Employers of foreign nationals: LMIA compliance inspections
Included in Beyond the border: Immigration update – February 2022
There are many advantages to employing temporary foreign workers (“TFW”) in Canada to address labour gaps and skills shortages, but employers who undertake this role are also subject to additional requirements. When supporting the individual’s work permit, employers must be careful to fully understand the obligations of the program they are using.
The commitments made when employing a TFW vary based on the program used. If supporting the TFW in applying for a work permit with their company, the employer has signed off on an undertaking to fulfill the duties under the program. The most common program employers use in Canada is the Temporary Foreign Worker Program, controlled by Service Canada / Employment and Social Development Canada (“ESDC”). This program requires that the employer obtains a positive Labour Market Impact Assessment (“LMIA”) prior to the TFW obtaining an “employer-specific” permit authorizing their work in Canada for the employer.
In this article we will review the ESDC inspection process under the LMIA program, including the consequences of non-compliance. Our past articles touch on Compliance Obligations and Compliance Tips, which employers will also find helpful.
Initiating an employer compliance inspection
Once a positive LMIA is obtained, ESDC has the right to perform a compliance review or audit of the employer with respect to the program. These reviews can be triggered in a number of ways: 1) random selection; 2) suspicion of non-compliance; or 3) past non-compliance. Since the COVID-19 pandemic started in 2020, an inspection may also happen when a worker is or was subject to requirements under the Emergencies Act or the Quarantine Act or a communicable disease has been found at the worksite. This additional trigger for an audit is a response to the increased employer obligations to help keep the public and TFWs safe during the pandemic.
When initiating an inspection, the employer will be contacted by ESDC and will normally be asked to provide details and documentation relevant to the work of a single or multiple TFWs. The review may focus on one LMIA or several if the employer has more than one.
Normally, a deadline will be given to the employer by which the information must be provided to the inspector. It is important to take such inquiries seriously and work to meet the deadlines as gathering the details can take time.
ESDC can review an employer in relation to a TFW hired under the LMIA for up to six years which is why keeping records as required under the program is so important. Having documentation easily accessible can make your responses easier and can also prove compliance.
No matter what compelled the inspection, the basis for the review is to ensure the employer is acting in compliance with all requirements of the program and those set out in Immigration and Refugee Protection Regulations (“IRPR”). These differ slightly depending on whether the LMIA was a “High Wage” or “Low Wage” application.
The inspector will ensure that the employer is: meeting the conditions set out in the offer of employment; complying with federal and provincial employment and recruiting laws; engaged in the same business as was used to hire the TFW; and making efforts to provide an abuse-free workplace and providing adequate housing (if applicable).
A key focus of the inspector will be that the employer can prove that they are providing working conditions that are “mainly the same but not less favourable than those in the employment offer.” This includes ensuring that the TFW is employed in the same job as stated in the offer and that their wages remain substantially the same and not lower. Certainly, a decrease in wages would constitute non-compliance. Employers must also remember that even a substantial wage increase could be seen as “non-compliance” because it is a deviation from the approved LMIA conditions. This is because the LMIA was based on proving a labour gap for the role as advertised (including the wage rate). Employers must also be mindful that substantial shift in the duties of a TFW could result in non-compliance even if the title of the job remains constant.
The inspector will also seek to ensure that the employer is meeting any commitments made when completing the LMIA application. Specifically, they will review the steps taken to comply with the transition plan that the employer outlined in a high-wage LMIA and will ensure commitments such as hiring or training Canadians or permanent residents, or transferring skills, have been completed. Strong records of all efforts to complete these steps will be essential in a compliance review.
As a result of the COVID-19 pandemic, the inspector will also ensure that the employer has helped to prevent the spread of COVID-19 and protected the TFW from contracting COVID-19. Reviews may include an inspection of the living quarters if these are provided and proof that the TFW was paid during their quarantine period if applicable.
Powers of an inspector
The inspector has many powers during the review process. These include being able to request information and copies of documentation and may include conducting site visits (with or without notice) and interviewing TFWs.
The inspector may: take photos; recordings; examine any documents related to the LMIA approval and IRPR, and request access to computers and electronic devices. The inspectors may also communicate with other authorities during the course of the inspection.
Outcomes and penalties
Upon the completion of a compliance inspection, the employer will be notified that either the review is satisfactory or that there are potential non-compliance issues. If there is a finding of non-compliance, the employer will be given the opportunity to justify its shortcomings, mistakes or deviations from the requirements.
If the justifications are not acceptable to the inspector, a Notice of Preliminary Finding will be issued to the employer. If this is the case, there will still be a final opportunity to respond to this notice within strict timelines: within 30 days or only 5 days if the issues relate to COVID-19 pandemic requirements. Should this happen, it is important that the employer meet the deadline or be approved for an extension.
If there are violations, the final assessment will be issued as a Notice of Final Determination which will explain the conditions violated and related consequences.
Penalties depend on the nature of the non-compliance but can include: a warning, fines between $100,000 per violation to a maximum of $1 million per year; publication of the business name and address on the Immigration Refugee and Citizenship Canada website; and suspension or revocation of LMIAs already issued. For the most egregious violators, a permanent ban on hiring TFWs can be issued meaning that they will no longer be able to use the LMIA or LMIA-exempt processes to hire a TFW.
Non-compliance can have severe consequences to business reputation as well as financial impacts. Severe violations can also mean loss of TFWs supporting your workforce and an inability to use the programs in the future.
It is important to be upfront during a compliance review and answer all questions carefully. If you have concerns about compliance we would encourage you to consult with a lawyer before an audit even begins and certainly prior to responding to an inspection.
The best way to stay compliant is to make sure that the requirements are well understood before using the program. The undertakings made when signing government paperwork should not be taken lightly. It is also essential that people in the company who are making human resources decisions (including managers) know the requirements of the program and the potential extra concerns of employing TFWs especially as it relates to changing any conditions of employment.
Our immigration team is happy to discuss the employer requirements of LMIAs and LMIA-exempt programs with you so that you can feel confident using the programs. We are also able to provide advice if you are currently under inspection or have concerns about your compliance.
This client update is provided for general information only and does not constitute legal advice. If you have any questions about the above, please contact a member of our Immigration group.
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