IMPACT – MEDIUM

What is the change? Employers who violate the terms of a foreign employee’s work permit would face harsh penalties under a proposed enforcement regime scheduled to take effect Dec. 1.

What does the change mean? The range of penalties under the government proposal includes fines and barring employers from submitting new work permit applications. The proposed penalties cover both LMIA-based and LMIA-exempt work permits.

  • Implementation time frame: The penalties are scheduled to take effect Dec. 1.
  • Visas/permits affected: All work permits. The proposal covers LMIA-based and LMIA-exempt work permits, including permits for intracompany transfers.
  • Who is affected: Any company employing foreign nationals.
  • Business impact: Companies would face steep fines and other penalties if found to have violated the terms of a work permit. For larger companies, the proposed fines reach a maximum of CA$100,000 (about US$77,000) per violation, with a cap of CA$1 million in fines per year.
  • Next steps: The government has published the proposed regulation and will consider possible changes in the coming months.

Background: Currently, Canada’s administrative penalties for LMIA-based work permit violations include revoking work permits, barring employers from hiring foreign workers for up to two years and publishing employers’ names on a “shame” website. In addition, employers found to have hired undocumented workers face criminal fines of up to CA$50,000 and up to two years in prison.

The criminal penalties would remain unaffected by the proposal, but the potential changes in the administrative enforcement scheme are fairly dramatic. Violations would be broken into three types:

  • “A” violations include those where an employer cannot demonstrate that information in a work permit application was accurate and remains accurate, is unable to produce required documents or does not appear for questioning by authorities.
  • “B” violations include those where an employer does not comply with laws that regulate employment and recruitment; does not comply with work conditions as promised in work permit applications; does not provide foreign workers with wages and conditions that are substantially similar to their Canadian counterparts; or does not ensure, if required, that the hiring of foreign workers results in the hiring or training of Canadian workers.
  • “C” violations, considered the most serious, occur where an employer is not actively engaged in the business in question or does not make reasonable efforts to ensure the workplace is free of abuse.

Violations would be given a score based on a formula that would consider both the type and severity of the violation. The type of violation would be scored on a scale of one to four (four being the most severe), with a maximum score of two for “A” violations, three for “B” violations, and four for “C” violations. The severity of a violation would then be scored on a separate scale based on criteria such as whether employees suffered abuse, negative impact on the Canadian labor market, the economic windfall to the employer and whether the employer undertook efforts to mitigate the violation or prevent it from reoccurring.

The two scores would then be combined and a corresponding fine would be imposed. Fines would be larger for larger companies and would range from zero to CA$100,000, with a maximum of CA$1 million in fines per year. Other proposed penalties include barring employers from recruiting additional foreign workers. Employers with unpaid fines would be barred from recruiting new foreign workers until they pay their fines. The Canadian government has said it will not punish employers who make unintentional errors or demonstrate good faith in attempting to stay in compliance.

BAL Analysis: The proposed enforcement regime shows how serious the Canadian government has become about work permit violations, including violations of LMIA-exempt work permits. Contact your BAL attorney with any questions about staying in compliance with applicable rules and regulations.

This alert has been provided by the BAL Global Practice group and our network provider located in Canada. For additional information, please contact your BAL attorney.

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