Pluses, minuses to accelerated LMOs (Legal View)

Labour market opinions now available in 10 days or less – but there are caveats
By Howard Greenberg and Naumaan Hameed
|Canadian HR Reporter|Last Updated: 06/15/2012

Over the last year, there was a dramatic increase in processing times for Labour Market Opinions (LMOs). Where LMOs once took four weeks to obtain, employers could instead expect to wait at least 14 to 16 weeks.

In an attempt to remedy the situation, the federal government introduced the Accelerated Labour Market Opinion (A-LMO) program on April 25, 2012. Under this process, some Canadian employers requiring skilled foreign workers can take advantage of expedited LMO processing, which will be issued in 10 business days or less.

Eligibility requirements

To be eligible to participate in the A-LMO program, employers must:

• have been issued at least one positive LMO in the previous two years

• have a clean record of compliance with the Temporary Foreign Worker Program within the last two years

• not have been the subject of a Human Resources and Skills Development Canada (HRSDC) investigation, infraction or serious complaint

• not have any unresolved violations or contraventions under provincial law governing employment and recruitment.

For those employers that meet the requirements, the A-LMO may seem a step in the right direction. However, there are several pitfalls employers should be cognizant of if they wish to participate in the A-LMO program.

The good news

HRSDC has indicated A-LMO applications will be processed within 10 business days of filing. This significant decrease in processing time has been made possible due to the simplification of the initial filing of the application.

At the front end, the reduction in processing time is achieved by waiving the requirement for employers to be scrutinized by Service Canada as to recruitment efforts or information justifying the need for the position.

Instead, HRSDC has created an expedited process predicated on the expectation employers are in compliance with the requirements of the LMO program by having them sign several declarations and attestations included on the A-LMO application form.

However, Service Canada will now be conducting post-A-LMO compliance reviews, based either on random selection or in response to new information received subsequent to the issuance of an A-LMO. As such, while LMOs will now be issued almost immediately, employers need to prepare themselves for the compliance audits that will follow.

In addition to reduced processing times, the A-LMO program brings with it some flexibility with regards to the wages employers must pay skilled foreign workers.

As is the practice with the processing of the traditional LMO, the prevailing wage rates will be used as the key indicator to ensure foreign workers are not paid less than Canadian workers.

However employers may, in appropriate circumstances, submit that the wages paid to the foreign worker should be up to 15 per cent lower than the prevailing wage rate for the particular occupation, having regard to the location of the employment.

A wage reduction may be justified in situations where it can be demonstrated the prevailing wage rate is higher than the actual wage rate paid to Canadian citizens and permanent residents in the same occupation, having regard to the location of the employment.

Likewise, the prevailing wage may be increased in circumstances where Canadian employees are paid a higher wage than the published salary wage rate for the occupation assumed by the foreign worker.

The bad news

Despite the fact the A-LMO program provides several strategic and competitive advantages to Canadian employers, it also has some very specific nuances with which an employer must be familiar.

Although employers no longer have to submit their recruitment efforts to HRSDC at the time of application, they are still required to maintain proof of having completed the minimum advertising requirements required by the skill level of the position, together with proof they were unable to find willing and able Canadians or permanent residents qualified for the position.

In addition, as HRSDC is now requesting minimal information to process an application, employers must ensure they include detailed and accurate job duties for the requested position.

Officers are required to determine the most appropriate National Occupation Classification (NOC) for the requested position.

Although not requested, the more information provided to them to make this assessment accurately, the better it will be for an employer from a compliance perspective.

More specifically, the prevailing wage for a requested position is determined on the basis of the NOC it is assigned. An incorrect NOC determination can result in an employer being required to pay a wage significantly different from what other employees in the same position are paid.

Moreover, while employers are permitted to pay less than the prevailing wage in certain circumstances, the variance is limited to 15 per cent. A greater deviation will result in a refusal of the LMO.

It is, therefore, critical employers and HRSDC officers arrive at the same conclusion regarding the NOC code.

To benefit from the efficiency of the A-LMO program, employers must also be mindful of the requirement to voluntarily consent to comprehensive compliance audits by HRSDC officers, during which any pending LMO applications for that employer will be suspended until the audit process is satisfied.

It has been indicated about one in five positive A-LMOs will be subject to such audits. Moreover, these reviews can extend to both the approved A-LMO or any other LMO issued by HRSDC in the prior two years.

Employers should be familiar with the scope of compliance audits and establish internal processes that permit a quick and accurate response to the review.

Under the traditional LMO process, errors or issues are generally caught by HRSDC at the time of processing so employers have an opportunity to correct or remedy such errors prior to the issuance of a decision.

However, under the A-LMO process, discovery of any application errors will occur during future compliance audits, at which time employers must be prepared to justify their A-LMO submissions.

If a contravention is detected at the time of a compliance audit, the employer may find it difficult to remedy a past incorrect recruitment.

This is especially pertinent where employers have conducted inappropriate NOC assessments, inadequate recruitment efforts or incorrect prevailing wage calculations.

Under the A-LMO process, there is greater burden on the employer to ensure the full accuracy of all representations relating to the genuineness of the job offer, the wage offered and whether the job offer is likely to fill a Canadian shortage. Further, there is an ongoing obligation to continuously monitor any subsequent changes that may cause the skilled foreign worker’s employment conditions to be different than those represented in the offer of employment.

The ugly news

Under current Canadian immigration regulations, in the event an employer fails a compliance audit, it may be subject to penalties including:

• ineligibility to participate in the A-LMO program

• possible revocation of positive LMOs where a work permit has not yet been obtained

• sharing of the audit findings with Canadian immigration authorities, for further investigation

• greater scrutiny of pending or subsequent LMO applications.

The risk of non-compliance has never been greater. In addition to the above penalties, proposed legislation under the federal budget bill (Bill C-38) will, in the near future, enable HRSDC to conduct site visits, both at employer and client locations.

Moreover, HRSDC will be given more enforcement authority to deter the behaviour of non-compliant employers for offences lesser than egregious behaviour.

To bolster existing penalties, Bill C-38 may also allow HRSDC to impose financial penalties and punitive measures on non-compliant employers.

However, the structure of the financial penalties and level of tolerance built in to the punitive measures have not been revealed.

Surprisingly, despite the significant expansion of HRSDC’s authority, the proposed legislation has received limited public attention.

Be ‘audit-ready’

The expectation HRSDC will adjudicate A-LMO applications within 10 business days is a significant improvement over the traditional LMO process.

In addition, the reduced requirement to submit documentary proof of compliance at the application stage has made the application process less burdensome on employers.

However, given the high probability of audits, it is critical employers develop an appropriate immigration policy and process to create an effective compliance framework and ensure their organization is “audit-ready.”

Howard Greenberg is certified by the Law Society of Upper Canada as a specialist in immigration law and a partner at the human resources law firm Greenberg Turner in Toronto. He can be reached at (416) 943-0288. Naumaan Hameed is a senior associate at Greenberg Turner.

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