CHRIS HANNAYINDEPENDENT BUSINESS REPORTERPUBLISHED NOVEMBER 10, 2023UPDATED NOVEMBER 11, 2023 The Globe and Mail

The Ontario government is delaying and amending new licensing rules for staffing agencies, after the industry expressed concern that the requirements were too onerous for small recruiting firms.

Ontario announced in July that businesses in the recruiting and staffing industry would need to apply for licences by Jan. 1, 2024, pay $750 application fees and put up $25,000 letters of credit that the government could draw upon, if needed, to cover wages owed to employees.

The government said the rules were needed to crack down on agencies exploiting temporary and vulnerable workers. For example, a temporary staffing agency could collect money from an employer and then fail to pay the person they sent to do work.

But nearly all independent businesses that helped people find jobs – or helped employers find new recruits – were covered under the new regulations. Small recruiting firms in particular said coming up with $25,000 on short notice would put their businesses at risk and cost hundreds of dollars in additional annual fees.

On Thursday, Ontario Labour Minister David Piccini wrote to recruiters to tell them implementation of the new rules would be delayed until July 1, giving the ministry time to rewrite the rules to address their concerns. His office confirmed the policy change on Friday.

“While the majority of recruiters and temporary help agencies in Ontario follow the rules, inspections by my ministry have consistently found firms charging illegal fees, paying people below the minimum wage, and denying them other basic rights,” Mr. Piccini wrote in the letter.

He continued: “Given the complexity of the potential impact on the recruitment and short-term employment sector, which are crucial to our economy, Ontario is delaying implementation of the requirement to be licenced to July 1, 2024 and I have instructed the ministry to consider additional changes to the framework.”

He said potential changes could include narrowing the scope of who needs to provide a letter of credit, as well as possibly accepting alternative forms of security.

Recruiters said they welcomed the delay.

“This is great news for the staffing industry, especially small businesses,” said Suky Sodhi, president of Professional Selection Inc. She said the extension gives firms such as hers time to consult with the ministry to have a fair outcome that also protects vulnerable workers.

Jason Noble, founder of the Noble Search Group, said he hopes the regulations are more focused. “Unlike temporary staffing agencies, permanent placement recruiters (such as me) don’t ever pay employees or charge fees, but we were treated like we do,” he said.

The rules announced in July were written after consultations with the industry group Association of Canadian Search, Employment and Staffing Services (ACSESS), which has also advised on rules in British Columbia and Alberta.

In August, ACSESS told The Globe it supported the rules. On Friday, the group said it also supported the delay and changes to acceptable forms of security.

“ACSESS is very pleased with Minister Piccini’s decision to delay implementation,” said Mary McIninch, the group’s executive director. She said the group would work in partnership with the Surety Association of Canada to advise the government that a surety bond should be an acceptable alternative to a letter of credit.

Some recruiters are exempt from the new licensing requirements, such as those working for unions, charities or the government.