Canada blocks staffing agencies, EORs from sponsoring foreign workers
Canada has tightened employer requirements under its Temporary Foreign Worker Program, barring staffing agencies and Employers of Record (EORs) from sponsoring foreign workers when another company controls the day-to-day work. Under clarified Labour Market Impact Assessment (LMIA) rules, Employment and Social Development Canada now looks at which entity actually directs and supervises the worker, not just contractual arrangements. This means staffing agencies cannot obtain an LMIA as employer if a third-party business oversees the worker, and EORs that do not exercise real control also lose sponsorship eligibility. The government also barred classifying temporary foreign workers as independent contractors to dodge payroll and tax duties.
The changes affect businesses that rely on EOR or staffing models to hire in Canada without a local presence, potentially increasing costs and compliance burdens. In related moves, Canada gave Atlantic Immigration Program applicants 90 days (from Sept 21, 2026) to update documents if their employer, job or ownership changes, while Ontario clarified that fully remote roles do not qualify for employer-supported nominations under the OINP. Additionally, low-wage LMIA applications are frozen in Census Metropolitan Areas with unemployment of 6% or more (except agriculture, food processing, construction and healthcare), and the cap on temporary foreign workers most employers can hire fell from 20% to 10% of their workforce.
What should you know or do? If you use staffing agencies or EORs to bring foreign talent into Canada, review whether your arrangement gives you genuine control over the worker's duties; otherwise, you may need to establish a direct Canadian entity or adjust your hiring model.