Regulation of Employment Agencies in BC
Did you know that the British Columbia Employment Standards Act regulates employment agencies?
It is true. The BC Employment Standards Act sets out parameters governing the definition and regulation of employment agencies in British Columbia.
Section 1 of the Act defines an employment agency as follows:
“employment agency” means a person who, for a fee and for employers, recruits or offers to recruit employees, except employees
- (a) who are foreign nationals, as defined in the Temporary Foreign Worker Protection Act, and
- (b) to whom recruitment services, as defined in that Act, must be provided in accordance with that Act
Section 12 of the Act creates a requirement for all employment and talent agencies to be licensed:
12 (1) A person must not operate an employment agency or a talent agency unless the person is licensed under this Act.
(2) Subsection (1) does not apply to a person operating an employment agency for the sole purpose of hiring employees exclusively for one employer.
A license is granted by the BC Director of the Employment Standards Act and must accord with the definition set out in the section and provide the required application materials set out in the Employment Standards Regulation.
In short, the process goes as follows:
- The prospective employment agency fills out and provides a written application and a fee of $100 for the process to the Director of Employment Standards.
- The Director may issue an employment agency license only if the applicant has.
a. Completed a written application in a form required by the director (Click Here for Link to Form),
b. Paid the application fee of $100.00, and
c. The information has satisfied the director that the applicant will operate an employment agency in the best interests of employers and persons seeking employment.
Obviously, the key consideration is 2(c) in which the Director is evaluating whether the employment agency is in the best interests of both employers and potential employees. For example, a director is entitled to refuse a license to an agency that has had a previous licence cancelled (see more below).
Records of Employment Agency
One fact that can become relevant in employment litigation is whether an employee was recruited, and employment agencies are often a source of this evidence of recruitment. Section 3 of the Employment Standards Regulation sets out requirements for employment agencies to keep records as follows:
3 (1) An employment agency must keep a record of the following:
- (a) the name and address of each employer for whom the employment agency provides a service
- (b) the name, occupation and address of each person who is directed to an employer for the purpose of being hired or who is provided with information about employers seeking employees
(2) The record must
- (a) be in English,
- (b) be kept at the employment agency’s principal place of business in British Columbia, and
- (c) be retained by the employment agency for 2 years.
Cancellation or Suspension of Employment Agency Licences
If an employment agency appears to be doing prohibited things and is not acting in the best interests of employers or employees, then the Director is also given authority to cancel or suspend that agency’s licence in the following circumstances set out in section 4 of the Employment Standards Regulation:
(a) the agency makes a false or misleading statement in an application for a license,
(b) the agency contravenes the Employment Standards Act or the Employment Standards Regulation,
(c) the agency is operating or has operated the employment agency contrary to the best interests of employers and persons seeking employment, or
(d) the agency is placing a domestic [i.e., a person employed at an employer’s private residence to provide cooking, cleaning, child care, or other services and lives at the residence] with an employer and does not inform the employer of the requirement to register the domestic with the Employment Standards Branch in accordance with Section 15 of the Employment Standards Act and section 13 of the Employment Standards Regulation.
What happens if an agency contravenes these sections?
If an agency contravenes these sections, then the Employment Standards Branch can investigate and make orders for fines and penalties against the organization.
Consider the case of ProGrade Staffing LLP (Re), 2021 BCEST 48, in which a person was trying to start up a business in staffing and in fact had started to operate their business already without a licence. They decided to make an application to the Employment Standards Branch because the business was growing, and the Director conducted a search finding that this business was a going concern. Ultimately, the business was issued a penalty of $500.00.
In this case, the agency was asking for a reconsideration of the appeal decision dismissing its appeal of the penalty arguing that they were not required to apply for a licence because they were only working for one client. Ultimately, the reconsideration was denied because the business at its outset was looking to work for multiple clients. The fact that it only had one client does not mean its business did not intend to grow beyond. It is in the interest of employers and employees alike (remembering the requirements of the Employment Standards Act) that an agency becomes licenced before an agency decides to take on more than one client. As described by the Employment Standards Appeal Tribunal in its decision, the mere fact that the agency had larger business plans meant it needed to get licenced:
8. The applicant clearly meets the statutory definition of an “employment agency” and, indeed, does not argue otherwise. However, if an agency’s only or “sole” purpose is to recruit employees for a single employer, it need not be licensed. This exemption does not turn on the number of clients that an agency may have; rather, the section 12(2) exception requires a relationship of exclusivity between the agency and a particular employer. I am prepared to accept for purposes of this application, as did the Member on appeal, that during the relevant time period, the applicant was only recruiting potential employees on behalf of a single client (although, the evidence on this point is somewhat equivocal). But, critically, there is nothing in the record to show that the applicant had any sort of exclusive arrangement with this one client.
9. This was a start-up business and, in its early days, it may have had only one client. Nevertheless, as evidenced by the conversation recorded in the delegate’s notes, the applicant was not operating a “single-client” agency but, instead, was prepared to take on assignments from as many clients as it could handle from certain industries, such as high technology, finance, oil and construction. The applicant’s licence application did not indicate that the agency was anticipated to be a “single-client” agency (i.e., hiring exclusively for one employer). In fact, the application expressly stated that it would not be a single-client agency, describing the business as “sourcing and recruitment services for clients and candidates” (my underlining).
10. I entirely endorse the reasoning set out in the Appeal Decision. In my view, this application does not, even on a prima facie basis, raise a serious challenge to the correctness of the Appeal Decision. On that basis, this application fails to pass the first stage of the two-stage Milan Holdings test (see Director of Employment Standards, BC EST # D313/98) and, accordingly, must be dismissed.
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