MobSquad and other nearshoring companies a misuse of temporary foreign worker program: lawyers

In June U.S. President Donald Trump, by executive order, suspended H-1B and H-4 visas, which are common work permits used by the tech sector to import highly skilled labour. The president’s restrictive immigration policies have created an opportunity for nearshoring companies – including Calgary’s MobSquad – to set up foreign workers to work for U.S. companies from Canadian offices.

But immigration lawyers say the practice provides little benefit to Canada and harm to the immigration system.  

“My prediction is that this nearshoring will bring the spotlight back on to the temporary foreign worker program and bring its integrity into question,” says Barbara Jo Caruso, founder of Corporate Immigration Law Firm and certified immigration and citizenship law specialist.

Nearshoring also crowds out foreign workers who intend to work for Canadian companies, says Peter Rekai, an immigration law specialist at Rekai LLP in Toronto. Temporary foreign workers are eligible for permanent resident status through the Express Entry Program, in which applicants compete for limited space, he says.

“It's a great waste of a foreign worker program, which is supposed to bring skills to Canada. And because it is an access point for immigration, which is limited [in] numbers every year, it takes space in the immigration program and excludes others who are working for Canadian companies. There's no advantage and some harm to the [TFWP] program,” says Rekai.

Caruso says that when she helps clients apply for the TFWP she has to explain the role, whether THE arrangement will help transfer knowledge to Canadian colleagues, and how the company is going to advance their Canadian products and services and boost revenue. With nearshoring, Canada loses the corporate taxes the U.S. company would pay if it opened a Canadian subsidiary, which could also recruit and hire other Canadians, and there is no transfer of knowledge to Canadian workers. This positive labour-market impact is the point of the TFWP, she says.

Caruso and Rekai also say that nearshoring services do not need to use the TFWP because the foreign worker is not, technically, working in Canada.

“Traditionally, [Immigration, Refugee and Citizenship Canada] has taken the view that if you are here in Canada, and you're telecommuting with your employer in the U.S., you're not working in Canada. You don’t need a work permit,” says Rekai.

MobSquad founder and CEO Irfhan Rawji told Canadian Lawyer that nearshoring services like his provide “substantial benefit” to Canada.

“As part of our business, we are bringing some of the best talent in the world, with the best training – often in Silicon Valley – to our country,” Rawji says. “We help them establish roots here and get on their path to Canadian citizenship. They become part of our technology ecosystem and our labour market. We don’t expect they will work with MobSquad forever, but are hopeful they choose to make Canada their permanent home.”

He adds that MobSquad’s software engineers earn more than $100,000 in annual salaries, on average, which they spend in Canada, and MobSquad employees have already paid more than $500,000 in personal income taxes so far in 2020, he says.

Rawji says his company uses the Global Talent Stream for TFWP and works to have their employees who are foreign nationals obtain permanent residency as quickly as possible, paying for the fees and costs associated with permanent residency and citizenship. He says the company completes labour market benefits plans under which the company commits to hiring Canadians, “completing local market training” and hiring interns. Rawji notes that his company employs people to work for Canadian companies, as well as nearshoring for foreign companies.

“Building Canadian companies that sell their products and services globally has been a long-time objective of any government. If Bombardier only sold its planes in Canada, would it be a successful company?” Rawji says. “I think the nuances are missed here. Are we open to selling our products and services to high-quality customers wherever they are located? Absolutely.”

Rawji adds that MobSquad does “daily check-ins” with their employees and, when a contract ends, MobSquad pays them until they are working on a new client assignment. The company has offices in Vancouver, Calgary, Toronto and Halifax.