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April 30, 2018

Ontario passes Pay Transparency Act to address Gender Pay Imbalance

Authors Hendrik Nieuwland and Seth Holland

On April 26, 2018, Ontario passed the Pay Transparency Act, 2018 (the “Act”) which seeks to alleviate inequality in compensation between men and women through increased transparency of pay and workforce composition. The Act requires that all employers adhere to certain recruitment practices, and that employers who employ 100 or more workers submit annual reports containing information with respect to pay differentials in their workforce based on gender and other characteristics as prescribed by regulation. The Act comes in to force on January 1, 2019.

Recruitment Rules

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

The Act also requires all public job postings to include the expected compensation or the range of expected compensation for the position.

Pay Transparency Reports

The Act also introduces a reporting requirement for employers who employ more than 100 employees. These employers are now obligated to prepare annual “pay transparency reports” that contain information relating to the employer, the employer’s workforce composition, and differences in compensation between genders and other characteristics as may be prescribed by regulation. Employers will be required to submit the pay transparency report to the Ministry of Labour (the “Ministry”) and to post the report online or 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 for 2019, then to employers who employ 250 or more workers for 2020, and to employers who employ 100 or more in 2021.

Protection From Reprisal

The Act protects employees from reprisal for engaging in activities prescribed under the Act. Employers are prohibited from taking 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. The Act 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 now have the authority to enter and inspect an employer’s workplace, without a warrant, to ensure compliance with the Act. Compliance officers have broad powers which include ordering the production of records and questioning any person on a relevant matter.

Final Thoughts

The Act introduces changes that affect all Ontario employers. All employers will need to adjust their hiring practices to comply with the Act’s requirements as the recruitment rules come in to effect on January 1, 2019. Further, employers with 100 or more employees should begin to gather information with respect to their workplace composition and pay differentials based on gender. In doing so, employers can adequately prepare for the upcoming reporting requirements in 2020 and 2021, and spot any pay disparity issues that may exist at this time.

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.

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