Canada tightens the LMIA rules; EORs can no longer sponsor foreign workers.

Canada tightens the LMIA rules; EORs can no longer sponsor foreign workers.
Canada clarifies LMIA employer laws, prohibiting EORs and staffing agencies from sponsoring foreign workers for third-party positions through the TFWP.
Canada has tightened the way companies are identified under the Temporary Foreign Worker Program, prohibiting the use of companies of Record (EORs) as sponsors for LMIA-based work permits.
Employment and Social Development Canada (ESDC) will determine who ultimately controls the employment connection, including who leads and supervises the foreign worker in Canada.
Staffing agencies cannot obtain LMIA for third-party jobs.
Staffing and employment firms who recruit employees for another Canadian company do not qualify as employers if the employee later works for a third-party company.
This means that an agency cannot obtain an LMIA for a foreign worker if another company manages the person's day-to-day employment.
The government has also made it plain that firms cannot identify temporary foreign workers as independent contractors in order to dodge payroll, tax, and other duties.
EORs Excluded from LMIA Sponsorship
Employers of Record may continue to operate under various employment arrangements, subject to applicable provincial employment regulations. However, for LMIA applications, EORs cannot serve as the sponsoring employer.
This represents a departure from the former approach, in which compliant EOR arrangements could be employed for LMIA-related recruiting.
The overall pattern is clear: Canada is focusing more on the actual employment connection than the contractual structure used to establish a foreign worker's employment.

Existing LMIA-Based Workers May Need Review.
Companies that already employ foreign workers under LMIA-based work permits should assess their arrangements before applying for an LMIA renewal or extension.
Cross-border operations require special consideration. If a foreign corporation continues to manage the worker while they are physically working in Canada, the Canadian entity may fail to meet the requirements for an employer-employee relationship.
For foreign workers and firms looking to expand, the organization designated as the employer and the entity actually supervising the worker must now match much more closely.
Travunited Take:
We consider this as a practical compliance warning: enterprises that use EORs for LMIA-based employment should reassess their arrangements as soon as possible, particularly before renewing or extending work permits.