On April 26, 2018, the Ontario Legislature passed the Pay Transparency Act (the Act) to tackle the wage gap in compensation between men and women in Ontario. The Act seeks to achieve this goal by introducing new requirements for employers in both the hiring process and on an ongoing basis. The Act, which comes into effect on January 1, 2019, will require all employers to follow certain hiring practices and require certain employers to prepare an annual report containing workplace payment information.
The Act introduces certain restrictions that affect how employers can address compensation in the hiring process. First, the Act requires all public job postings to expressly state the expected compensation, or the range of expected compensation, for the position. Second, the Act prohibits employers from asking a job applicant for their history of compensation. However, employers may rely on compensation information that an employee voluntarily provides during the application process. These hiring rules apply to all employers.
Under the Act, employers with 100 or more employees will eventually be required to complete annual pay transparency reports. The reports will include information about:
- the employer;
- the employer’s workforce compensation; and
- pay differentials between genders and any other prescribed characteristics that regulators deem fit.
The reports will be submitted to the Ministry of Labour (the “Ministry”), and employers will be required to post the reports online or in a conspicuous location in their workplace. The reporting requirements will come into effect progressively: initially only applying to Ontario public service workers in 2019. By 2020, employers with 250 or more employees will be required to prepare the annual reports, while employers who employ 100 or more employees will be required to prepare the annual reports by 2021.
In addition to fighting wage differences between genders, the Act protects employees from reprisal for engaging in any activities prescribed in the Act. For example, employers cannot discipline employees for making inquiries about compensation, disclosing compensation to another employer, making inquiries about a pay transparency report, or seeking compliance with the legislation. Additionally, compliance officers with the Ministry will be allowed to enter and inspect an employer’s workplace at any time to ensure compliance with the Act.
While the Act comes in to effect on January 1, 2019, employers would be well advised to be proactive in uncovering and addressing any pay differentials based on gender that may exist in their workplace. Addressing this issue today will save valuable time, energy and resources down the road.