Ontario has introduced changes to the Employment Standards Act (ESA) which will soon require THAs and recruiters to obtain licenses to operate, as well as impose penalties on those who do not comply with the new licensing requirements.

Summary of New Licensing Requirements 

The Working for Workers Act S.O. 2021 (the “Act”) was enacted by the Legislature and adds additional provisions to the ESA. These amendments established the licenses required by THAs and recruiters, and the steps involved in applying for such licenses to the Director of Employment Standards. The Act further provides that no one may act as a recruiter or THA without obtaining the prescribed licenses. Notably, the Act also prohibits clients, recruiters, employers, or prospective employers from knowingly engaging with or using the services of a recruiter or THA unless the recruiter or THA has a proper license as prescribed by the ESA. 

Additional regulations have been established under the ESA to provide additional guidance on the new licensing requirements. O. Reg. 99/23 defines recruiters as (1) any person who, for a fee, finds or attempts to find employment in Ontario for prospective employees, or (2) any person who, for a fee, finds, or attempts to find, employees for prospective employers in Ontario. A THA is 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. 

750. Reg 99/23 also provides that the application fees for a recruiter and THA license are $750. Along with the application fee, this regulation requires that persons applying for a new license must provide security in the form of an electronic irrevocable letter of credit in the amount of $25,000. This regulation also outlines the circumstances in which an application for an initial license or a license renewal may be denied. 

Penalties for Non-compliance 

O. Reg. 289/01 provides the penalties for contravening the new requirements under the ESA. A $15,000 penalty may be imposed on a party if they provide false or misleading information pertaining to the new licencing requirements as outlined under the new additions to the ESA. A $25,000 fine may be imposed if a party commits the same violation a second time in a three-year period, and $50,000 fine for a third violation in a three-year period. Other less substantive fines may be imposed for contraventions of other parts of the ESA relating to licencing for recruiters and THAs.

Stages of Implementation 

These new licensing requirements will be introduced in two stages. As of July 1, 2023, THAs and recruiters may start the application process and obtain the required licenses. They will then be given 6 months to comply with the licensing requirements. As of January 1, 2024, the provisions prohibiting recruiters and THAs from operating without licenses as well as the provisions barring employers and clients from knowingly engaging with or using the services of unlicensed agencies and recruiters will then come into effect. This will give recruiters and agencies the opportunity to comply with the new requirements without penalty. 

Takeaway 

Recruiters, THAs, and those who engage with and utilize their services must become aware of these new licensing requirements. If they do not, they run the risk of significant monetary penalties. Though the 6-month grace period provided to assist prospective licensees buys them time, it is crucial that recruiters, THAs, as well as companies retaining recruits to source candidates become aware of their new obligations under the ESA as soon as possible.