Will the 'Pay Transparency Act' impact your organization?

Will the 'Pay Transparency Act' impact your organization?

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2018 has been a year of legislative upheaval, as employers try to get their heads around a flurry of impending legal jargon.

The latest governmental offering comes in the form of the co-called ‘Pay Transparency Act’ – or, Bill 203. The legislature aims to reduce the gender pay gap through imposing certain rules regarding candidate compensation questioning and job postings.

We caught up with Matthew Certosimo, partner at Borden Ladner Gervais LLP, who gave us his take on the potential new law.

“I don’t think, historically, it’s viewed as off-side for employers to talk about a candidate’s compensation history as part of an attempt to understand what that candidate’s expectation would be in the new job. What this legislation is trying to address is the reinforcing of the gender pay gap by using that information unintentionally, in all likelihood too reinforce rather than overcome the gap.”

Certosimo explained that this Bill comes in four sections – each of which lay out proposed changes and recommend guidelines for employers.

“It is important to note that the first part, on compensation history, applies to every employer – Bill 203 says that no employer shall seek compensation history information about an applicant by any means, either personally or through an agent. I take that to intend that employers not do indirectly what they would not be able to directly, such as by using recruitment agencies to gather that information.”

“Secondly, in terms of publicly advertised job postings, again all employers will have to include expected compensation or a range of expected compensation. The third part of Bill 203 only applies to prescribed employers, who will be required to prepare pay transparency reports with information on the workforce and differences in compensation with respect to gender – and possibly other yet to be determined characteristics. To date, we are told that the pay transparency reports part will only apply to employers with over 500 employees initially – then 250 employees at some point down the road.”

“The fourth part deals with enforcement - anti-reprisal protection for employees and compliance procedures, to ensure that the intention of Bill 203 is implemented.”

To put this into context; Bill 203 is a long way from being passed into law. Ontario is about two months away from an election – so the question really is, will this party win the election and be in a position to go to a second and third reading? Or, potentially, will they try and rush it in beforehand?

Bearing this in mind, we asked Certosimo of his analysis of Bill 203 – and what the potential ramifications are for Canadian employers.

“I think you can apply a Goldilocks analysis,” he explained. “You could say that this so-called ‘Pay Transparency Act 2018’ is too harsh or hard. Certain critics have said, and some employers may feel, that this is yet another layer of overregulation in a workforce that has slashed quite a number of jobs in the first part of 2018. You could point to the Human Rights Code that already provides for protection against gender discrimination, or the Employment Standards Act.”

“On the other side of the analysis, there’d be those who say it’s too soft. Those critics would say that despite all the statutes listed above, we still have a gender pay gap. And in fact, in the last decade, statistically it hasn’t much improved.”

The third part of the “Goldilocks analysis” is that this Bill is ‘just right’, explained Certosimo. He told us that the Bill can be viewed as very balanced.

“First of all, while Bill 203 has that clause saying no employer shall seek compensation history, you also have exceptions allowing employers to access that kind of information from other sources, in order to address their business needs,” he said.

“For instance, there’s always publicly available data, or unprompted disclosure, or market comparables that employers can seek out from other sources. Bill 203 allows other ways for employers short of asking point blank in an interview to understand the market for the purposes of setting an appropriate wage. I think, in fairness, you can make the case that there is a nice balance in the wage history section.”

“On the compensation posting part, it only applies to publicly advertised postings and only requires employers to share expected compensation or the range of expected compensation for the position. So, it doesn’t, in my opinion, overreach.”

“When it comes to the third part of Bill 203, dealing with the pay transparency reports, it is noteworthy that, for those who might grumble about over-regulation, these obligations will only apply to larger employers, at least in the first phase of implementation. It has been reported that the vast majority of workplaces in Ontario have less than 50 employees, so very few will be required to files these reports. Larger employers, over 500 employees initially, will be the “guinea pigs” while the provincial government works out the bugs in the system.   And for those who say it’s too soft, well it’s a start.”

“Few disagree that the gender-based pay gap has been a persistent challenge, in Ontario. While the pre-election timing of Bill 203 has understandably led to some eye-brow raising, it is difficult to make the case that the status quo is acceptable. Applying the “Goldilocks analysis”, I think the case can be made that Bill 203 is neither too hard nor too soft.”

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