Canada Tightens LMIA Employer Rules for Temporary Foreign Workers

• Service Canada now sets out more clearly how it determines which business is the genuine employer for an LMIA application.

• The assessment can look beyond the company name on the application to who actually pays, supervises, directs and benefits from the worker’s employment.

• Staffing or employment agencies that recruit workers for another business are not considered the employer where they do not have the required employer-employee relationship.

• Temporary foreign workers hired through the TFWP cannot be classified or later reclassified as independent contractors.

• Related companies and businesses with more complex operating structures may face closer questions about which entity is actually employing the worker.

• BorderPass helps employers prepare LMIA applications around the real employment structure, with lawyer review before filing and ongoing visibility across international hires.

The change is not a new LMIA stream. It is a clearer employer test that Service Canada can use when reviewing applications across major parts of the Temporary Foreign Worker Program.

An employer is now described as the entity that hires the temporary foreign worker, sets their working conditions and directly pays them.

Service Canada can consider several parts of the relationship, including who benefits directly from the worker’s labour, who decides where, when and how the work is performed, who pays wages, who determines duties, who monitors performance, who can dismiss the worker, who signs the employment agreement, and who manages payroll and statutory deductions.

For HR teams with straightforward employment structures, this may confirm what is already happening in practice. For companies with multiple entities, shared operations or third-party staffing arrangements, the employer named on the LMIA needs to line up with the actual employment relationship.

BorderPass helps employers organize the employment information, supporting documents and LMIA requirements around the correct hiring entity before submission, with a licensed immigration lawyer reviewing the application.

The new guidance is particularly relevant to staffing and employment agencies.

An agency recruiting temporary foreign workers for another business is not considered the employer if it does not have the employer-employee relationship with those workers. In that situation, the agency cannot receive LMIA approval to hire workers on behalf of the end business.

Service Canada has also made the worker classification rule explicit.

A temporary foreign worker hired through the TFWP must have an employer-employee relationship. Employers cannot obtain an LMIA for an employee and then reclassify that worker as an independent contractor, or structure the relationship to avoid payroll, compensation or other program requirements.

That matters beyond the initial application. The employment arrangement on paper needs to continue to reflect how the worker is actually employed after they start.

BorderPass supports employers beyond the filing stage by keeping worker information, immigration status and employer-side compliance in one place. For teams managing multiple international employees, that creates a clear record of the conditions connected to each hire instead of treating the LMIA as a one-time application.

“An LMIA is tied to a real employment relationship, not just the company name on an application. Employers with related entities, staffing arrangements or non-standard workforce structures should make sure the organization applying is also the organization that will actually employ, pay and supervise the worker.”

Varinder Johal, Head of Legal, BorderPass

The updated employer test can also affect businesses where one legal entity hires, another manages payroll and another oversees day-to-day work.

Service Canada can look at the substance of the relationship rather than relying only on which company submitted the LMIA. Who directs the employee, who pays them and who controls the employment relationship can all be considered.

That does not mean related companies cannot use the Temporary Foreign Worker Program. It means the application needs to accurately reflect which entity is taking on the employer responsibilities connected to the worker.

For multi-entity employers, BorderPass gives HR and legal teams a centralized view of international employees, applications and compliance requirements. The LMIA can then be prepared around the actual hiring structure, reviewed by a licensed Canadian immigration lawyer and tracked through the same system after submission.

The employer relationship does not stop mattering once an LMIA receives a positive decision.

Employers participating in the TFWP have ongoing obligations tied to the conditions in the LMIA, decision letter and federal regulations. Relevant records generally need to be retained for six years, and employers may be inspected to confirm that the conditions attached to the foreign worker’s employment are being met.

Non-compliance, including worker misclassification, can lead to administrative monetary penalties, bans from the TFWP and public listing.

For employers managing several foreign workers, the challenge is not only filing correctly. It is knowing which worker is tied to which employment conditions, when permits expire and what needs attention across the workforce.

BorderPass brings LMIA preparation, work permit support, worker status tracking, expiry management and employer compliance into one place, backed by licensed Canadian immigration lawyers. That lets HR teams manage international hiring as an ongoing workforce process rather than a series of disconnected applications.

The September update puts more attention on one basic question: is the company applying for the LMIA also the company that genuinely employs the worker?

BorderPass helps employers answer that question before an application is filed and manage the obligations that follow.

For LMIA hiring, BorderPass supports application preparation, employer and worker documentation, lawyer review and filing. Once an international employee is hired, teams can track immigration status, permits, renewals and compliance requirements from the same system.

For employers hiring across multiple locations, entities or roles, that gives HR and legal teams a consistent process without having to rebuild the immigration file for every hire.

Learn more about BorderPass for employers: https://www.borderpass.ai/employers