Stories
Canada Tightens Foreign Worker Rules: Staffing Agencies and EORs Face New LMIA Restrictions
- •Canada has updated its foreign worker rules, focusing on the actual employer for Labour Market Impact Assessment (LMIA) sponsorships.
- •Under new guidance from Employment and Social Development Canada, staffing and employment agencies can no longer obtain LMIAs for workers ultimately employed by another business.
- •Employers of Record (EORs) are also restricted from acting as LMIA sponsors when the worker will be employed by a different company.
- •The changes emphasize that the LMIA sponsor must be the entity that directly hires, sets working conditions, pays wages, and controls the worker's day-to-day activities.
- •This clarification effectively ends the EOR model for LMIA-based work permits, though EORs can still operate in other employment arrangements.
Key Questions Answered
Under guidance issued by Employment and Social Development Canada on September 18, staffing agencies and Employers of Record can no longer obtain an LMIA for a foreign worker who will ultimately work for a third-party company. The changes ensure that the LMIA sponsor must be the actual entity that employs and manages the worker.
Officials look at which entity actually hires the temporary foreign worker, sets their working conditions, and pays their wages. They also consider who directs day-to-day activities, determines duties and hours, benefits from the work, and holds the authority to supervise or dismiss the worker.
No, Canada has reiterated that temporary foreign workers cannot be classified as independent contractors as a way to avoid payroll, tax, or other obligations under the program.
