When Will Ross and William Steenbergen started their company in early 2020, they quickly discovered just how much they’d have to rely on remote workers.
The pair incorporated their company, Federato – a California insurance technology startup based on their graduate research at Stanford University – just three days after the university closed for the pandemic.
It didn’t take long before their eyes travelled north to Canada, a prolific source of tech talent.
“As a U.S. company operating with the benefits of a world that has gotten used to remote work, it never made sense to us to shut the door on the skills and the diversity of thought that is available in Canada,” says Mr. Ross.
Now with eight of its 33 employees located in Canada, Federato is part of a growing contingent of global companies capitalizing on remote work to hire Canadian talent. And like those global companies, they’re realizing the Canadian appetite to work remotely is voracious.
According to staffing firm Robert Half’s The State Of Remote Work survey done in Canada in early 2023, 85 per cent of Canadian workers say they’re interested in hybrid or fully remote positions. But just 23 per cent of new job postings in January 2023 were advertised as remote, according to the Robert Half survey. In the U.S., 28 per cent of new job postings during the same period were remote.
That survey also found that a quarter of workers would take a pay cut if it meant their work was entirely remote, and that 77 per cent feel more productive when they work remotely – an important mark of job satisfaction. Meanwhile, recent analysis suggests the Canada’s much-touted labour shortage is not because of a lack of qualified candidates, but because of fundamental mismatches in what Canadian employers are offering and what candidates want.
Perhaps it’s no surprise, then, that HR trends indicate that employers requiring an in-person presence for jobs that can easily be done remotely is affecting many workers’ willingness to stick around. Indeed, the push to return to the office may be part of the reason why Canadian skilled workers look beyond the border for job opportunities – and why American companies are happy to have them.
“Some workers come to us and say they’re interested in working remotely for a U.S. company because they’re angry that Canadian companies are sending them back to the office,” explains Trevor Misfeldt, co-founder of JobArc, a Kelowna-based company which has helped firms from France, India, the United Kingdom, Mexico and the U.S. hire Canadians remotely.
Officially called professional employer organizations (PEOs), companies like JobArc hire employees and assign them to provide services to foreign firms. Typically, they charge fees to facilitate compliance with Canadian regulations on taxation, labour standards, visas and benefits.
PEOs are becoming increasingly attractive options for companies that don’t want to fuss around with visas, and for workers who don’t want to move to earn the higher salaries offered by U.S. and European companies.
As long as Canadian workers hired through appropriate channels continue to pay Canadian income tax on their salaries – which they are still required by law to do – then getting to work exclusively from home without having to move is the icing on the cake, says Mr. Misfeldt.
The growth of PEOs and other foreign recruitment strategies in Canada are signs that cross-border hiring may be here to stay. There’s certainly been an uptick in U.S.-based firms interested in knowing their obligations surrounding compliance when it comes to hiring Canadians remotely, says Hugh A. Christie, a managing partner at the Toronto office of international labour and employment law firm Ogletree Deakins.
“It’s increased since COVID-19,” says Mr. Christie. “We have way better infrastructure for working remotely than we did five years ago.”
He explains that foreign firms have a couple of other options besides PEOs when looking for remote workers in Canada. They can register as a non-resident business or hire the worker as an independent contractor, as well.
“They’re still Canadian residents if they’re hired through a PEO as an independent contractor,” says Mr. Christie. “There are remittance deductions and remittance obligations on somebody to give money to the tax man, so generally, that circuit still works.”
Back in Palo Alto, Mr. Ross says the pandemic forced certain changes that make international hiring easier now. “The pandemic has helped grease the skids in terms of payroll systems [and] it’s made it very tenable,” he says.
Growing competition for talent on home turf suggests Canadian employers looking to get first dibs on talent should be prepared to negotiate not only on salary, but also on location.
It also highlights the importance of looking at talent globally. There’s a growing infrastructure and opportunity for connecting with out-of-country talent to fill skills gaps – one that Canadian companies can also use to their advantage.
“It’s a global statement,” Mr. Ross says. “With remote work, we really feel we’re not sacrificing anything.”