Ontario’s new licensing regime for temporary help agencies and recruiters

Beginning January 1, 2024, Ontario businesses operating as temporary help agencies or recruiters must be licensed to carry on business.

This licensing requirement, which has been years in the making, is a result of the Working for Workers Act, 2021, which amended the Employment Standards Act, 2000 (“ESA”) to require temporary help agencies and recruiters to hold a valid license to operate.

Subject to certain exceptions, under the ESA and Regulation O. Reg. 99/23  (the “Regulation”):

• temporary help agencies are defined as “an employer that employs persons for the purpose of ‎assigning them to perform work on a temporary basis for clients of the employer”; and‎
• recruiters are defined as “any person who, for a fee, finds, or ‎attempts to find, employment in Ontario for prospective employees” or “any person who, for a fee, ‎finds, or attempts to find, employees for prospective employers in Ontario.”

Two-stage implementation

The licensing requirements are being implemented in two stages:

• the first stage came into force on July 1, 2023 and allows temporary help agencies and recruiters to prepare and submit on-line applications; and
• the second stage will come into force on January 1, 2024, at which point temporary help ‎agencies and recruiters must hold a valid license in order to operate (businesses which ‎submitted an application before December 31, 2023 may continue to operate past the ‎January 1, 2024 deadline up to the date they receive a response).‎ 

The fee for each application or renewal is $750, payable at the time the ‎application is submitted. ‎Every legal entity that operates a temporary help ‎agency or acts as a recruiter must apply for a ‎license separately. ‎For example, ‎legal entities that are treated as one employer under s.4 of the ‎ESA must each ‎‎apply for their own license.‎ Applicants must also provide security in the form ‎of ‎an electronic irrevocable ‎letter ‎of credit to the Director of Employment ‎Standards (the ‎‎“Director”). The letter of credit must be in ‎the amount of ‎‎$25,000.‎

Once issued, licenses are valid for one year after the date of issue, or such longer period as may be prescribed. The Ontario government will maintain a searchable database of licensed businesses.

An application or renewal may be refused for a number of reasons, including:

• if the applicant has ever taken possession of or retained a passport or a work permit of a foreign national in contravention of subsection 9(1) or (2) of the Employment Protection for Foreign Nationals Act, 2009;
• the applicant, or any officer, director, or partner of the applicant, has been convicted of certain prescribed offences under the Criminal Code or Immigration and Refugee Protection Act (Canada) for which a record suspension has not been ordered;
• the applicant has not registered with the Workplace Safety and Insurance Board (“WSIB”) or provided WSIB with information as required under the Workplace Safety and Insurance Act, 1997; or
• the applicant is in default of filing a tax return.

Applicants and registrants will receive 60 days’ written notice of the Director’s intention to refuse to issue or renew a license, or to suspend or revoke a license. Businesses can use this notice period to show evidence of ‎compliance with the licensing requirements. — i.e. explain why the business should be or remain licensed.

Penalties

 The Regulation provides for penalties in certain circumstances:

• if any person provides false or misleading information in the application for a license; or
• if an employer knowingly engages or uses the services of an unlicensed recruiter,

the person or the employer, as applicable, may be subject to a $15,000 penalty for a first contravention, or a $50,000 penalty in the case of a second or third contravention within a three-year period.

Takeaways

Employers should ensure they are engaging the services of only licensed recruiters and temporary help agencies, ‎and should check the Ontario government’s online database to confirm whether a particular recruiter or temporary help agency is licensed. Failure to do so could result in significant penalties.

For further information please contact any of the members of the DLA Piper Canadian Employment and Labour Law Service Group listed here.