Then Now Next: Ontario Government Introduces Pay Transparency Legislation

March 27, 2018 | Inna Koldorf

Only weeks after the new amendments to the Employment Standards Act, 2000 (“ESA”) and their focus on precarious employment  came into effect, the Ontario government introduced a new bill aimed at increasing pay transparency. Bill 203, the Pay Transparency  Act, 2018 was introduced as part of the Wynn government’s broader strategy to advance women’s economic empowerment named “Then Now Next: Ontario’s Strategy for Women’s Economic Empowerment”.

The proposed legislation includes:

  • a requirement that all publicly advertised job postings include a salary rate or range;
  • a prohibition on employers’ questions regarding job candidates’ past compensation;
  • a prohibition on reprisals against employees who discuss or disclose their compensation; and
  • the establishment of a framework to require larger employers to track and report compensation gaps based on gender and other diversity characteristics.

The new legislation proposes that the new disclosure measures would first apply to the Ontario Public Service. Following consultation, the new disclosure requirements would be extended to employers with more than 500 employees, followed by an extension to employers with more than 250 employees, though it is conceivable that the measures would eventually extend to employers of all sizes. For now, the Ministry of Labour advised that it would “encourage smaller employers” to release the same data.

If passed, the new legislation will come into force in January 2019.

Although there is no question that the gender wage gap is an issue that must be addressed and corrected, the details of the proposed legislation raise some serious issues for employers. Requiring employers to publicly advertise salary rates, particularly for senior and executive roles, has the potential to greatly diminish an organization’s competitive advantage. In addition, if the new legislation adopts the ESA’s definition of wages, all aspects of an employee’s compensation would have to be disclosed. This could prove difficult in the case of complex compensation structures where components of an employee’s compensation are performance-based. Disclosing such compensation structures may also lead to the inadvertent disclosure of confidential information about the company.

Furthermore, where an organization does not have a set compensation level in mind because it intends to recruit candidates with diverse skills and levels of experience, a salary range may be so wide that the disclosure would prove meaningless.

Lastly, the public disclosure of compensation may lead to the public disclosure of specific employees’ wages in circumstances where small departments are contained within large organizations. The employer may then face privacy and other legal issues with respect to such disclosure.

Miller Thomson will continue to follow new developments and amendments to this draft legislation and will provide further information as it becomes available.

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