Government of Canada Overhauls the Temporary Foreign Worker Program

On June 20, 2014, Citizenship and Immigration Canada (“CIC”) and the Ministry of Economic and Social Development Canada (“ESDC”) announced significant reforms to the Temporary Foreign Worker Program (“TFWP”).  The changes will affect all employers of Temporary Foreign Workers (“TFWs”) in Canada.  Many of the changes take effect immediately, with the remainder being phased in over the next year in a half. The reforms are comprehensive, and include the following:

• Labour Market Impact Assessment Program
  • New Labour Market Information Assessment (“LMIA”) Replaces the Labour Market Opinion (“LMO”)
  • LMIA Application Fee of $1,000
  • Guaranteed 10-Day Processing For Certain Occupations
  • Dividing LMIAs into High-Wage and Low-Wage Positions
  • Cap on Low-Wage TFWs for Individual Companies
  • Refusing Low-Skilled LMIA Applications in Areas of High Unemployment in Some Occupations
  • Reducing the Duration of Low-Wage Work Permits
  • Introduction of Transition Plans for High-Wage Positions
• Stronger Enforcement and Tougher Penalties
  • Increasing the Number and Scope of Inspections
  • Monetary Fines for Employers Who Break the Rules
• International Mobility Programs (“IMP”)
  • IMP Replacing LMO-Exempt Work Permit Program
  • New Fee and Employer Compliance System
  • New Privilege Fee for Open Work Permit Applicants
  • Amending Provincial Annexes
  • International Experience Canada Program Being Restructured
  • Intra-Company Transfer Program – New Rules for Specialized Knowledge Applicants

As noted above, the Labour Market Opinion (“LMO”) program is being renamed the Labour Market Impact Assessment (“LMIA”).  As well, the International Mobility Program (“IMP”) is replacing work permit applications which were previously classified as LMO-exempt.    Please note that what follows below provides only a summary of the changes.  We have provided at the end of this newsletter a link to a 41-page Government of Canada PDF which provides a more comprehensive overview.

Labour Market Impact Assessment Program

New Labour Market Information Assessment (“LMIA”) Replaces the Labour Market Opinion (“LMO”) In addition to current LMO recruitment and application requirements, the LMIA application will require that employers state the number of Canadians that applied for the position, the number of Canadians that the employer interviewed, and an explanation of why those Canadians were not hired. In order to verify employer attestations, the Canada Job Bank will soon feature a Job Matching Service that will allow Canadians to apply directly through the Canada Job Bank for jobs that match their skills and experience.  ESDC has stated that LMIA officers will thus be better aware of the number of potential applicants and how closely their skills align with available jobs, which presumably means that LMIA officers will have access to applicant information. ESDC has also announced that starting in 2015 its officers will also be able to access Employment Insurance (“EI”) program data and other internal sources to accurately determine the availability of qualified Canadian workers. For example, LMIA program officers will know if employers requesting TFWs have recently laid-off Canadian workers. Additionally, program officers will be able to determine if employers are requesting TFWs in regions where there are unemployed Canadians with the appropriate skills. Finally, EI data will be used to help match unemployed workers with available jobs.  Finally, ESDC will be publishing a quarterly list of employers who received a positive LMIA. The objective is that if qualified Canadian applicants who applied for a position will be able to see if the company ultimately hired a TFW. LMIA Fee of $1,000 Previously, a LMO cost $275.00 per position.  Under the LMIA, the application fee is being increased to $1,000.00 for every TFW position that an employer requests.  This increased fee is now in effect. There will be no refund in the event of a negative LMIA, or if the employer cancels or withdraws the application.  Employers requesting to have their LMIA application reconsidered as a result of a negative LMIA must submit a new application and processing fee for each position. Additionally, ESDC will in the summer of 2015 be imposing an estimated $100 “privilege fee” on employers applying for LMIAs.  This will in effect result in the LMIA fee being $1,100.00 per position. Guaranteed 10-Day Processing For Certain Occupations ESDC has announced that effective immediately LMIA applications for the highest-demand occupations (skilled trades), the highest-paid occupations (top 10 percent), or short-duration work periods (120 day or less) will now be processed within a 10-business-day service standard. Dividing LMIAs into High-Wage and Low-Wage Positions  Previously, the LMO program was divided into High-Skilled and Low-Skilled positions based on the National Occupational Classification (“NOC”).  Under the LMIA, wage levels will now replace the NOC system as the main criteria for administering the TFWP.  Jobs with wages below the provincial or territorial median wage will be considered “Low-Wage.”  Jobs which pay at or above the provincial or territorial median wage will be considered “High-Wage.” The current Median Hourly Wages by Province / Territory are:

It is important to note that this does not mean that Prevailing Wage for an individual position is being abolished.  Rather, the High-Wage / Low-Wage distinction refers to the overall administration of the program. As noted below, there are important distinctions in how ESDC will process LMIA applications depending on whether they are High-Wage or Low-Wage. Cap on Low-Wage TFWs for Individual Companies Employers with 10 or more employees applying for a new LMIA are subject to a cap of 10 percent on the proportion of their workforce that can consist of Low-Wage TFWs. TFWs currently working at work sites over the cap will be allowed to continue working at those sites until their existing work permits expire.  As well, to provide employers who are above the 10 percent cap time to transition and adjust to this new cap, it will be phased in over the next couple of years.  For those employers that currently have a Low-Wage TFW workforce that is above the cap, effective immediately, when those employers apply for a new LMIA they will be limited at 30% or frozen at their current level, whichever is lower. This transition measure will be further reduced to 20 percent beginning July 1, 2015 and reduced again to 10 percent on July 1, 2106. Employers with fewer than 10 employees nationally, including the vacant positions they are considering to hire foreign workers for, are exempt from the cap requirement. Refusing Low-Skilled Applications in Areas of High Unemployment in Some Occupations ESDC will refuse to process certain LMIA applications in the Accommodation, Food Services and Retail Trade sectors. Specifically, ESDC will not process LMIA applications for employers if they meet all of the following criteria:

• the employer is applying for an LMIA in a Statistics Canada economic region with an annual unemployment rate over 6%;
• the employer is seeking an LMIA in a specific occupation identified under North American Industry Classification System as Accommodations & Food Service or Retail Sales; and
• the employer is seeking an LMIA in an occupation in one of the following occupations:
  • Food Counter Attendants, Kitchen Helpers and Related Occupations ;
  • Light Duty Cleaners ;
  • Cashiers;
  • Grocery Clerks and Store Shelf Stockers;
  • Construction Trades Helpers and Labourers;
  • Landscaping and Grounds Maintenance Labourers;
  • Other Attendants in Accommodation and Travel;
  • Janitors, Caretakers and Building Superintendents;
  • Specialized Cleaners; and
  • Security Guards and Related Occupations.

Reducing the Duration Low-Wage of Work Permits  The duration of work permits for Low-Wage positions will be reduced from the current two-year standard duration to a one-year period. As well, CIC will reduce the cumulative duration that Low-Wage foreign workers can work in Canada. The exact amount has not yet been specified. Introduction of Transition Plans for High-Wage Positions Employers seeking to hire High-Wage TFWs will now be required to submit Transition Plans to demonstrate how they will increase efforts to hire Canadians, including through higher wages, investments in training and more active recruitment efforts from within Canada.  An employer will have to provide a Transition Plan for each position that it is seeking a LMIA for. The requirement that employers provide a Transition Plan has taken effect immediately. Employers may be exempt from the Transition Plan requirement if they are hiring TFWs for positions which:

• require unique skills (ESDC has stated that two examples include nuclear physicist and senior executives such as Chief Executive Officer);
• have a limited duration of between:
  • 1 and 120 days (ESDC has stated that two examples include emergency or warranty work repair technicians / mechanics); or
  • more than 120 days to a maximum of 2 year (ESDC has stated that two examples include project-based business consultant, specialized construction engineer).

As part of the Transition Plan, employers are required to conduct the all of the following:

• General Requirements – Employers must conduct at least 3 distinct activities that are designed to recruit, retain, and train Canadian citizens and permanent residents;
• Underrepresented Groups requirement – Employers must conduct at least 1 distinct activity to work with an organization serving underrepresented groups (Aboriginal peoples, youth, immigrants and persons with disabilities) to identify potential candidates for recruitment or training. This activity is additional to that conducted for the minimum recruitment and advertisement requirement. If the underrepresented group is the same, the activities must be different. If the activities are for the same group, they must be substantially different.
• Permanent Resident Requirement – Employers must conduct at least 1 distinct activity that supports a TFW’s permanent transition to Canada. This activity could include assisting with language training.

Employers will be required to report on the results of the commitments they have made in their Transition Plan if they are selected for an inspection, or choose to re-apply for a subsequent LMIA for the same occupation and work location.

Stronger Enforcement and Tougher Penalties

Increasing the Number and Scope of Inspections ESDC will be increasing the number of inspections that it conducts so that one in four employers using temporary foreign workers will be inspected each year.  ESDC has the authority to immediately inspect complaints of possible rule-breaking, conduct warrantless on-site visits, interview TFWs and other employees with their consent, and compel employers to provide documents for the purpose of verifying their compliance with the TFWP. As of the fall of 2014, ESDC will be able to compel banks and payroll companies to provide bank records and payroll documents to help inspectors verify that employers with the rules of the TFWP. As well, the Canada Border Services Agency (the “CBSA”) is receiving new financial resources to increase its capacity to criminally investigate suspected cases of offenses by employers.  Under the Immigration and Refugee Protection Act, employers who intentionally misrepresent information or withhold information or provide false information to contravene immigration laws, including lying in a LMIA application, can be fined up to $100,000 and imprisoned for up to five years or both. The CBSA is expected to begin prosecuting numerous investigations in the autumn of 2014. Monetary Fines for Employers Who Break the Rules Beginning in fall 2014, the Government will impose fines of up to $100,000 (depending on the severity of the offence) on employers who break the rules of the TFWP.  In addition to standard rules such as not underpaying employees, employers may be fined for misstatements and falsehoods in LMIA applications. ESDC will publicly disclose the names of employers who have been fined and the amount of that fine.

 New Fee and Employer Compliance System Currently, many prospective TFWs are able to apply for work permits without a LMO assessment at a Canadian Port of Entry.  Under the reforms, employers hiring LMIA-exempt workers under the IMP will be required to submit the job offer and other relevant information to CIC.  Prospective TFWs will not be able to apply for a work permit until their employer has done so.  CIC has committed to this change, which it has not provided any additional information on, coming into effect by the summer of 2015.  The reason for the delay is presumably this reform will require significant amendments to Canada’s Immigration and Refugee Protection Regulations.  CIC has also announced that it will be creating a compliance system for the IMP which will presumably be similar to the LMIA system. A new Work Permit application fee of $230.00 will also be introduced in the summer of 2015.     New Privilege Fee for Open Work Permit Applicants CIC is introducing a $100.00 Work Permit privilege fee for open work permit applicants. As with the LMIA $100.00 “privilege fee,” this fee is expected to be introduced in the summer of 2015. Amending Provincial Annexes Five provincial/territorial governments (Alberta, British Columbia, Ontario, Nova Scotia and Yukon) currently have annexes to their immigration agreements with the Government that establish LMIA exemptions in their jurisdiction. The Government of Canada has given notice to provinces that it is changing the existing agreements, and removing many of the exemptions. International Experience Canada Being Restructured The International Experience Canada program is currently under review.  There is currently a large imbalance between the number of foreign nationals arriving in Canada compared to the number of Canadians participating abroad.  As such, CIC will be enhancing its efforts to promote the program to Canadians. At the same time, it will review each mobility agreement on a country-by-country basis to ensure that the rate of reciprocity is improved.  This may feature quota reductions. Intra-Company Transfer Program – New Rules for Specialized Knowledge Applicants On June 9^, 2014, CIC reformed the Intra-Company Transferee – Specialized Knowledge stream so that applicants demonstrate a high degree of both proprietary knowledge and advanced expertise.  As well, specialized Knowledge applicants must be paid the Prevailing Wage for their position.  Non-cash per diems, including hotel and transportation, are not to be included in the calculation of the overall salary.  This change took effect on June 9, 2014. More information about the changes to the TFWP can be found here.

Please contact us if you have any questions or concerns about these changes.