Ontario Unveils New Law Requiring License for Temporary Staffing Firms, Recruiters

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By Nigel Hapuarachchi

Regional Director of Business Development

Ontario lawmakers are set to introduce new legislation that will require temporary staffing agencies and recruiters to be licensed to conduct business in the province. The law is designed to ensure that all talent acquisition firms and recruitment specialists operate morally and ethically while placing temporary workers on assignment.

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Here’s the latest on what you need to know about this latest push to protect temporary workers in Ontario—and how it could potentially impact the future of temporary staffing agencies in Canada.

Cracking down on illegal activity

According to a news release revealed by the Ontario government, studies and inspections conducted by the Ministry of Labour discovered violations in the treatment of workers. Most notably, firms were found to be compensating employees below minimum wage, denying holiday and overtime pay, and refusing to grant them basic employment rights. In doing so, these agencies are gaining unfair advantages over other staffing firms by undercutting markup rates. Some temporary staffing agencies even charged workers illegal hiring fees upon placing them on assignment—highlighting yet another highly illegal practice uncovered during the investigation.

Protecting against worker trafficking

Within the proposed legislation, the Ontario government is considering hiring a team of dedicated officers to monitor and prevent the exploitation and trafficking of domestic and foreign workers. This group would be responsible for examining illegal practices and recouping unpaid wages on behalf of exploited workers. In years past, the Ontario Provincial Police has rescued dozens of migrant workers from a trafficking ring who were being compensated below minimum wage, while their placements were fully—and illegally—controlled by third-party recruiters.

Penalties for unlicensed operators

According to a 2020 report, over 2,200 temporary staffing agencies operate in Ontario. Under the proposed legislation, all of these firms would need to be licensed to conduct business. Not only would these agencies be vetted by the aforementioned team of dedicated officers before receiving their license, but they would need to provide an irrevocable letter of credit that could be used to repay wages owed to workers. Those that refuse to be licensed could face severe financial punishment. According to the proposed legislation, officers could levy penalties against firms or recruiters that refrained from adhering to this licensing system. Proactive inspection measures will be used to ensure compliance with all applicable requirements found within the law.

What this means for the rest of Canada

Assuming the legislation is passed, the Ontario government intends to require licenses for temporary staffing firms and recruiters as early as 2024. Ontario has shown its willingness to crack down on illegal activity and do its part to protect the 125,000+ full-time temporary workers—which represents 2.6 percent of employment in the province. With this law, legislators also seem committed to fostering a more competitive environment for all staffing agencies. While it remains to be seen whether other provinces will adopt similar legislation, one thing is clear: implementing a bold approach to protecting temporary workers is the moral and righteous thing to do.

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