Closing the gender pay gap: What employers need to know about Ontario’s new rules

According to the Ontario government, women in this province earn around 30 per cent less than men – a gap that’s gone unchanged for the past decade.

This disparity has persisted despite rising education levels among women, as well as an increase in the number of women working in high-level positions. In an attempt to address this problem, the Pay Transparency Act, 2018 (Bill 3) received Royal Assent in May of this year and will come into force on January 1, 2019.

When the Act was first introduced, then-premier Kathleen Wynne said: “We’ve got to pay attention to the reality of women’s lives. They still are not paid the same as men are paid. They still, at a very young age, have their horizons limited. We have got to stop doing that to them.”

Increasing pay transparency

Ontario is the first province in Canada to pass legislation of this kind. The new act does not amend existing legislation, such as the Pay Equity Act; but rather it is intended to address different sides of the issue.

For context, the Pay Equity Act is designed to address situations where one job classification that is predominantly staffed by women is paid less for the same or similar work performed by another job classification, which is predominantly staffed by men.

It requires employers to identify and correct gender discrimination that may be present in their compensation practices. In addition, employers need to adjust the wages of employees in female job classes so that they are at least equal to the wages of employees in male job classes when they are found to be doing comparable work.

On the other hand, the Pay Transparency Act aims to address the issue on an individual level. In other words, you don’t need to be in a male- or female-dominated job class to be affected.

The aim of the Act is to increase transparency in hiring processes and give women more information when negotiating compensation.

What does it mean for employers?

Employers must consider the requirements of the Act and ensure they are in compliance. The legislation is rolling out in stages: it will apply first to the Ontario Public Service, then to employers with more than 250 employees in May 2020, and to those with more than 100 employees in May 2021.

The requirements, which will come into force for the Ontario Public Service on Jan. 1, 2019, include:

  • Inclusion of a salary rate or range in all publicly advertised job postings;

  • Prohibition on asking a job candidate about their past compensation;

  • Prohibition on enacting reprisals against employees who discuss or disclose compensation to another employee; and

  • Requirement to track and report compensation gaps based on gender and other diversity characteristics.

The rules require employers to submit pay transparency reports to the Ministry of Labour, which will include information about the composition of their workforce, as well as any differences in compensation that fall along gender lines (or other diversity characteristic). Further, these reports will also be made publicly available.

These are important changes to workplaces in Ontario, and employers need to be aware of how they will be affected and what they need to do to comply.

Though private sector employers will not be immediately affected, a company’s information will become public once an employer is required to submit the reports.

This means employers may wish to begin tracking the information in advance and take steps towards correcting any compensation gaps brought to light by the information.

Alison McEwen is an associate lawyer with Nelligan O’Brien Payne LLP, and a member of the firm’s labour law and employment law practice groups.