap.

The cap does not apply to:

  • Employers with a company-wide business size of fewer than 10 employees;
  • Employers hiring foreign workers for positions related to on-farm primary agriculture, including the Seasonal Agricultural Worker Program;
  • Positions that are truly temporary (e.g. emergency and warranty positions);
  • Positions that are highly mobile or truly temporary and no more than 120 calendar days. This duration
    can be extended if an employer can demonstrate that their peak season, project or event operates
    beyond 120 days;
  • Applications supporting permanent residence under any Express Entry programs (e.g. Federal Skilled
    Worker Program, Federal Skilled Trades Program); and
  • Certain seasonal positions.

It is also important to note that employers who are subject to the cap do not have to include the following types of low-wage foreign workers when calculating the cap:

  • LMIA-exempt foreign nationals working under Immigration, Refugees and Citizenship Canada’s International Mobility Program;
  • Foreign nationals who have received a nomination certificate from a Provincial Nomination Program; and
  • Foreign workers working in low-wage positions that are exempt from the cap.

 

Frequently Asked Questions

The following are samples of frequently asked questions that were reproduced from the TFWP Wiki below.  Please note that the information below was obtained through an Access to Information Act request, and may not be up to date.

Question – When considering the impact cap percentage, should an officer ’round’ to the nearest decimal point? Example, established cap is 10% and the impact cap is percentage is 10.1 to 10.5. Does ESDC round down to 10% and accept it, or does it just determine it exceeds the 10% cap?

Answer -When calculating the Cap or the Impact on Cap comparison calculations, the percentage should be recorded up to two decimal points, rounding accordingly.

 

Question – What should be done with LMIA applications where the employer has identified more than one location on the application – i.e. Employer A has applied for 15 workers for 3 different locations on 1 LMIA form? How will the cap be noted to ensure a cap rate is captured for each location on the LMIA form?

Answer – The employer must complete a separate application for each location of work in order for a cap to be established for each location; and each location will also have an individual cap comparison calculation to determine the effect of hiring requested TFWs based on the employer’s current staffing complement at the time of the submission of the application.

 

Question – How does previously confirmed but unfilled LMIAs (i.e. hired but who have not started work) affect the determination of business size and cap calculation?

Answer – Previously confirmed but unfilled LMIAs (that are not expired) are to be included as employees for determining the business size. Pending applications should not be included in these numbers.

 

Question – Should owners count themselves when determining their business size?

Answer – When determining if a business has 10 or more employees company-wide, the count should include all employees on payroll and the vacant position. If the owner has a paid position, they should be included.

 

 

Question – When calculating “Determining the Effect on the Cap”, does the 4 consecutive weeks prior to LMIA submission have to be the 4 weeks prior to the application date or can there be a gap?

Answer – Ideally there should be as small a gap as practically possible for the purposes of this calculation. According to the CAP Directive the employer should provide data from the 4-week period “immediately prior” to the date the application was signed. W-T is interpreting “immediately prior” as allowing up to a 2 week gap between when the application is signed and the four consecutive weeks used by the employer for determining the effect of the CAP. In addition, two weeks may also be allowed between when the application is signed and when the application is received.

 

Question – If the staffing complement listed on Schedule E changes between the date of signature and the date of assessment, how does the officer proceed with assessing the cap?

Answer – The effect calculation will be assessed based on the four-week period used prior to the date of signature, and NOT the date of assessment.


Changes To Temporary Foreign Worker Program

On April 1, 2011, new regulatory changes came into effect that will significantly impact temporary foreign workers and the companies that want to hire them.  If you are an employer who currently employs or is interested in employing temporary foreign workers then you need to be aware of these changes.

The changes include:

  • Assessing the genuineness of a Temporary Foreign Worker;
  • Live-in-Caregiver Changes;
  • The Employer Blacklist;
  • Time limits for temporary foreign workers; and
  • Labour Market Opinion Changes.

Establishing a set of factors to guide the assessment of the genuineness of an employer’s offer of employment to a temporary foreign worker.

The changes introduce a new s. 200(5) of the Regulations, which reads:

Genuineness of job offer

(5) A determination of whether an offer of employment is genuine shall be based on the following factors:

(a) whether the offer is made by an employer, other than an employer of a live-in caregiver, that is actively engaged in the business in respect of which the offer is made;

(b) whether the offer is consistent with the reasonable employment needs of the employer;

(c) whether the terms of the offer are terms that the employer is reasonably able to fulfill; and

(d) the past compliance of the employer, or any person who recruited the foreign national for the employer, with the federal or provincial laws that regulate employment, or the recruiting of employees, in the province in which it is intended that the foreign national work.

Establishing certain employer-related requirements for live-in caregivers.

Section 203(1)(d) of the Regulations will now read:

203. (1) On application under Division 2 for a work permit made by a foreign national other than a foreign national referred to in subparagraphs 200(1)(c)(i) to (ii.1), an officer shall determine, on the basis of an opinion provided by the Department of Human Resources and Skills Development, if

(d) in the case of a foreign national who seeks to enter Canada as a live-in caregiver,

(i) the foreign national will reside in a private household in Canada and provide child care, senior home support care or care of a disabled person in that household without supervision,

(ii) the employer will provide adequate furnished and private accommodations in the household, and

(iii) the employer has sufficient financial resources to pay the foreign national the wages that are offered to the foreign national; and

Creating an Employer Black List

Perhaps most importantly, the changes will make an employer ineligible to access the Temporary Foreign Worker Program (“TFWP“) for a period of two years where the employer has been found to have provided wages, working conditions, or an occupation that was not substantially the same as what was offered during the previous employment of a temporary foreign worker.  The changesalso provide for the publication of a list with the names, addresses and period of ineligibility of employers who are not eligible to access the TFWP for the reasons noted above on Citizenship and Immigration Canada’s external Web site, in order to inform foreign nationals as to which employers are not eligible to hire TFWs.

Section 203 of the Regulations will now read:

203. (1) On application under Division 2 for a work permit made by a foreign national other than a foreign national referred to in subparagraphs 200(1)(c)(i) to (ii.1), an officer shall determine, on the basis of an opinion provided by the Department of Human Resources and Skills Development, if

(e) during the period beginning two years before the day on which the request for an opinion under subsection (2) is received by the Department of Human Resources and Skills Development and ending on the day on which the application for the work permit is received by the Department,

(i) the employer making the offer provided each foreign national employed by the employer with wages, working conditions and employment in an occupation that were substantially the same as the wages, working conditions and occupation set out in the employer’s offer of employment, or

(ii) in the case where the employer did not provide wages, working conditions or employment in an occupation that were substantially the same as those offered, the failure to do so was justified in accordance with subsection (1.1).

Justification

(1.1) A failure referred to in subparagraph (1)(e)(ii) is justified if it resulted from

(a) a change in federal or provincial law;

(b) a change to the provisions of a collective agreement;

(c) the implementation of measures by the employer in response to a dramatic change in economic conditions that directly affected the business of the employer, provided that the measures were not directed disproportionately at foreign nationals employed by the employer;

(d) an error in interpretation made in good faith by the employer with respect to its obligations to a foreign national, if the employer subsequently provided compensation — or if it was not possible to provide compensation, made sufficient efforts to do so — to all foreign nationals who suffered a disadvantage as a result of the error;

(e) an unintentional accounting or administrative error made by the employer, if the employer subsequently provided compensation — or if it was not possible to provide compensation, made sufficient efforts to do so — to all foreign nationals who suffered a disadvantage as a result of the error; or

(f) circumstances similar to those set out in paragraphs (a) to (e).

Capping the Time that a Person Can be a Foreign Worker

The changes establish a limit of how long someone can be a foreign worker at four years of work for temporary foreign workers, followed by a period of at least four years in which they may not be authorized to work in Canada. An exception will exist for international agreements.

Labour Market Opinion Changes

The changes also will introduce a provision clarifying that Human Resources and Skills Development Canada will indicate a period of time during which a Labour Market Opinion is valid. If a temporary foreign worker does not obtain a work permit within this time period, then the employer must request a new Labour Market Opinion.