The letter or phone call usually arrives on an ordinary day. A trucking dispatcher in Brampton, a restaurant owner on Kennedy Road, or the manager of a small warehouse off Steeles Avenue hears from someone at Service Canada who wants to look at the employment of a worker hired two years ago. The worker may still be there, or may have moved on long ago. Either way, the employer is now expected to prove things it may not have thought about since the permit was issued.
Compliance inspections are a routine part of how Canada runs its foreign worker programs. They are not a sign that you have done anything wrong, and they can happen simply through random selection. Still, the consequences of being unprepared can be severe, and the look-back is long. Employers who treat the LMIA as a one-time hurdle and move on often find out, at this stage, that it came with continuing conditions.
Nothing here is legal advice on your workplace. It is a general outline. Program rules are updated from time to time, and you should read the current Employment and Social Development Canada (ESDC) and IRCC pages. If you have received an inspection notice, get advice before you respond.
Two Programs, Two Regulators
Foreign workers come through one of two programs, and the employer should know which it is using.
The Temporary Foreign Worker Program covers jobs where the employer obtained a Labour Market Impact Assessment (LMIA). ESDC, usually through Service Canada, runs the inspections.
The International Mobility Program covers LMIA-exempt jobs, such as certain trade agreement and intra-company transfer cases, where the employer submitted an offer through the Employer Portal. IRCC or Service Canada may carry out those inspections.
The conditions overlap, but the details differ. For example, ESDC’s guidance has employers keeping records for six years from the first day of the employment period under the work permit, while IRCC’s information for the mobility program speaks of six years from the date the work permit was issued. Keeping everything well beyond the shorter window avoids that question altogether. The employer conditions themselves are set out in the Immigration and Refugee Protection Regulations, mainly in sections 209.2 and 209.3.
A worker on an open work permit, such as a spouse or a graduate, is different. You are generally not subject to these program-specific conditions for that person, though ordinary employment standards still apply to them as they do to anyone else.
How You Get Selected
An inspection can begin for several reasons:
- Random selection.
- A suspicion that you are not complying, which can come from a tip or from information held by another agency.
- A previous finding of non-compliance.
- Public health orders or an outbreak in some settings.
Inspections may be on-site or virtual, announced or unannounced. A warrant is generally not required, except to enter a private dwelling. If you run a small business from your home or employ a home care worker, the rule on dwellings may be relevant, though it does not excuse you from producing records.
An inspection notice typically states the review period, the authority for the inspection, and what you must prove. Read it very closely. It is the road map for your response.
What They Can Ask For
ESDC says inspectors can check 29 different conditions. The ones that cause the most difficulty for small employers tend to be these:
Same job. You must employ the person in the occupation stated in the offer. A worker hired as a cook who has mostly been washing dishes, or a “bookkeeper” who actually drives deliveries, is a classic problem. People pitching in during a busy period is normal, but a shift in the essential work is not.
Same wages and conditions. Wages and working conditions must be substantially the same as, and no less favourable than, the offer. A raise can usually be justified, though the reason may be reviewed. A pay cut is usually a serious issue. So is a change from full-time to part-time, unless it’s dealt with properly.
Same business. You need to remain actively engaged in the business described in the offer for the permit period. A sale of the business, a merger, or a new location can raise questions.
An abuse-free workplace. You must make every effort to provide a workplace free of abuse, whether physical, sexual, psychological, or financial. Holding a worker’s passport, demanding repayment of fees, or threatening deportation can all count.
Employment and recruitment laws. You must comply with federal, provincial, and territorial laws on employment and recruitment. In Ontario, this means the Employment Standards Act and the rules on recruiters. A violation of those laws can become an immigration problem too.
LMIA commitments. If you promised to hire or train Canadians, or to transfer skills, you must show what you did.
Accuracy. You have to be able to show that what you stated in the LMIA application was accurate. Inspectors may look back at your original numbers and statements.
Documents they might ask for include job descriptions, employment contracts, time sheets, payroll records, T4 summaries, and proof of any required private health insurance. Officers can interview workers and other employees, and they can copy documents and take photos or recordings. Under the mobility program, IRCC tells employers to remove social insurance numbers and unrelated personal details before sending documents.
The Paper Trail That Protects You
The problem is usually not misconduct, but an inability to prove what actually happened. A hypothetical small employer may pay a worker correctly, with overtime, but do so partly through cash and partly by bank transfer, with no time records. An inspector will see only that the numbers in the records do not add up.
Practical habits make a real difference:
- Open a dedicated folder for each foreign worker when the offer is made.
- Keep the LMIA or job offer, the signed employment agreement, and any changes to it.
- Run all pay through payroll, with deductions that can be explained, and keep the pay stubs.
- Keep time records even for salaried employees, if there is any chance of an overtime question.
- Keep proof of recruitment efforts, including the ads, the dates, the results, and the reasons for not hiring others.
- Keep proof of any required benefits, such as transportation and health coverage, for low-wage positions.
- Note job changes in writing, and report LMIA changes or errors promptly. ESDC’s contact number for employers is 1-800-367-5693.
Keep these records after a worker leaves. An employee who quit four years ago can still be the subject of an inspection, and the fact that a former bookkeeper has the files in a box somewhere won’t help you if you can’t find them.
From First Contact to Final Decision
The process generally has several stages.
Initial review. You provide the documents and answer questions within the time set out in the notice. Stay organized and be accurate. If someone else, such as your accountant, holds the records, contact them right away.
Initial finding. If the inspector finds a problem, you are normally given a chance to explain why it occurred, what you did to correct it, and how you will prevent a repeat. If ESDC accepts your explanation, the inspection ends with no further action. The regulations recognize that some errors may be justified, including a change in the law, good-faith errors in interpreting an obligation, unintentional accounting or administrative mistakes, and events beyond your control. A correction, such as repaying wages owed to the worker, can be important here.
Notice of Preliminary Finding. If no acceptable justification is given, you receive this notice. You have 30 days to respond, and extensions may be available when a good reason exists. This is your most significant opportunity to put your case in writing, and it should not be treated casually. Include your evidence and legal arguments.
Notice of Final Determination. This sets out the violations, the reasons, the consequences, and the next steps.
A challenge to a final decision may be possible through the Federal Court, with short deadlines. If you’re in that position, get legal advice immediately.
What Is at Stake
Consequences vary with the seriousness of the violation, the size of the business, and your history. They include a warning, monetary penalties of up to $100,000 per violation up to a cap of $1 million per year, a ban from the Temporary Foreign Worker Program and the International Mobility Program (permanent for the most serious violations), and the suspension or revocation of existing LMIAs.
Other than warnings, sanctions can lead to your business name and address being published on a public government list of non-compliant employers. For a small Brampton business that relies on its reputation, or on hiring through these programs, this could be as painful as the fine. If a ban or unpaid penalty makes you ineligible while LMIA applications are pending, no positive LMIA will be issued and the fees are not refunded.
These consequences are separate from any claim under the Employment Standards Act and from any offence under the Immigration and Refugee Protection Act, such as misrepresentation. Selling LMIAs or taking payment for a job is a very serious matter and can result in far worse than an administrative fine.
Treat Your Workers Carefully During the Process
An inspection often makes owners anxious, and some start looking at their workers with suspicion. Resist that. You should not pressure a worker about what to tell an inspector, ask them to sign a statement you drafted, or threaten anything related to their permit. Retaliation can turn a manageable paperwork issue into an abuse finding.
Tell workers that an inspection is happening if they will be asked to take part, tell them to answer honestly, and leave it there. If you have fallen behind on pay, work out what is owing and deal with it properly, with records. A worker who has been underpaid is generally owed that money whatever the inspector eventually decides.
Note too that a foreign worker who is experiencing abuse may be able to obtain an open work permit designed for this situation, allowing them to leave for another employer. An employer should not be surprised if an abused worker takes that step.
Prepare Before Anyone Calls
A short internal audit is often the best use of an hour. Pick one worker’s file. Does the job they actually do match the offer? Do the hours and wages on the pay stubs match the contract? Is the agreement signed, and was it signed by the first day of work? Could you find everything within a day or two?
If gaps show up, fix what can be fixed, and document it honestly. Do not create or backdate documents. A backdated contract is much worse than a missing one, and it could give rise to a separate problem. Our work visas page outlines the kind of help available for employers, and if a notice has already arrived, the contact page is the place to start. Program conditions and enforcement practices can change, so please read the current ESDC and IRCC guidance as well.