Canada tightens rules, bars staffing agencies from sponsoring foreign workers

Canada has strengthened its Temporary Foreign Worker Program (TFWP) regulations, prohibiting staffing agencies and Employment of Record (EOR) services from sponsoring foreign workers for jobs under third-party businesses. The Labour Market Impact Assessment (LMIA) requirements have been revised to focus on the entity with actual control over the employment relationship, not just contractual arrangements.

This means that staffing agencies and EORs may no longer qualify as employers for LMIA applications if another company exercises day-to-day control over foreign workers. The Canadian government clarified that temporary foreign workers cannot be classified as independent contractors to evade employer obligations such as payroll and taxes.

EORs can still operate under different employment arrangements, adhering to provincial employment laws, but must demonstrate sufficient control over workers' employment relationships to qualify as the sponsoring employer for an LMIA application. These changes aim to tighten oversight of temporary migration and employer-supported immigration pathways in Canada.