Ontario Legislation Aims to Promote Gender Equality and Reduce Wage Gap

The Pay Transparency Act, 2018 (the “Act”) received Royal Assent on May 7, 2018, and is scheduled to come into force on January 1, 2019*. The primary purpose of the Act is to promote gender equality and equal opportunity in employment and in the workplace. As reported by the Ontario Government, the wage gap between men and women in Ontario has remained stagnant for the last decade, with women earning approximately 30 per cent less than men. The Act, which is the first of its kind in Canada, aims to increase transparency in hiring processes and provide women with more information when negotiating for equal compensation.

The Act places several obligations on employers and expressly prohibits certain conduct, as follows:

• Employers are generally prohibited from seeking compensation history about external job applicants.
• Employers must include information about expected compensation in publicly advertised job postings.
• Certain employers must file and post annual pay transparency reports.
• Employers are prohibited from penalizing, or threatening to penalize, an employee because the employee has inquired about compensation or a pay transparency report, disclosed the employee’s compensation to another employee, given information about the employer’s compliance or non-compliance with the Act to the Ministry of Labour, or asked the employer to comply with the Act.

The employer obligations outlined in the Act are in addition to existing obligations pursuant to the Pay Equity Act.

With respect to the requirements regarding pay transparency reports, every employer with 100 or more employees and every prescribed employer will eventually be required to prepare and submit a pay transparency report in accordance with the regulations by May 15 of each year. Such reports will contain information relating to the employer, the employer’s workforce composition, and differences in compensation in the employer’s workforce with respect to gender and other prescribed characteristics.

Pay transparency reporting requirements will be introduced gradually. Employers with 250 or more employees will be required to comply with the reporting requirements for the first time in 2020. Employers with 100 or more employees will be required to comply with the reporting requirements for the first time in 2021.

In addition to preparing and submitting reports, employers will be required to post such reports online or in at least one conspicuous place in every applicable workplace where it is likely to come to the attention of employees. The Ministry will also make the pay transparency reports it receives available to the public.

In addition to the public policy considerations supporting compliance with the Act, employers should take note of the provisions of the Act regarding compliance and enforcement and the impact that contraventions of the Act may have on an employer’s reputation. Compliance officers will be empowered to enforce the Act by means of compliance audits and investigations of possible contraventions. Contraventions will result in penalties, which have yet to be determined by regulations established under the Act.

Complaints of reprisal may be heard by an arbitrator in accordance with a governing collective agreement, or by the Ontario Labour Relations Board. In both circumstances, possible outcomes include the reinstatement of a discharged employee or an order requiring the employer to hire an individual.

Significantly, where a contravention has occurred, details about the contravention, including the name of the offending party, may be published on the Internet or otherwise made available to the general public.