3 Common Mistakes Made by U.S. Employers in Canada

By Kathryn Benson, Senior Human Resources Consultant, HR Options

Expanding into the Canadian market may seem straightforward for U.S. companies due to the commonalities we share such as English being the predominant language and our many cultural similarities. As a result, it is often a U.S. based Human Resources or Operations representative who is responsible for overseeing Canadian employment and management.

Three common mistakes made by U.S. employers in Canada are outlined below with helpful tips and guidelines for the U.S. representatives who may have fallen into these traps.

1.       Adhering to the wrong employment standards legislation. Many new employers to Canada follow federal employment standards legislation regulated by the Canada Labour Code. When in fact only 10% of industries in Canada fall under federal legislation, such as Banks, Air & Marine Transportation, and Telecommunications. It is the province that has control over employment standards legislation (such as minimum wage, vacation pay, leaves etc.), as well as over Workers’ Compensation Boards, Health and Safety and Human Rights legislation. For help, view Statutory Laws Across Canada.

2.       Failing to provide a Health & Dental Benefit Plan. U.S. employers often ask why a Canadian employer should provide health benefits when Canada has public health care? The answer is that although some services are covered through provincial governments, many health services are not. Each province’s Health Insurance Plan covers doctors/specialist visits, hospitalization, surgeries etc., but don’t cover (with some exceptions based on circumstance) prescription drugs, vision, dental or long term disability care. For this reason, to remain competitive in the Canadian market, employers should be offering a supplemental benefit plan for employees. Canadian employees will expect a benefit package as part of their offer of employment.

3.       Misclassifying Independent Contractors. An Independent Contractor (IC) is by definition self employed, therefore removing any tax deduction and remittance responsibilities from an employer. This can be a great way to access Canadian talent, but only if the worker is truly an independent contractor.  Life in the U.S., if ICs are misclassified and they are in reality an employee, the employer will be stuck paying all the back taxes,  including the employee’s  portion, as well as penalties. If a worker is controlled by the employer, works primarily for the employer, and depends on the employer for their livelihood, they should be treated as an employee. For help, view Employee or Self-Employed?

About HR Options: HR Options is Total Human Resources Services provider, meaning we provide Consulting and Outsourced Employment services. Outsourced employment means that we take the burden of Canadian employment, payroll, Group benefits, Group RRSP (comparable to a 401k) and human resources management of employees off your hands, so you can focus on your business.  The employee performs work for you and the HR Options handles all aspects of employment from beginning to end. Please call us at 1-866-859-4157 toll free, or see our service options at www.hroptions.ca.