Federal Court Upholds Penalties for LMIA Violations

Date:20260320 Docket: IMM-20159-24 Citation: 2026 FC 377 Ottawa, Ontario, March 20, 2026 PRESENT: Madam Justice Azmudeh BETWEEN: [COMPANY]. Applicant and [NAME] CANADA Respondent

JUDGMENT AND

REASONS I. Overview [ 1 ] The Applicant, [COMPANY]., is a small business that operates a restaurant in the greater Toronto region. The Applicant challenges a September 13, 2024 decision (Decision) by the Assistant Deputy Minister (ADM or decision-maker), [NAME] at Service Canada advising that the Applicant failed to comply with some of the conditions of the [NAME] ([NAME]) set out in the Immigration and Refugee Protection Regulations , SOR/2002-227 [IRPR], and that the failure to [NAME] so was not justified. [ 2 ] The Decision identified the following breaches of the [NAME] set out in IRPR as determinative and imposed penalties, totalling an administrative monetary penalty (AMP) of $71,000.00, along with a 1-year ban : Wages : Breach : Subparagraph 209.3(1)(a)(iv) of the IRPR which requires employers to provide each [NAME] with wages that are substantially the same but not less favourable than those set out in the letter and annexes related to the Labour Market Impact Assessment (LMIA). Penalty: An AMP of $7,000.00. • Working Conditions: Breach: Subparagraph 209.3(1)(a)(iv) of the IRPR which requires employers to provide each [NAME] with working conditions that are substantially the same but not less favourable than those set out in the LMIA, letter and annexes. Penalty: An AMP of $24,000.00. • Wages under quarantine : Breach: Subparagraph 209.3(1)(a)(xii) of the IRPR requires that, in the case of an employer who employs a [NAME] who, in accordance with an order made under section 58 of the Quarantine Act, is required to isolate or quarantine themselves for a period on entry into Canada, must provide the [NAME] with wages during that period that are substantially the same as those set out in the offer of employment. Penalty: an AMP of $40,000.00 and a 1-year ban. [ 3 ] The Decision was made pursuant to the evidence the [NAME] (Minister) gathered through its inspection power pursuant to ss 209.6 to 209.9 of IRPR. After the inspection(s), the Minister prepared a preliminary report to which the Applicant could respond. In the preliminary report, the Minister had imposed an AMP of $130,000 together with a two-year ban. It was after considering the Applicant’s response to the preliminary report that the decision-maker reduced the penalties and explained the rationale. [ 4 ] For the following reasons, I dismiss the application for judicial review.

II. Standard of Review [ 5 ] The standard of review is reasonableness. The parties [NAME] not dispute this. [ 6 ] When the applicable standard of review is reasonableness, the role of a reviewing court is to examine the reasons given by the administrative decision-maker and to assess whether the decision was based on “an internally coherent and rational chain of analysis” and is “justified in relation to the facts and law that constrain the decision-maker” ( Canada (Minister of Citizenship and Immigration) v Vavilov , 2019 SCC 65 at para 85 [ Vavilov ]). The reviewing court must therefore ask “whether the decision bears the hallmarks of reasonableness — justification, transparency and intelligibility” ( Vavilov at para 99). It is up to the party challenging an administrative decision to show that it is unreasonable. [ 7 ] On procedural fairness, the Court must be satisfied of the fairness of the procedure with regard to the circumstances of the case. In other words, I must ask whether the Applicant was given the opportunity to know the case against them, and was given a right to be heard ( [NAME] v Canada (Citizenship and Immigration), 2023 FC 1617 at para 11 citing [NAME] v Canada (Citizenship and Immigration) , 2023 FC 215 at para 6; [NAME] v Canada (Citizenship and Immigration) , 2022 FC 927 at para 4; [COMPANY] v Canada (Attorney General) , 2018 FCA 69 at paras 54–56).

III. Analysis A. The ADM’s decision was reasonable [ 8 ] I find that the ADM’s decision—enclosed in the Notice of Final Determination—was reasonable. It was responsive to the totality of the evidence before the decision-maker, it was made in accordance with the IRPR, and the notes/worksheets contained a detailed chain of reasoning that explained how the facts were applied to the IRPR. [ 9 ] A [NAME] cannot work in Canada unless that person holds a work permit issued by Immigration, Refugees, and Citizenship Canada: IRPR, s 203(1). One requirement for work permit issuance is an assessment by ESDC concerning whether a job offer is genuine (IRPR, s 200(5)). This assessment is a Labour Market Impact Assessment (LMIA) and is issued by an officer of the [NAME] (IRPR, s 203(2)). The employer must then follow certain conditions for the period for which the work permit is issued under paragraphs 209.3(1) and 209.4(1) of the IRPR. In this application, the following conditions, under subparagraph 209.3(1)(a)(iv) and subparagraph 209.3(1)(a)(xii) are relevant: (iv) provide the [NAME] with employment in the same occupation as that set out in the [NAME]’s offer of employment and with wages and working conditions that are substantially the same as — but not less favourable than — those set out in that offer; and (xii) provide a [NAME] who is required to isolate or quarantine themselves upon entry to Canada with wages during that period that are substantially the same as those set out in the offer of employment. [ 10 ] The Minister can then exercise their inspection powers under sections 209.6 to 209.9 of the IRPR to verify employer compliance. Pursuant to section 209.5 of the IRPR, the Minister may exercise these powers if one of three triggers exists: (1) there is a reason to suspect that the employer is not complying or has not complied with any of the conditions (also known as a risk-based inspection), (2) the employer has not complied with one of the conditions in the past, or (3) the employer was randomly selected for inspection. [ 11 ] The decision-maker relied on the information gathered during the inspection to conclude that the Applicant was not complying with the LMIA’s terms. Specifically, the decision-maker assessed the time sheets and pay information and concluded that the Applicant had not paid the [NAME] workers in accordance with the terms of the ESDC-approved LMIA. [ 12 ] Schedule II of the IRPR sets out the framework for assessing AMPs based on the type of violation, the size of business, and the severity of the violation. The Applicant argues that the Minister did not consider the fact that they operated a small business. [ 13 ] I find that the decision-maker reasonably applied the legislative framework when it calculated the AMPs for the Applicant. In their evidence concerning the AMP calculations for the Notice of Final Determination, the Minister assessed penalties under section 209.3(1)(a)(xii); and for each of wages and working conditions under section 209.3(1)(a)(iv). The penalties were computed under Table 2, “Administrative Monetary Penalty Amounts” , of the IRPR, and the total penalties correspond to the “Individual or Small Business” column for the relevant type of non-compliance, as befitted the number of points in Column 1. Thus, the Applicant’s allegation is factually incorrect. The Respondents’ evidence clearly shows that the assessments leading to the Decision consistently referred to the Applicant as a small business. [ 14 ] The Applicant does not challenge the decision-maker’s use of its inspection powers under sections 209.6 to 209.9 of the IRPR, or the factual findings upon which the Decision was made. They also [NAME] not argue that the Notice was not responsive to what was before the decision-maker. In short, the Applicant does not challenge the finding that they were in non-compliance with the regulations governing the [NAME]. [ 15 ] However, the Applicant argues that the non-compliance was justified, in part due to the limitations imposed by COVID-19, and in part due to poor representation by their [NAME] immigration consultant. Notably, the Applicant argues that they had provided the [NAME] workers accommodations in lieu of additional wages. On the Applicant’s view, the decision-maker did not consider this factor. The Applicant also argued that it was the previous immigration consultant’s fault that this information was not provided to the decision-maker. [ 16 ] The Applicant does not lead any evidence that they have complied with the requirements of the Consolidated Practice Guidelines for Citizenship, Immigration, and Refugee Protection Proceedings on notifying [NAME] counsel, nor [NAME] they argue that the [NAME] counsel’s actions breached procedural fairness. I therefore [NAME] not consider that the information on free accommodation is relevant in my analysis. [ 17 ] The Applicants [NAME] not dispute that they obtained the LMIA for a competitive hourly wage, and that they would pay a higher overtime for any work beyond 44 hours per week. However, the Applicant then modified the terms of the [NAME] workers’ remuneration from an hourly wage to a fixed salary based on a 40-hour week, without seeking the decision-maker’s approval. The evidence shows that the Applicant then did not pay the required overtime to the [NAME] workers, even when they had worked significantly more than 40 hours. [ 18 ] The Applicants argued that they made the change because they were also providing free accommodation to the [NAME] workers and that the impact of COVID-19 made them make the change. However, this evidence was not before the decision-maker. The Applicant does not explain why it did not seek approval of its new wage structure prior to implementing it. Nor does the Applicant explain why they did not document the benefits paid in lieu of wages. It was therefore reasonable for the decision-maker to see the unpaid work as a breach of both the wage and working condition requirements of the [NAME]. [ 19 ] The Applicant also does not dispute that they did not pay the [NAME] workers’ wages during the 2-week quarantine period, which are owed under IRPR subparagraph 209.3(1)(a)(xii). However, they argued that the decision-maker should have considered that the employer-provided free accommodation and free food compensated for the mandatory wages. The Applicant agreed that they had not filed evidence of free accommodation or food but argued at the hearing that the same [NAME] workers’ address with the Applicant implied accommodation. I disagree – I find it reasonable that the decision-maker did not base their decision on pure speculation. B. The Decision was reached in a procedurally fair manner [ 20 ] The Applicant claims that the decision-maker breached the Applicant’s right to procedural fairness in its assessment of the AMP ( Canada v [COMPANY] , 2016 FCA 143 at paras 44–45 [ [NAME] ]). In [NAME] , Justice Stratas of the Federal Court of Appeal found that the use of an unpublished formula was procedurally unfair, and that a party liable for an AMP “needs to know about any formula, guideline or supporting analysis” a decision-maker “reli[es] upon in [their] assessment of penalties” ( [NAME] at paras 43–44). [ 21 ] The Applicant has not explained at which point in the process and in what way, their right to participate or respond was limited. Here, the record is clear that the Applicant was involved throughout the process and that ESDC notified the Applicant about the methodology for AMP calculation. The process started with the Minister’s inspection. They were asked to respond to the Minister’s Notice of Preliminary Finding, which included, in annex, the points calculation for the AMP; the Applicant’s response was considered; and the penalties were reduced in the Notice of Final Determination. [ 22 ] I conclude that the decision was reached in a procedurally fair manner.

IV. Conclusion [ 23 ] The Decision was reasonable and reached in a procedurally fair manner. [ 24 ] The parties did not propose a certified question and I agree that none arises in this case.

JUDGMENT in IMM-20159-24 THIS COURT’S

JUDGMENT is that The application for judicial review is dismissed, without costs. There is no certified question. "Negar Azmudeh" Judge FEDERAL COURT SOLICITORS OF RECORD DOCKET: IMM-20159-24 STYLE OF CAUSE: [COMPANY]. v. MESDC PLACE OF HEARING: via videoconference DATE OF HEARING: march 11, 2026

REASONS FOR

JUDGMENT AND

JUDGMENT: AZMUDEH J. DATED: MARCH 20, 2026 APPEARANCES : [NAME] FOR THE APPLICANT [NAME] For The Respondent SOLICITORS OF RECORD : [NAME], Ontario FOR THE APPLICANT [NAME] Of Canada Department of Justice Canada ESDC/VAC Legal Services Toronto, Ontario For The Respondent