In 1987 the Ontario government passed the Pay Equity Act (PEA). The Act describes the minimum requirements for ensuring that an employer's compensation practices provide pay equity for all employees in female job classes. It is only a gender-based discrimination law. The purpose of this Act is to redress systemic gender discrimination in compensation for work performed by employees in female job classes.
The PEA requires the following:
1. Determine job classes, including gender and job rate of job classes
2. Determine the value of job classes based on skill, effort, responsibility, and working conditions using a gender-neutral comparison tool
3. Conduct job comparison for all female job classes using job-to-job and/or a proportional value method of comparison
4. Identify and adjust the compensation of underpaid female job classes so that they are paid at least as much as an equal or comparable male job class or classes
5. Provide payroll summary and proof of statement as required by the Pay Equity Office
However, the Act is not easy to implement. If employers fail to achieve pay equity, they may be subject to retroactive payments to current and former employees identified as having been discriminated against. In addition, employers who retaliate against employees who act on their right to equal pay may be fined upwards of $50,000.
Ontario’s government then passed the Bill 3, Pay Transparency Act, in 2018 that documents the requirements Ontario’s employers must comply. This law requires that
1. Salary rates or ranges must be stated in all publicly advertised job postings
2. Employment candidates may not be asked about their past compensation
3. Reprisals cannot be taken against employees who discuss or disclose compensation
4. Employers with 100 or more employees as well as certain prescribed employers must track and report compensation gaps based on gender and other prescribed characteristics
5. Such employers must post their pay transparency reports online, or at least in one conspicuous place in every workplace of the employers
6. The Province will also publish such pay transparency reports, which may be done online
Employers with 250 or more employees must submit their first pay transparency report by May 15, 2020. Employers with 100 to 249 employees must submit their first pay transparency report by May 15, 2021.
So, what does it mean to have a gap? The Ontario Pay Equity Commission provided examples such as:
A female employee who has just been hired is paid at the bottom of the grid at $20 per hour. A male employee in the comparable male job class who has worked in the company for six years is paid at the top of the salary grid at $26 per hour. Is this a pay equity issue? Unlikely. If a company has a formal seniority system where employees are paid based on their length of service, an employee who is just starting with the company will be paid less than one with more seniority. Based on this example, as the female employee's seniority increases, she should expect to move up the salary grid at the rate of $1 per hour more each year until she too earns the maximum job rate in six years, unless there are other non-pay equity issues.
Another question came up about bonuses paid. The Commission wrote:
An employer pays a year-end bonus to the salesperson with the highest sales each month. Is this a pay equity issue? Unlikely. If it can be shown that the bonus is equally accessible to men and women, is awarded as a measure of merit for outstanding performance in sales, and the bonus is not given on a regular or rotating basis, this is not likely a pay equity issue.
Any employer with operations in Ontario should consult legal counsel as to their requirements under this law as it is being enforced now. Any analysis conducted under the law should be directed by legal counsel for confidentiality purposes.
Source: Dickenson Wright Sept 2019, GoPayParity Post 12/19/19, Pay Equity Commission of Ontario