Canada: U.S. Immigration Solution: Canada Is Open For Business

The competition for professional foreign workers continues to increase in many U.S. business sectors. In light of changing U.S. immigration laws and impending reform, however, American companies hiring foreign talent are challenged by how to efficiently and economically recruit and retain their top talent.

In an effort to increase innovation and profits in a burgeoning global economy, large, mid-market and emerging companies are searching for solutions to ease their challenges with attracting a highly skilled immigrant workforce. One of these may be adding business interests in our neighbor to the north – Canada – to leverage the favorable economic and immigration environment.

SITUATION ANALYSIS

With global competitive pressures, it's essential that U.S. companies in specific industries be able to recruit and retain top talent. In a perfect storm compounded by numerous factors, U.S. corporate leadership is aggressively seeking solutions that promise to enrich their competitive edge and, at the same time, create a more favorable marketplace.

EXISTING U.S. IMMIGRATION POLICY PRESENTS RECRUITING, RETENTION CHALLENGES

Though immigration law reform may eventually come to the U.S., current laws are challenging, directly impacting American companies from resolving the current disproportionate state of workforce supply and demand.

Currently, the U.S. Department of Homeland Security caps the number of skilled immigrant workers allowed into the U.S. each year through the H-1B visa program at 85,000, though there are some exceptions. (For the 2017 fiscal year, the cap is 65,000 plus 20,000 foreign workers who earned an advanced degree). This year, U.S. Citizenship and Immigration Services estimated the number of applications received at nearly 199,000.1

"Across numerous industries – but particularly in IT and tech industries that rely on STEM workers – talent is a big challenge for companies," says Matthew J. Slaughter, Paul Danos Dean of Dartmouth's Tuck School of Business, research associate with the National Bureau of Economic Research and founding faculty director of the Center for Business, Government & Society. "And for these particular parts of the labor market, at least a bachelor's degree or advanced degree is required under the H-1B visa program. The demand is pretty acute."

Increasing their global competitive standing has long been a struggle for U.S. tech companies. They have lobbied aggressively for immigration reform to allow more skilled foreign workers to enter and remain in the U.S. But they also compete for available H-1B visas with the health care, science and financial industries, which also rely heavily on the program to fill gaps in their workforces.

H-1B holders are typically required to work in positions that would require, at minimum, a bachelor's degree or its equivalent.

RETAINING IMMIGRANT TALENT IN MIDST OF UNCERTAINTY

As the global economy continues to grow and innovate, U.S. companies face deep competitive concerns in both recruiting and retaining top talent. Corporate America understands that a North American platform is absolutely essential to effectively competing for excellent domestic talent. Top international graduates are increasingly unwilling to accept professional opportunities with companies unless their immigrations issues and visa status are settled as they are seeking a secure future.

In the current U.S. immigration environment, some of America's top businesses spend thousands of dollars for every immigrant worker, sponsoring those foreign workers into the H1-B lottery system. Large enterprises know that they must protect their investment, doing whatever it takes to build from the best talent pools in the world.

According to a recent National Foundation for American Policy study, more than half of America's multi-billion-dollar startups were founded by immigrants – many of whom first came to the U.S. on an H-1B visa. The 44 immigrant-founded companies profiled in the report held a collective market value of $168 billion and employed an average of 760 people each.2

"The key thing to understand about high-skill immigration is that they make the economic pie bigger because of the talents they bring", Slaughter says. "It's not a matter of adding people to a fixed supply of jobs. Whether they're U.S.-born or foreign-born, innovative workers drive productivity growth and grow the economy."3

KEY CONSIDERATIONS FOR A CANADIAN SOLUTION

U.S. corporations looking to maintain their competitive advantage and retain top foreign talent may consider opening a Canadian subsidiary or affiliate in order to facilitate employment (i.e., work permits) within North America.

With this approach – which some of the largest U.S. tech companies leverage – employers can transition international workers from the U.S. to a Canadian subsidiary either temporarily or permanently, with the option to subsequently transition back to America as an "international transferee" within the organization.

Among the many benefits of opening a Canadian subsidiary is that it keeps skilled foreign workers geographically close to the U.S. home office and within the same or a similar time zone. This ensures business operations can continue without disruption and work can be turned around and issues addressed quickly.

To this end, leading Canadian business law firm Blake, Cassels & Graydon LLP (Blakes) and well-respected Canadian immigration law boutique law firm Cumming and Partners often work together to provide a combined corporate and immigration solution to help U.S. businesses retain their highly valued skilled workers by expanding operations and forming a Canadian subsidiary location.

CANADIAN IMMIGRATION POLICY IMPROVEMENTS

As a nation with only about one-tenth the populace of the U.S. (36.2 million to America's 322.7 million)4, Canada's immigration system is largely based on the needs of Canada's labor markets.

On June 12, 2017, the Government of Canada implemented a new Global Skills Strategy to make it easier and faster for Canadian companies to obtain work permits for foreign workers. Special streamlined rules have been implemented for those in technology and other industries that rely on top international talent. In addition, work permits for international hires can now be expedited with approvals obtained within 30 days.

There is also a direct route to Canadian Permanent Residency for top international talent, with a processing time of 12 months or less. The new programs are specifically designed to give Canadian employers – including subsidiaries and affiliates of U.S. businesses – quick and easy long-term access to top global talent.

CANADIAN OPTIONS THAT SUPPORT U.S. COMPANIES

With a sophisticated economy, close proximity to the U.S., familiar business culture, attractive currency exchange and universal health care, Canada is an often safe and secure place for U.S. companies looking for a solution to immigration and employment issues.

But Canada does have a different legal and regulatory regime. It is, therefore, important to retain experienced counsel with a deep understanding of cross-border structures and transactions.

While Blakes does not practice U.S. law, it collaborates with U.S. and international clients and their legal and financial advisors to provide advice on the Canadian aspects of transactions.

Among the considerations for U.S. corporations to evaluate when looking into a Canadian outpost:

1. Corporate considerations

  • In Canada, businesses can incorporate under either the federal statute (Canadian Business Corporations Act) or, an individual province (e.g., Ontario or British Columbia).
  • Most corporations in Canada require resident directors – with the British Columbia Corporations Act being an exception.
  • Companies will want to carefully consider their choice of corporate entity – corporation, general or limited partnership, branch office, etc.

2. Corporate tax considerations

  • The Canadian Scientific Research and Experimental Development (SRED or SR&ED) Tax Incentive Program provides support in the form of tax credits and refunds for certain R&D activities.
  • Withholding, dividend and value-added taxes are additional tax considerations that companies should be aware of.
  • The choice of business entity can have tax consequences: Canadian unlimited liability corporations and U.S. limited liability companies can be treated as "disregarded" entities or partnerships for U.S. federal income tax purposes while being taxed in Canada at the same time as corporations.
  • Provincial tax rates vary – income of a business is allocated to a province based on various factors.

3. Employee tax considerations

  • There are specific tax treatments for non-resident employees in Canada, and companies will need to be aware of the Canadian federal rate as well as additional taxes – and ways to manage them, if applicable.
  • Stock option benefits in Canada are typically taxed under the Income Tax Act, with cross-border business introducing additional factors – including for those working in both Canada and the U.S.

4. Employment law considerations

  • All labor and employment regulations are governed by province rather than federally.
  • There is no employment-at-will in Canada, rather it is a "notice period" regime.
  • Disability considerations are even more stringent than in the U.S., requiring all employers to fully accommodate employees with disabilities – even if not work-related.
  • Random drug and alcohol testing is typically not allowed, even for safety purposes.
  • Adapting employment contracts, benefits plans, etc.

5. Current Canadian business environment:

  • Canada has a long history of political stability.
  • The Canadian banking system has been declared among the soundest in the world.5
  • Canada led all G7 countries in economic growth between 2006 and 2015.7

STRUCTURED SOLUTION TO INCREASE NORTH AMERICAN PLATFORM

By engaging an experienced legal team and trusted business and immigration law advisors, U.S. clients can unlock an economical, turnkey solution for identifying and effectively addressing the requirements and considerations of establishing a Canadian outpost.

On an à la carte basis, a similar process would likely take much longer and cost much more. To that end, the teams of Blakes and the immigration law professionals with whom they work have developed a coordinated methodology for working through the necessary channels and processes to represent its many satisfied cross-border clients. These teams that manage these complex issues are leaders in cross-border business and immigration solutions that have created defined and successful processes for large, mid-market and smaller emerging companies.

GETTING STARTED

To benefit fully from the expertise of these legal teams, U.S. companies will be guided through a comprehensive business platform audit and situation analysis. Then, a custom workflow solution will be developed.

For mid-market and emerging U.S. companies – which may not have a Canadian outpost or cross-border immigration counsel – these teams will be especially valuable.

To compete in the global marketplace, U.S. businesses are adopting a comprehensive and proactive North American immigration and business strategy. Your company's success has never been more dependent on retaining the best and brightest business and legal teams, both at home and abroad.

We wish to acknowledge the contribution of Cheryl Slusarchuk to this publication.

Footnotes

1 "USCIS Completes the H-1B Cap Random Selection Process for FY 2018." U.S. Citizenship and Immigration Services. April 17, 2017. https://www.uscis.gov/news/alerts/uscis-completes-h-1b-cap-random-selection-process-fy-2018  .

2  Anderson, Stuart. "Immigrants and Billion Dollar Startups." National Foundation for American Policy. March 2016. http://nfap.com/wp-content/uploads/2016/03/Immigrants-and-Billion-Dollar-Startups.NFAP-Policy-Brief. Foundation for American Policy. March 2016. http://nfap.com/wp-content/uploads/2016/03/Immigrants-and-Billion-Dollar-Startups.NFAP-Policy-Brief.March-2016.pdf

3 Ibid

4 "What Can the U.S. Learn from Canada's Immigration Policy?" Knowledge@ Wharton. September 16, 2016. http://knowledge.wharton.upenn.edu/article/what-the-u-s-can-learn-from-canadas-immigration-policy/

5 "Competitive Alternatives 2016: Focus on Tax." KPMG. July 12, 2016. https://home.kpmg.com/ca/en/home/media/press-releases/2016/07/canada-maintains-top-spot-as-the-most-tax-competitive-country-for-business-globally-kpmg-study.html

6 "Global Competitiveness Survey." World Economic Forum. 2017. http://reports.weforum.org/global-competitiveness-index/competitiveness-rankings/#series=EOSQ087

7 OECD Data. https://data.oecd.org/canada.htm

Originally published in The American Lawyer, August 2017

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
14 Nov 2018, Speaking Engagement, Ontario, Canada

Join members of the Blakes Environmental and Enterprise Risk & Crisis Response groups for a discussion of hot topics and trends in Canadian environmental law.

15 Nov 2018, Webinar, Toronto, Canada

Join us for a live webcast with partners from our Employment & Labour and Litigation & Dispute Resolution groups as they discuss employment-related challenges and considerations surrounding the recent legalization of recreational cannabis in Canada.

15 Nov 2018, Webinar, Toronto, Canada

Join us for a live webcast with partners from our Employment & Labour and Litigation & Dispute Resolution groups as they discuss employment-related challenges and considerations surrounding the recent legalization of recreational cannabis in Canada.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions