Joseph Ah-Hone, 55, has been charged with extortion, breach of trust and accepting a benefit from person having dealings with government.
Toronto police said they received a call in June alleging fraud.
Ah-Hone allegedly conducted a safety audit of a business near Markham Road and McNicoll Avenue and found a number of things not complying to standards, police said. Ah-Hone then allegedly left the owners to fix the outstanding issues but returned and "made an improper request for money from the owner."
Police arrested and charged Ah-Hone on Tuesday, and believe there may be more victims.
The Ontario Ministry of Labour said that its inspectors are public servants who are not allowed to accept money or commissions for their services.
Ah-Hone is scheduled to make a court appearance on Dec. 4.