THE EMPLOYERS' EDGE
Changes to Temporary Help Agency Licensing Requirements: A Comprehensive Overview
As you may have read in this space before, the Ontario government passed Bill 27 back in 2021. The Working for Workers Act, 2021 – not to be confused with similarly-titled bills tabled in 2022 (see our commentary here) or 2023 (more here) – introduced amendments to various employment-related statutes, including, of course, the Employment Standards Act, 2000 (ESA). One significant area of amendment to the ESA was with respect to temporary help agencies. In an effort to enhance protection for temporary workers and ensure compliance within the employment sector, the Ontario government introduced significant amendments to the licensing requirements for Temporary Help Agencies (THAs) and Recruiters. These changes, set to take effect on July 1, 2023, aim to address concerns regarding worker exploitation and unfair employment practices by introducing a more stringent application process and tighter regulation of the industry. The key changes are:
- Strengthened Licensing Framework: The revised legislation introduces a more robust licensing framework for THAs. To obtain or renew a license, agencies must meet stringent criteria, including demonstrating compliance with employment standards and paying a prescribed fee. Moreover, the amendments to the legislation introduce a new definition of “recruiter,” which is defined as (i) “any person who, for a fee, finds, or attempts to find, employment in Ontario for prospective employees” or (ii) “any person who, for a fee, finds, or attempts to find, employees for prospective employers in Ontario.”
- Enhanced Record-Keeping Obligations: Under the amended ESA, it is not only THAs that will be required to maintain comprehensive records regarding their workers, including hours worked, wages paid, and any deductions made, but recruiters will now also have to keep extensive records of prospective employees and prospective clients. This provision aims to enhance transparency and ensure accurate remuneration for temporary workers. Employers must update their record-keeping systems to comply with these new requirements, ensuring they capture all necessary information accurately and securely.
- Fees, Security and Penalties: The fee for license application is set at $750 when applying for or renewing a licence, but even more significant is the requirement for applicants to provide security in the form of an irrevocable letter of credit in the amount of $25,000. The intent of this security is to be able to draw against any amounts owing under the ESA or the Employment Protection for Foreign Nationals Act. Finally, the penalties for not adhering to the requirements of the licensing application process are set out in amendments to Ontario Regulation 289/01 (Penalties and Reciprocal Enforcement) and range from $250 to $50,000.
Key Takeaways for Employers:
a) Compliance is Key: Employers must familiarize themselves with the new licensing requirements and ensure their THA and/or Recruiting Agency operates in full compliance with the amended legislation. Failure to do so may result in penalties and reputational damage.
b) Record-Keeping and Documentation: Employers must establish robust record-keeping systems to accurately track hours worked, wages paid, and deductions made for temporary workers, as well as the new requirements for all prospective clients and employees for Recruiters. This will aid in demonstrating compliance during audits or investigations.
The changes to the licensing requirements for THAs and Recruiters under the amended ESA, set to take effect on July 1, 2023, are not only a legal imperative but also provide a strategic opportunity to mitigate potential risks, foster employee trust, and uphold the values of fairness and equality in the workplace – from the THA perspective, being recognized as a fair employer can help on both sides of the coin, providing peace of mind to your clients and attracting the best candidates.
If you operate a THA or recruiting business and want to ensure you are ready to meet your obligations this Canada Day, the team at CCPartners is here to help.
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