Tuesday, August 5, 2014

Canada - Changes to Temporary Foreign Worker Program Impose Significant Burden on Employers

By Sergio Karas, Principal, Karas Immigration Law Professional Corporation, Canada

On June 20, 2014, the Federal government announced major changes to the much maligned Temporary Foreign Worker Program after months of negative media reports concerning high profile scandals, public pressure, and a looming Federal election campaign. The changes announced are profound and will make it more difficult for employers to hire foreign workers in many categories. The most significant policy changes can be summarized as follows:

• Labour Market Opinions (LMOs) are now replaced by Labour Market Impact Assessments (LMIAs), which will be based on enhanced labour market data rather than on occupation descriptions listed in the National Occupation Classification (NOC). Filing fees are increased from $275 to $1,000 per applicant.

• Temporary foreign workers will now be separated into two main categories according to their wage level. “High-wage temporary foreign workers” will be those in positions at or above the provincial/territorial median wage; and “low-wage temporary foreign workers” will be those in positions earning below that median wage. Currently the median wages vary from a low of $17.26/hour in Prince Edward Island, to a high of $32.53/hour in the Northwest Territories. The median wages will be revised periodically.

For low-wage temporary foreign workers, Work Permit duration will be limited to a one year maximum rather than the previous two year maximum. Temporary foreign workers who are currently in Canada with longer Work Permits will not be affected.

For high-wage temporary foreign workers, employers will be required to present Transition Plans in addition to other recruitment efforts to demonstrate how they intend to decrease their dependence on temporary foreign workers. Limited exceptions will apply.

• The Seasonal Agricultural Worker Program is renamed the Primary Agricultural Stream but its elements are largely unchanged. Further, no changes have been made to the Live-In Caregiver program for the time being, but media reports indicate that the government is planning an overhaul in the near future.

New Recruitment Requirements

The new LMIA will require employers to provide much more comprehensive information regarding their recruitment efforts and to demonstrate that Canadians cannot be found for a specific position. These efforts are in addition to current advertising requirements. Employers will also need to demonstrate that Canadians have not been laid-off or had their hours reduced at a worksite that employs temporary foreign workers. The authorities will rely on better sources of labour market information to determine if there are Canadians who could fill those positions. The new labour market information will include a proposed new job matching service to allow Canadians to apply directly for positions through the Job Bank, a quarterly job vacancy survey by Statistics Canada, an annual national wage survey also to be conducted by Statistics Canada, and better use of government data. It remains to be seen how the government will roll out these new sources of information and how they will accurately reflect labour market conditions.

Cap on Low-wage Temporary Foreign Workers

All employers with more than 10 employees will be subject to a cap of low-wage temporary foreign workers. The cap will be set at 10% of the employer’s workforce per location. The cap will be calculated based on the total number of hours worked at the specific worksite by all employees.

These changes are designed to reduce the number of workers in low-skilled occupations by limiting the number of employees in each employer location. Employers with ten or more employees applying for a new LMIA are subject to a cap of 10% on the proportion of their workforce that can consist of low-wage temporary foreign workers. This cap will be applied per worksite on an employer and is based on total hours worked at that worksite.

Employers who are currently above the 10% cap will be provided with a transition period to reduce the number of low-wage foreign workers. Initially, they will be limited at 30% or frozen at their current level, whichever is lower. Those employers will have to reduce that percentage to 20% as of July 1, 2015, and eventually to 10%. According to recent media reports, the government has indicated a desire to eliminate the low-wage temporary foreign worker program all together, but no such action has yet been taken.

Unemployment Rate and Foreign Workers

Another measure announced will result in the refusal of LMIA applications for employers in the accommodation, food services, and retail trade sectors for positions that require little or no education or training, in geographical areas where unemployment rates exceed 6%. This applies to occupational titles such as food counter attendants, kitchen helpers, light duty cleaners, cashiers, construction labourers, landscaping and grounds maintenance labourers, janitors, specialized cleaners, security guards, and attendants in accommodation and travel. The government’s rationale for such move is that Canadians hit with high unemployment rates should be afforded an opportunity to apply for those positions. However, this does not take into account the fact that many unemployed Canadians refuse to accept low wage occupations.

Transition Plans for High-Wage Temporary Foreign Workers

Employers who want to hire temporary foreign workers in high-wage occupations will be required, with limited exceptions, to submit Transition Plans with their LMIA applications to ensure that they are taking steps to reduce their dependence on foreign workers over time. These Transition Plans are in addition to the existing recruitment and advertising requirements that employers must meet during the course of an application. The Transition Plan is designed to provide proof that employers are either training Canadians for the position, or assisting the temporary foreign worker to become a Permanent Resident.

Employers will also be required to undertake further recruitment activities, including reaching out to organizations with groups traditionally underrepresented or affected by high unemployment such as aboriginal people, youth, Canadians with disabilities, etc. Employers will need to report on the success of their Transition Plans if they are selected for inspection.

Highest-Demand, Highest-Paid and Shortest-Duration Occupations

Occupations in the skilled trades, or highest-paid (top 10 percent of earners) or short-duration (under 120 days) will now be provided with a 10-business-day service standard. It must be noted that employers will still be required to advertise and undertake the same recruitment efforts as with other LMIA applications. Employers are exempt from the requirement of the Transition Plan when hiring in these categories. Typically, the positions benefitting from the faster processing will be those in skilled trades that are critical for the development of infrastructure, or for those whose wage level indicates that they are highest-skilled in their occupation, or are those involved in short-term projects or warranty work.

Enforcement Measures

The government promises to increase the number and scope of inspections of employers hiring temporary foreign workers to ensure that they are complying with all the requirements of the Temporary Foreign Worker Program, through more site visits conducted without a warrant, interviewing temporary foreign workers and other employees, compelling employers to provide documents for the purposes of verifying their compliance with the program, and banning employers who break the rules. The government will also expand its use of the Confidential Tip Line launched in April 2014 to report abuse of the Temporary foreign Worker Program which has received more than 1000 tips to date.

Perhaps the most serious enforcement mechanism will be the criminal prosecution of employers suspected of activities that are in breach of the Immigration and Refugee Protection Act (IRPA) such as employing foreign nationals that are not authorized to work in Canada, counselling misrepresentation, and actual misrepresentations. This is an effort to combat fraud. The government proposes to impose monetary fines of up to $100,000.00 and imprisonment of up to 5 years, or both, for those found criminally liable.

These major changes indicate a complete reversal of prior policies that encouraged temporary foreign workers to come to Canada with valid Work Permits first, in order to gain the necessary experience to become Permanent Residents. Also, prior policy allowed employers more flexibility in addressing labour shortages. The new guidelines penalize employers in specific service sectors that cannot attract a sufficiently high number of Canadians, such as the hospitality and fast food industries.

Notwithstanding the complexity of the new guidelines, the government has failed to address some of the most obvious sources of abuse, such as those perpetrated by small employers hiring relatives with little or no experience in an occupation as a path to obtain Permanent Residency. Further, the government ignores a problem of its own creation: the growing number of open Work Permits granted under the International Experience Class (IEC) to young workers from overseas who come to Canada and compete directly against Canadians in entry level or junior professional positions. In fact, Minister Jason Kenney has expanded that program, which is scheduled to climb to 10,000 open Work Permits to young citizens of Ireland. Other countries benefitting from the IEC include Australia, the United Kingdom, France, and many others currently suffering from high youth unemployment rates. It makes little sense to expand the open Work Permit category while reducing the number of employer-specific Work Permits.

Obviously these reforms are politically motivated, constitute an overreaction to media reports of abuse, and appear to be calculated as an opening salvo for the 2015 Federal election campaign. Rather than completely revamping the Temporary Foreign Worker Program, the government should have concentrated on detecting abuse, enforcing existing rules and imposing significant penalties on violators. It is noteworthy that although enforcement provisions have been part of immigration legislation since 2002, there have been very few prosecutions of employers under the Immigration and Refugee Protection Act in connection with the unauthorized employment of foreign nationals. The reason for the low number of charges against alleged abusers is due to the fact that investigations are costly, time intensive, and usually require the cooperation of foreign worker victims as witness. There is also a high bar to obtain convictions. So it is difficult to understand how an increase in penalties will deter abuse, or result in better prosecutorial outcomes, as it is unclear, how many resources will be allocated to investigate complaints and the enabling legislation remains fundamentally unchanged.

There is no doubt that the Temporary Foreign Worker Program has just become more cumbersome and will impose a significant burden on employers trying to fill vacancies and positions that Canadians are not prepared to accept or for which they are not qualified. The complexity of the new rules adds several layers of red tape for businesses. Consulting legal counsel to navigate those rules is now imperative for all employers desiring to engage foreign workers.