US companies and H-1B visa holders can benefit from the new rules Canada has announced to attract highly skilled professionals. The new guidelines show that the Canadian government wants more foreign-born scientists and engineers in its country – following economists’ advice on the benefits of immigrating highly skilled individuals. At the same time, the announcement puts Canada’s US lawmakers, who advocate the status quo or further restrictions on corporate immigration, at odds while other countries seek to attract talent.
10,000 open work permits for H-1B visa holders
On June 27, 2023, Secretary of Immigration, Refugees and Citizenship Sean Fraser announced Canada’s Tech Talent Strategy, which focuses on liberalizing immigration rules for foreign workers in the United States. He made the announcement at Collision 2023 in Toronto.
The most important part of Secretary Fraser’s announcement concerned H-1B visa holders working in the United States. Canada has no annual limit for temporary visas for highly qualified persons and no country-specific permanent residence limits. In contrast, the vast majority of H-1B registrations in the US are denied due to the annual H-1B limit of 85,000 for businesses. Employment-related green card applicants from India may have to wait decades due to country restrictions in US immigration law.
“Starting July 16, 2023, U.S. H-1B specialty occupation visa holders and their immediate family members may apply to enter Canada,” according to a background information from the Canadian government. “Approved applicants are given an open work permit that lasts up to three years, which means they can work for almost any employer anywhere in Canada.”
In the United States, generally only the spouses of H-1B visa holders with pending green card applications are eligible for a work permit, but not all spouses of H-1B professionals. In Canada, the spouses and dependents of working-age foreign workers are generally granted work permits. The Canadian government’s announcement states that spouses and dependents of H-1B professionals who come to Canada under this policy may work.
The new program has a numerical limit. “This measure will remain in effect for one year or until IRCC [Immigration, Refugees and Citizenship Canada] receives 10,000 applications,” the government said. Only main applicants count towards the 10,000 limit. In the past, several Canadian pilot programs have become permanent programs.
Who is likely to benefit from the policy?
Peter Rekai, senior partner at Rekai LLP in Toronto, believes that most people coming to Canada under the new policy will already have employment given the costs involved in moving to a new country and renting a city apartment have found. However, obtaining an open work permit makes job hunting easier because employers can waive the initial immigration paperwork and other permits.
Three categories of H-1B visa holders are most likely to benefit from Canada’s new policy. First, individuals affected by layoffs in the United States and unable to find new employment within 60 days may prefer to go to Canada with an open work permit and seek employment than within it return home country.
Second, H-1B professionals waiting in work-related immigration backlogs might decide waiting a decade or more for permanent residency is too long. The long wait time would be due to the per-country limitation and the low annual number of employment-related immigrant visas. Such individuals will almost certainly want to find employment with a Canadian company before leaving their jobs in the United States.
Third, H-1B visa holders who have been denied an extension could benefit from Canada’s policy. During the Trump administration, rejection rates for H-1B continued employment applications reached 12% in fiscal 2018 and fiscal 2019. Following a court settlement by USCIS following a successful litigation by an employer group (ITServe Alliance), the continued employment rejection rate dropped to 2% by fiscal year 2022. H-1B visa holders with immigration issues are likely to explore Canada’s new policies.
These are preliminary views of Canada’s announcement. More details from the government will clarify the scope of the new proposals.
How the new Canadian rules can help US companies
Recognizing that attracting foreign investment is good for the economy, the Canadian government has recognized that talent and investment go together.
“Canada has been encouraging skilled foreign workers to move there for several years, with welcoming immigration policies and even a bold billboard campaign in the heart of Silicon Valley three years ago,” reports Carolyn Said im San Francisco Chronicles. “The efforts have paid off. According to CBRE’s annual assessment, Toronto is now the third largest location for technology jobs in North America, behind the Bay Area and New York.”
Many of America’s leading technology companies have large or growing operations in Canada, with US immigration policies being a major factor in the drain of resources from the United States. “Thousands of high-tech workers are employed by companies that have major offices in both Canada and the United States, and those who work in the United States often have H-1B special-job visas,” according to the backgrounder of the Canadian government.
Congressmen who believe that imposing restrictions on H-1B visas will lead to more jobs for US workers have been wrong. “Firms are responding to H-1B immigration restrictions by increasing the employment of foreign affiliates in the intense and extensive environments, particularly in China, India and Canada,” says a widely cited study by Britta Glennon, an assistant professor at the Wharton School of Business at the University of Pennsylvania.
Rekai recommends US companies with operations in Canada use the new policy as a way to “retain” employees they would otherwise lose to US immigration issues. This includes employees who have been denied renewal or who are dissatisfied with the pace of the transition to permanent residency due to backlogs or administrative issues.
Canada’s efforts to attract H-1B visa holders are just one of several programs to facilitate the admission of IT professionals, including streamlining or eliminating labor market assessments, he notes.
The Canadian government announced that it will “create a new exemption from the labor market impact assessment process to support high-growth employers and a talented workforce in supporting Canada’s innovation priorities and high-tech industries.”
Employers in Canada can now circumvent the requirement to test the labor market in certain categories by submitting approved training and hiring plans (called Labor Market Benefits Plans). Secretary Frasier would relax these requirements further by the end of the year.
“Stakeholder feedback on the Innovation Stream proposal guided IRCC [Immigration, Refugees and Citizenship Canada] to consider two options, which are not mutually exclusive: 1) employer-specific work permits for up to five years for workers assigned to work for a company identified by the Canadian government as contributing to our industrial innovation goals; 2) Open work permits for up to five years for high-skilled workers in selected in-demand occupations,” reads the government background information.
The Canadian government also announced improvements to its startup visa program. These changes could increase enrollment in these programs, but advocates point out that given the easy opportunities Canada offers for a highly skilled workforce, it’s often quicker to take the employment route or start a business in another country and into one to move to new Canadian office . Due to the longer and more uncertain path to permanent US residency and the attractive size of the American market, a startup visa program is more likely to benefit foreigners in the United States.
Dissatisfaction with the US immigration system
Many employers and foreign-born scientists and engineers are dissatisfied with the US immigration system. During negotiations for the CHIPS bill in 2022, Senator Charles Grassley (R-IA) blocked passage of an exemption from annual green card limits for foreigners with a PhD. in STEM fields (science, technology, engineering and mathematics) and those with a master’s degree “in a critical industry”. Given the long waits for employment-related green cards and the difficulty of obtaining temporary H-1B status in the United States, it’s not surprising that the number of Indians immigrating to Canada has more than tripled since 2013.
Foreign nationals in the United States who have been laid off or are unhappy with long waits for employment-related green cards may find better options in Canada. New Canadian regulations will give US companies more options to retain H-1B visa holders who have been denied an extension or who are otherwise unable to remain in the United States. Canada’s announcement may leave the impression that US lawmakers, who have opposed more liberalized immigration policies, have lost touch compared to government officials in other countries competing for talent in the global economy.