The Minery has had the pleasure of sitting down again with Associate Lawyer, Alexandra Williamson from the firm e2r® to discuss Bill 3, Ontario’s Pay Transparency Act and how we should prepare for it.
We would like to take this opportunity to remind all of you that the information contained within this article is an overview only, and accordingly should not be relied upon as legal advice for any given situation. As always, contact your employment lawyer for any specific questions related to the information in this article, or any other topic, and for specific applicability of this topic area to your workplace.
The Minery: What is the Pay Transparency Act and why is it important?
Alexandra: Recently Bill 3, Ontario’s Pay Transparency Act received royal assent and will come into force on January 1, 2019 (with the exception of one provision). The purpose behind this new legislation is, in part, an effort to close the wage gap between men and women in the workplace.
The new legislation will impose significant new obligations on employers, such as disclosing certain compensation information about, and to, employees and prospective employees. In addition, employers will be restricted from asking certain compensation-related information during the hiring process.
The Minery: What are the new obligations under the Pay Transparency Act?
Alexandra: Under the Pay Transparency Act, the following obligations will come into force on January 1, 2019:
In addition, Employers with 100 or more employees in Ontario will be required to file a pay transparency report with the Ministry of Labour by May 15 of each year. The data included in this report will include a breakdown of the employer’s workforce compensation, outlining gaps within the organization based on gender and other diversity characteristics.
Employers with 250 or more employees in Ontario must submit their first report by May 15, 2020; and Employers with 100-249 employees must file their first report by May 15, 2021.
The Minery: What do organizations and dealerships have to do to prepare for the passing of the legislation?
Alexandra: Employers must ensure that their hiring policies and protocols are aligned with the new legislation. In particular, employers should take steps to ensure that compensation negotiation strategies and job applications do not require an applicant to divulge their compensation history. In addition, all job postings should be revised to ensure that the required compensation information will be included by the January 1, 2019 deadline.
The regulations specifying what precisely will be required in order to file a pay transparency report have not yet been enacted. The earliest reporting deadline is not until May 15, 2020, and accordingly, employers will have some time to plan and coordinate how to track differences in compensation based on what the regulations will prescribe.
The Minery: How will this affect the way employers are hiring?
Alexandra: This new legislation fundamentally changes the way in which most employers recruit and hire new employees. Some employers find a competitive advantage in avoiding disclosing pay and heavily rely on a candidate’s compensation history to base a job offer. Effective January 1, 2019, these employers will have to significantly change their compensation negotiation strategies.
Further, some employers are concerned that by listing the compensation range on job postings they may be discouraging potential candidates from applying on the basis that the range listed is too low. This could be problematic, as there may be exceptions to a range of compensation in situations where a candidate has exceptional skills and qualifications that would prove to be an asset for the company.
On the other hand, other employers view pay transparency as a welcome change. There is something to be said for clearly stating the expected compensation range. This tactic may result in attracting the right individuals for the position, and arguably will make discussions around compensation simpler.
Alexandra strives to collaborate with employers, providing strategic advice on a diverse range of human resources and employment law matters. Her advisory services include policy and procedure development, employment contracts, employment standards, human rights and employee dismissals.