skip to main content
March 8, 2018

Ontario Seeks to Address Wage Gap with Pay Transparency Act

Authors Hendrik Nieuwland and Seth Holland

Ontario’s proposed Bill 203, the Pay Transparency Act (the “Bill”) was introduced in the Ontario Legislature on Tuesday, March 6, 2018. The Bill takes aim at the wage gap between men and women in the province by implementing a number of measures to increase transparency in hiring and payment practices. If passed, the proposed Bill comes in to force on January 1, 2019.

Recruitment Rules

The Bill would prohibit all employers from seeking compensation history about a job applicant. However, employees would still be permitted to voluntarily and without prompting disclose their compensation history, and where they have done so employers would be permitted to rely on such information in determining the applicant’s compensation.

The Bill would also require public job postings to include the expected compensation or the range of expected compensation for the position. These changes will impact salary negotiations with new employees, as employers will be legally required to “show their hand” at the outset of the job application process.

Reporting Requirements

The Bill also proposes a reporting requirement for certain prescribed employers. These employers will be obligated to prepare a “pay transparency report” that contains information relating to the employer, the employer’s workforce composition, and differences in compensation between genders and other prescribed characteristics. Prescribed employers will be required to submit the pay transparency report to the Ministry of Labour (the “Ministry”) and to post the report in a conspicuous location at all of their work locations. The reporting requirements will be implemented progressively: initially applying only to the Ontario public service, then to employers who employ 500 or more workers, and later to those who employer 250 or more.

The reporting requirements will force these larger employers to closely track and report compensation trends in their workforce. These requirements will certainly bring wage inconsistencies to the forefront of workplace discussions. As a result, Ontario may see an uptick in pay equity litigation following the Bill coming into effect.

Protection From Reprisal

The Bill purports to protect employees from reprisal for engaging in activities prescribed under the proposed Pay Transparency Act. Employers will not be able to take any punitive action against an employee for making inquiries about compensation, disclosing their compensation to another employee, making inquiries about a pay transparency report, or seeking compliance with the legislation. Interestingly, the Bill expressly provides for the adjudication of alleged reprisals by labour arbitration where the employment relationship is governed by a collective agreement.

Further, Ministry-appointed compliance officers will have the authority to enter and inspect an employer’s workplace, without a warrant, to ensure compliance with the legislation. A compliance officer will have broad powers including the production of records, and questioning any person on a relevant matter.

If passed, employers will need to adjust their hiring practices to comply with the Bill’s requirements. The Bill is still in its early stages and will need to undergo second and third reading in the Legislature, as well as consideration by a standing committee. There is no formal timetable on when the Bill may pass. However if the Wynne government’s recent passing of Bill 148 is any indication (which took just under six months), the Bill could possibly become law prior to the June 7, 2018 election.

The foregoing is for informational purposes only, and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of SOM LLP’s lawyers by email or telephone.
65 Queen Street West, Suite 1800, Toronto, Ontario M5H 2M5
T 416 304 6400 F 416 304 6406