- Hiring Canadian employees can be an excellent option for US companies with hard-to-staff roles.
- Carefully consider whether the Canadian employee needs to work physically in the US, or whether they could work remotely from Canada. If they can work from Canada, then consider the possibility of an international Employer of Record (EOR) solution.
- If the employee needs to physically relocate to the US, consider the possibility that they may be eligible for visa-free TN entry.
If your business is planning on hiring Canadian employees for a US company, your HR and hiring team must gain essential knowledge of the Canadian hiring laws related to payroll, benefits, and taxes. It’s also important to remember that these laws must be specific to the particular Canadian province that the employee is from or works within.
There are lots of reasons why an American company would want to hire a Canadian employee, including cultural, educational, and linguistic similarities. In this article, we will provide you with an informative guide and checklist on the process of hiring Canadian employees for a US company.
If you would like further information on the reverse case (Canadian companies hiring US workers), take a look at our guide to US citizens working in Canada.
What are the advantages for US companies hiring Canadian employees?
There are multiple reasons why you may consider hiring Canadian employees for a US company. Let’s explore the advantages of hiring a Canadian employee:
1. Access to talented candidates
Canadians are well educated, with 73 percent of Canadian adults having received post-secondary education. This, in addition to an excellent reputation for training STEM professionals, means that Canada is an excellent option for US companies looking to tap into a pool of fresh talent.
2. Reduced hiring costs
Due to the strong value of the American dollar, employing Canadian residents makes complete financial sense for US companies. How much your company can save depends entirely on the exchange rate at the time, but according to the Payroll Edge, US businesses can save as much as 35% of hiring costs by employing and paying Canadian workers.
3. A more diverse workforce
Canada is recognized as one of the most diverse countries in the world. By this, we mean in terms of gender, religion, language, sexual orientation, abilities, and economic status. There are approximately 7.5 million people from abroad living in Canada today. This diversity helps you to build a more diverse workforce, and with this comes many benefits. A study by Havard Business Review found that companies that promote diversity are 70% more likely to capture new markets.
4. Expansion into the Canadian market
Canada has one of the most stable markets globally, which is extremely beneficial for US companies looking to expand here. Their economy is highly skilled and diverse and they operate in a variety of industries from transportation, chemicals, food production, petroleum, natural gas, and more. In addition to its economic stability, as a country, they have institutional and political stability.
Thanks to the close proximity, trade agreements, and their unique relationship with the US, these factors highlight the benefits and convenience for US companies expanding into the Canadian market.
Top options for hiring Canadian employees for a US company
There are a few distinct options for US companies that seek to hire Canadian employees, including
1. Sponsor a Canadian worker on a US visa/exemption and support them to relocate
In order for Canadian citizens or residents to work in the US, they must first acquire a job offer from a US employer who will sponsor them for a work visa, or otherwise qualify to work in the country. There are several work visas that Canadians are eligible to work in the US under:
TN Entry: For Canadians who receive a job offer in the United States, the North American Free Trade Agreement (NAFTA) agreement may allow them to enter the country without a visa. This is the quickest and easiest way to obtain the right to work in the United States. Note, it is only available for certain types of professional (such as engineers, lawyers or teachers) and requires that the job offer be in hand.
Visa H-1B: Canadians who are offered jobs in the United States, can apply for an H-1B visa. The H-1B visa is quite advantageous for Canadian employees working in the US.
L-1 Visa: An L-1 visa may be best suited for Canadian workers who are hired by Canadian companies but are being transferred to US operations.
2. Set up a foreign entity in Canada
Setting up an entity in Canada allows you to hire employees by incorporating your own branch or subsidiary there. It gives your company full freedom to hire Canadian employees, process payroll and establish a reliable local base of operations there. Setting up a foreign entity is a good option if you plan to hire a large Canadian team or establish a long-term presence in Canada.
It’s important to remember that setting up a foreign entity in any country can be a costly, and time-consuming process. It requires in-country expertise and knowledge of Canada’s legal, corporate, and payroll regulations. Establishing an entity may not be worthwhile if you only plan to hire a small number of employees.
3. Partner with a global Employer of Record
If owning a foreign entity in Canada doesn’t interest you, you may want to partner with a global Employer of Record (global EoR). An Employer of Record acts as the legal employer of your workers in another country, they are therefore responsible for handling a variety of HR compliance tasks, such as:
- Creating the employment agreement
- The general employee onboarding process
- Payroll processing and deductions
- Employment tax compliance
A US company can use a global EOR that operates in Canada to legally hire Canadian workers that are still based in Canada.
4. Hire Canadian Contractors
When it comes to hiring Canadian employees for a US company, it might make more sense to work with Canadian contractors instead. This is often beneficial for you as a business, as the contractor provides their services as a self-employed worker, allowing companies to be more flexible and reduce labor costs when targeting specialized services or one-off projects.
In the US, a Canadian contractor is treated differently from a company’s employees, as an independent worker. Remember, if your company chooses to engage with a contractor your company is not required to pay them a fixed salary, provide work equipment, or control their schedule and work methods. A report by Businessweek magazine found that by hiring independent contractors, companies can save up to 30% on hiring and labor costs. This is due to the elimination of payroll taxes, employee compensation, disability and unemployment insurance, and other employee benefits such as workplace pensions, disability insurance, vacation days, sick days, and more.
Your checklist for hiring Canadian employees
When hiring Canadian employees for a US company, we recommend you work through the following checklist:
- What is the business case for hiring Canadian employees? It may be more cost-effective to seek to hire in the US first.
- Do I need a Canadian employee, or will a contractor do? It is usually easier to hire a Canadian contractor from the US than an employee. But keep in mind the risks of employee misclassification.
- If choosing an employee, does the employee need to come to the US? . If the employee must physically relocate to the US, it is likely that a sponsored visa is required. For those eligible for TN entry, a visa will not be required, though an eligible job offer and confirmation of employment.
- If choosing an employee, can the employee work remotely from Canada? If it is possible for the employee to stay in Canada, Employer of Record solution is an option in order to make their hiring compliant with Canada law.
US companies hiring in Canada — our take
All in all, expanding into the Canadian market is a great way to grow your global workforce and delve into new markets. Your company is likely to benefit greatly from the diversity and skillsets found in Canada. Of course, there are many considerations and challenges to ensure your US company remains compliant with Canada’s employment laws and regulations.
For further support with relocating employees between the US and Canada consider the support of a specialist global relocation firm.
Yes. It is possible to work remotely from Canada as an employee with an Employer of Record (EOR) solution in Canada. If the worker is an independent contractor or freelancer rather than an employee, an EOR solution is not required, but there are other contractor compliance requirements, both in the US and Canada.
Not always. Under the United States-Mexico-Canada Agreement (formerly NAFTA), Canadian citizens in certain professional categories can work in the US without a work visa, as long as they have a job offer in hand (this is known as 'TN entry').