In 2024, Ontario implemented significant changes to the regulation of temporary help agencies (THAs), staffing firms, and recruiters through amendments to the Employment Standards Act, 2000 (ESA) and related regulations. Starting July 1, 2024, these new rules mandate that agencies and recruiters placing workers in Ontario must be officially licensed.
For employers who depend on staffing or recruitment firms, the changes introduce new responsibilities and possible risks. Below is an overview of what every Ontario employer needs to know to remain compliant and avoid costly penalties.
Why the Change?
The new licensing regime was introduced to safeguard vulnerable workers, foster fair competition, and eliminate unethical recruitment practices. The system features a $25,000 security deposit for many agencies to ensure that unpaid wages can be recovered, includes a public registry of licensed firms for transparency, and grants significant enforcement powers and penalties for non-compliance.
In short, the province is setting higher standards for those working in the staffing and recruitment sector.
Who Must Be Licensed — and Who Isn’t
The licensing requirement applies to Temporary Help Agencies (THAs) and Recruiters operating in Ontario or placing candidates in Ontario positions.
Temporary Help Agencies are employers that hire workers for short-term assignments for client businesses. Recruiters are individuals or companies that, for a fee, assist in finding employment for workers or placing employees with employers.
There are some key exemptions, such as internal HR staff who recruit as part of their usual job, employers hiring for their own business, and certain educational institutions recruiting for students or alumni. Importantly, agencies or recruiters outside Ontario still need to be licensed if they place workers in roles within Ontario. Additionally, if a business functions as both a THA and a recruiter, it must obtain two separate licences.
Key Dates and Transitional Rules
The licensing system took effect on July 1, 2024. To operate legally, all staffing agencies and recruiters must hold a valid licence or have submitted a complete application before that date. Those who applied before July 1 can continue operating until their application is processed.
Each licence is valid for one year and must be renewed annually. Licences are non-transferable, so if a business is sold or ownership changes, a new licence application must be submitted.
What This Means for Employers
The new rules not only impact agencies and recruiters but also clearly define the responsibilities of employers who hire them.
First, employers must not knowingly work with an unlicensed agency or recruiter. Doing so could result in legal and financial penalties for your business. Before signing any staffing agreement, employers should verify that the firm is licensed by requesting its licence number and consulting the public registry available on the Government of Ontario’s website.
Second, employers should update their contracts with staffing and recruiting partners. Each agreement must explicitly require the agency to hold a valid licence, give immediate notice of any suspension or revocation, and indemnify your organization if they fail to comply. These clauses are essential safeguards against liability for unpaid wages, misclassification, or other ESA violations.
Third, while staffing agencies manage recruitment and payroll, employers remain responsible for workplace safety and compliance when temporary workers are on-site. Ensure all temporary or contract workers receive site-specific health and safety training, orientation, and supervision. Employers should also verify that the agency maintains valid WSIB coverage and complies with ESA requirements for pay, hours, and recordkeeping.
Finally, it is crucial to regularly monitor your staffing partners. Licence status can change at any time, and employers should periodically verify that their agencies remain licensed and in good standing. Establish internal procedures for quarterly checks and keep documentation in your vendor files.
Steps Employers Should Take
Employers should take these steps to protect their organization and show compliance with the ESA.
Begin by requesting and retaining proof of licence from each staffing or recruiting firm you engage with. Verify each licence through the Ontario public registry to confirm it is active and valid. Then, strengthen your contracts by adding clauses that require the agency or recruiter to hold a valid licence, inform you of any status changes, and accept liability for breaches. Regularly review and re-verify the licence status, ideally every quarter or during vendor audits.
Ensure temporary workers receive proper health and safety orientation for your worksite, as employers remain responsible for daily safety oversight. Also, verify the agency’s WSIB and payroll compliance to prevent shared liability for unpaid wages or benefits. Finally, develop a contingency plan if a staffing partner loses its licence during the contract to maintain business continuity and legal compliance.
Risks of Non-Compliance
Failing to verify or maintain compliance with these licensing standards can result in serious consequences. Employers who knowingly engage unlicensed agencies or recruiters may face substantial fines under the ESA, as well as reputational damage and operational disruptions. If a staffing agency breaches employment laws, employers could also be found jointly liable for unpaid wages or other violations.
Contracts with unlicensed providers may not be enforceable, leaving your business without legal recourse if problems arise. The Ministry of Labour has also imposed heavy penalties for misrepresentation, including fines of up to $50,000 for repeated violations within three years.
Conclusion
Ontario’s new licensing standards for staffing agencies and recruiters represent a significant shift in how temporary and recruitment services are regulated. For employers, compliance means more than just hiring a staffing partner — it involves actively verifying, documenting, and monitoring their licence status.
By partnering exclusively with licensed agencies, establishing contractual safeguards, and conducting thorough due diligence, your organization can maintain flexible workforce solutions while minimizing legal, financial, and reputational risks.