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The gender wage gap has seen significant industry focus in recent months. On April 12, 2016, the Ontario Human Resources Professional Association (HRPA) released a report entitled Closing the Gender Wage Gap, a Review and Recommendations. This report examined existing pay equity research and the results of a comprehensive survey of 912 HRPA members on pay equity issues in the workplace. As noted in the report, Statistics Canada estimates that the wage gap between women and men is anywhere between 12 per cent and 31.5 per cent. The report also cited Royal Bank of Canada statistics to suggest that Canadian incomes could rise up to $168-billion each year if the wage gap was closed.
The Ontario Human Rights Commission (OHRC) waded into the debate on April 19, 2016, the aptly named "Equal Pay Day" by the Ontario Pay Equity Coalition. The OHRC cited more particularized statistics and explained that the wages of female workers in full-time jobs are on average 29.4 per cent lower than those of male workers. The OHRC says that April 19, 2016 is significant because it marks how far into the new year a woman has to work to earn what a male worker earned in the previous year: 110 days.
These sobering statistics are not without controversy. For example, the right-leaning Fraser Institute has stated in the past that such "misleading statistics" are not representative of the workplace reality when accounting for job tenure, weekly hours worked, education or an individual's choice of occupation.
Whatever side of the debate industry commenters find themselves on, the legal reality is that many Canadian employers have a statutory obligation to ensure pay equity in the workplace. All federally-regulated employers must comply with pay equity requirements in Part III of the Canada Labour Code and the Equal Wages Guidelines. Federally-regulated businesses and industries include, but are not limited to, banks, air transportation, railway, radio and television broadcasting, and most federal Crown corporations.
In Ontario, the Pay Equity Act, RSO 1990, c. P 7, applies to all provincially-regulated employers except for private sector employers with fewer than ten employees. It requires that employers establish and maintain compensation practices that provide for pay equity in the workplace. In Quebec, the Pay Equity Act, c. E-12.001, establishes similar obligations with respect to provincially-regulated employees. Manitoba, New Brunswick, Prince Edward Island and Nova Scotia have all enacted similar pay equity legislation, while Saskatchewan, Newfoundland and Labrador, and British Columbia have not. In lieu of this legislation, these latter provinces rely on policy frameworks for negotiating pay equity with specific public sector employees. Alberta is the only province with no specific pay equity legislation or policy framework.
An employer's legal obligations will depend on the applicable federal or provincial legislation. Ontario's legislative framework is a useful example of how extensive these obligations can be for employers. The Pay Equity Act requires that all applicable provincially regulated employers establish and maintain compensation practices that provide for pay equity between male and female employees. The Pay Equity Act states that pay equity is achieved when every female job class in an establishment has been compared to a job class or job classes and any adjustment for underpaid wages is made.
To meet the minimum requirements under the Ontario Pay Equity Act, all applicable employers would generally be required to: (i) determine job classes, including the gender and job rate of job classes; (ii) determine the value of job classes based on factors of skill, effort, responsibility and working conditions; (iii) conduct comparisons for all female job classes using a job-to-job, proportional value or proxy method; and (iv) adjust the wages of underpaid female job classes so that they are paid at least as much as an equal or comparable male job class or classes. Similar procedures exist for other federal and provincial jurisdictions.
The Ontario Pay Equity Act provides for additional flexibility, albeit similar substantive obligations, in unionized environments. For example, unions and employers are required to ensure that their compensation bargaining does not have the effect of contravening the minimum pay equity requirements under the Pay Equity Act. The negotiating parties are also required to establish a pay equity plan for each bargaining unit and a pay equity plan for that part of the establishment that is not in any bargaining unit. There is also a joint obligation on the employer and the union to negotiate in good faith in reaching these objectives.
Failure to comply with pay equity laws can have serious consequences for employers. For example, in Ontario the Pay Equity Tribunal has jurisdiction to order a range of remedies where companies refuse to address their obligations under the Pay Equity Act. This can include ordering the employer in a unionized environment to negotiate in good faith or implement a pay equity plan in non-unionized environments. If an employer fails to abide by an order, the Pay Equity Tribunal can award compensatory damages starting from the date of the order's breach.
Implementing a pay equity plan is not the end of the matter. Once pay equity is established in the workplace, the Pay Equity Tribunal may find employers to be non-compliant with their obligations under the Pay Equity Act and order remedial measures. While these enforcement mechanisms appear to be used with limited frequency in Ontario, recent media attention on the gender wage gap may translate into further action in this area.
All Canadian employers should be aware that federal and provincial human rights legislation also prohibits discrimination in employment. In addition to the enforcement mechanisms under pay equity legislation, employees can use human rights legislation as a tool to address pay discrimination in both federally and provincially regulated workplaces.
An employer's pay equity obligations will ultimately be fact-specific and depend on the legislative framework governing the workplace. However, in light of recent industry attention on this issue, both public and private sector employers are strongly advised to acquaint themselves with their statutory obligations and consult with a legal professional should they have any pay equity concerns.
Lisa Cabel is a partner at Borden Ladner Gervais LLP. She is a member of the labour and employment department, where she advises and represents public and private sector employers.