A job offer can look competitive to an employer and still fail an LMIA wage review. Under LMIA Wage Requirements in Canada: Prevailing Wage vs. Wage Threshold, two different wage tests often apply at the same time. Confusing them can put an otherwise well-prepared Labour Market Impact Assessment application at risk.
The prevailing wage helps determine the minimum pay that must be offered for a specific job in a specific location. The wage threshold helps determine whether the position is processed under the high-wage or low-wage stream of the Temporary Foreign Worker Program. They are related, but they do not mean the same thing.
Prevailing wage: the minimum for the role
For most LMIA applications, the employer must offer at least the prevailing wage for the occupation and work location. This is generally based on the median wage published for the relevant National Occupational Classification (NOC) code and region. The employer may also need to consider what it pays current employees in comparable roles. If employees with similar duties, skills, and experience are paid more, the offered wage may need to reflect that higher rate.
This rule protects both Canadian and foreign workers. An employer cannot use an LMIA to fill a position at a lower wage simply because the candidate is outside Canada or needs a work permit.
Choosing the right NOC code is central to this analysis. Job titles can be misleading. A role called “manager,” for example, may involve duties that fit a different NOC than the employer expects. Because wage data is tied to the NOC and location, an incorrect classification can lead to an incorrect wage calculation and questions from the reviewing officer.
Employers should also be careful when a role includes commission, bonuses, tips, or variable hours. The required wage must be clear, guaranteed, and supported by the employment agreement. A potential bonus does not usually fix an hourly rate that falls below the applicable prevailing wage.
LMIA wage requirements: the wage threshold test
The wage threshold is a separate provincial or territorial hourly wage figure set by the federal government. It is updated periodically and is used to determine whether an LMIA application falls under the high-wage or low-wage stream.
If the offered wage is at or above the threshold for the province or territory where the worker will be employed, the position is generally treated as high-wage. If it is below that threshold, it is generally treated as low-wage.
That distinction affects the employer’s obligations. A high-wage application typically requires a transition plan explaining how the employer will reduce reliance on temporary foreign workers over time, such as recruiting Canadians, training staff, or supporting permanent residence pathways where appropriate. Low-wage positions may be subject to workforce caps and additional restrictions, depending on the sector, location, and current program rules.
The threshold is not a shortcut around the prevailing wage. A wage can be above the provincial threshold but still fall below the prevailing wage for the specific occupation. In that case, the offer may not meet LMIA requirements. Conversely, a wage can meet the prevailing wage for a lower-paid occupation but remain below the threshold, placing the application in the low-wage stream.
A practical example
Suppose an employer in Ontario wants to hire a worker for a role with a prevailing wage of $24 per hour. If Ontario’s applicable wage threshold is higher than $24 per hour, an offer at $24 may meet the prevailing wage requirement but be classified as low-wage because it falls below the threshold.
If the employer raises the offered wage to the threshold or higher, the application may move to the high-wage stream. However, that change also affects the employer’s budget, payroll records, transition-plan obligations, and the terms that must be honored after the worker arrives.
The right choice is not always to raise the wage. It depends on the business need, the role, the applicable stream rules, and whether the employer can genuinely sustain the offered compensation.
How employers can prepare before filing
Before submitting an LMIA application, employers should confirm the worker’s actual duties, select the most accurate NOC code, and check the current wage information for the work location. They should compare the result with internal payroll for similar employees and confirm the current high-wage and low-wage threshold for the province or territory.
The job advertisement, employment contract, LMIA forms, payroll records, and recruitment evidence should tell the same story. Inconsistencies in job duties, hours, wage structure, or work location can create delays or credibility concerns.
A wage offer is not just a number on an LMIA form. It is a commitment the employer must be prepared to meet throughout the worker’s employment. If the role, location, or compensation changes after approval, the employer may need advice before making that change.
For employers and workers, careful wage planning can prevent a costly refusal and reduce uncertainty later in the process. You do not have to figure out those details alone, but they should be resolved before recruitment begins and before an LMIA application is submitted.