U.S. companies and H-1B visa holders can benefit from new rules Canada has announced to attract high-skilled professionals. The new policies show the Canadian government wants more foreign-born scientists and engineers in its country—following the advice of economists on the benefits of high-skilled immigration. At the same time, the Canadian announcement makes U.S. lawmakers who support the status quo or more restrictions on business immigration appear out of step as other nations seek to attract talent.
10,000 Open Work Permits For H-1B Visa Holders
On June 27, 2023, Minister of Immigration, Refugees and Citizenship Sean Fraser announced Canada’s “Tech Talent Strategy,” focused on liberalizing immigration rules for foreign workers in the United States. He made the announcement at Collision 2023 in Toronto.
The most significant part of Minister Fraser’s announcement involved H-1B visa holders working in the United States. Canada has no annual limit on high-skilled temporary visas and no per-country limits for permanent residence. In contrast, the vast majority of H-1B registrations in the U.S. are refused due to the H-1B annual limit of 85,000 for companies. Employment-based green card applicants from India can wait potentially decades due to the per-country limit in U.S. immigration law.
“As of July 16, 2023, H-1B specialty occupation visa holders in the US, and their accompanying immediate family members, will be eligible to apply to come to Canada,” according to a Canadian government Backgrounder. “Approved applicants will receive an open work permit of up to three years in duration, which means they will be able to 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 employment authorization, not all spouses of H-1B professionals. In Canada, the spouses and working-age dependents of foreign workers typically receive work authorization. The Canadian government announcement states that spouses and dependents of H-1B professionals who come to Canada under this policy will be allowed to 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,” according to the government. Only principal applicants will count against the 10,000 limit. In the past, several Canadian pilot programs have become permanent.
Who Is Likely To Benefit From The Policy?
Peter Rekai, senior partner of Rekai LLP in Toronto, believes most people who come to Canada under the new policy will already have arranged employment, given the costs of moving to a new country and renting a city apartment. However, receiving an open work permit will make it easier to find a job since employers can forego the initial immigration paperwork and other approvals.
Three categories of H-1B visa holders are most likely to benefit from the new Canadian policy. First, individuals experiencing layoffs in the United States and unable to land a new job within 60 days could find going to Canada on an open work permit and seeking employment preferable to returning to their home country.
Second, H-1B professionals waiting in employment-based immigrant backlogs may decide waiting one or more decades for permanent residence is too long. The long wait would be due to the per-country limit and the low annual number of employment-based immigrant visas. Such individuals would almost certainly wish to arrange employment with a Canadian company before leaving their job in the United States.
Third, H-1B visa holders denied an extension might benefit from Canada’s policy. During the Trump administration, denial rates of H-1B petitions for continuing employment reached 12% in FY 2018 and FY 2019. After a USCIS legal settlement following successful litigation by an employer group (ITServe Alliance), the denial rate for continuing employment dropped to 2% by FY 2022. H-1B visa holders with immigration problems will likely explore Canada’s new policies.
These are preliminary assessments of the Canadian announcement. More details from the government will clarify the scope of the new proposals.
How The New Canadian Rules Can Help U.S. Companies
The Canadian government has appreciated the benefits of attracting foreign investment is good for an economy, recognizing that talent and investment go together.
“Canada has already been encouraging skilled foreign workers to move there for several years, with welcoming immigration policies and even a cheeky billboard campaign in the heart of Silicon Valley three years ago,” reports Carolyn Said in the San Francisco Chronicle. “Its efforts have paid off. Toronto is now the third biggest hub for tech employment in North America, after the Bay Area and New York, according to CBRE’s annual ranking.”
Many of America’s leading technology companies have large or growing offices in Canada, with U.S. immigration policies a significant driver of moving resources from the United States. “Thousands of workers in high-tech fields are employed with companies that have large operations in both Canada and the U.S., and those working in the U.S. often hold an H-1B specialty occupation visa,” according to the Canadian government’s Backgrounder.
Members of Congress who believe imposing restrictions on H-1B visas leads to more jobs for U.S. workers have been shown to be mistaken. “Firms respond to restrictions on H-1B immigration by increasing foreign affiliate employment at the intensive and extensive margins, particularly in China, India and Canada,” according to widely-cited research by Britta Glennon, an assistant professor at the Wharton School of Business at the University of Pennsylvania.
Rekai recommends U.S. companies with operations in Canada use the new policy as a way to “hang onto” employees they would otherwise lose due to U.S. immigration issues. That would include employees with a denied extension or dissatisfied with the pace of moving toward permanent residence due to backlogs or administrative problems.
Canada’s effort to lure H-1B visa holders is just one of several programs to facilitate the admission of information technology professionals, including streamlining or eliminating labor market assessments, he notes.
The Canadian government announced it “will create a new exemption from the labour market impact assessment process to help high-growth employers and talented workers in support of Canada’s innovation priorities and high-tech industries.”
Employers in Canada can now avoid the requirement to test the labor market in certain categories by presenting approved training and recruitment plans (called Labour Market Benefits Plans). Minister Frasier would ease those requirements further by the end of the year.
“The feedback from stakeholders on the Innovation Stream proposal has led IRCC [Immigration, Refugees and Citizenship Canada] to consider two options that are not mutually exclusive: 1) employer-specific work permits for up to five years for workers destined to work for a company identified by the Government of Canada as contributing to our industrial innovation goals; 2) open work permits for up to five years for highly skilled workers in select in-demand occupations,” according to the government Backgrounder.
The Canadian government also announced improvements to its startup visa program. Those changes could increase the intake in those programs, but attorneys note given the ease of Canada’s pathway for high-skilled workers, it is often quicker to use the employment route or to start a company in another nation and transfer yourself to a new Canadian office. A startup visa program is more likely to benefit foreign nationals in the United States because of the longer and more uncertain U.S. path to permanent residence and the attractive size of the American market. U.S. attorney Tahmina Watson has published a new book offering practical immigration advice for foreign nationals seeking to found a company in the United States.
Dissatisfaction With The U.S. Immigration System
Many employers and foreign-born scientists and engineers are dissatisfied with the U.S. immigration system. During negotiations over the CHIPS Act in 2022, Sen. Charles Grassley (R-IA) blocked from becoming law an exemption from yearly green card limits for foreign nationals with a Ph.D. in STEM (science, technology, engineering and math) fields and those with a master’s degree “in a critical industry.” Given the long waits for employment-based green cards and the difficulty in obtaining H-1B temporary status in the United States, it’s not surprising the number of Indians immigrating to Canada has more than tripled since 2013.
Foreign nationals in the United States laid off or dissatisfied with long waits for employment-based green cards may find increased opportunities in Canada. New Canadian rules will allow U.S. companies more options to retain H-1B visa holders denied an extension or otherwise unable to remain in the United States. The Canadian announcement may make U.S. lawmakers who have opposed more liberalized immigration policies appear out of touch compared to government officials in other countries competing for talent in the global economy.