Jul 29

Jul 29 Mind the (Gender Wage) Gap: What Lies Ahead for Ontario Employers

This past month, the US Women’s National Soccer Team made headlines amid their World Cup run by pushing for pay equality with their counterparts on the men’s team, leading to support from sponsors and the US Senate.

So what is the big deal about gender/sex discrimination in compensation and should Ontario employers be concerned?

Below is a summary of the current routes for making gender/sex wage discrimination complaints, with a focus on the Code. Despite the challenges faced by the Association of Ontario Midwives (the “AOM”) in a recent decision, a human rights application appears to be the nimblest of the currently available routes to deal with these complaints, and the one about which employers should be the most concerned going forward.

The Legislative Landscape

There are three main statutes (and one statute in limbo) that regulate the wage complaints based on gender and sex in Ontario:

1. Pay Equity Act (PEA)

2. Employment Standards Act, 2000 (ESA)

3. Pay Transparency Act, 2018 (PTA)

4. Human Rights Code (Code)

However, the province has not conducted a significant review of these statutes in many years. In addition, the PTA,which was set to come into force earlier this year, has been delayed indefinitely.

Pay Equity/PEA

The PEA applies to public and private sector employers with 10 or more employees. The goal of the PEA is to redress systemic gender-based discrimination experienced by employees working in predominantly female job classes. Employers subject to the PEA are required identify gender discrimination in their pay practices and implement new workplace protocols that promote gender equality.

The PEA defines the minimum requirements for ensuring that an employer’s compensation practices provide pay equity for all employees in female-dominated jobs. Both men and women can make claims under the PEA if they are working in undervalued female job classes. Employers are required to compare jobs usually done by women to those usually done by men based on factors such as skill, effort, responsibility and working conditions.

If, following this analysis, the female-dominated job is deemed to be equivalent in value to the male-dominated job, and pay differences that adversely affect the predominantly female job class are identified, the employer’s obligation is triggered. That female job class must receive compensation that is at least equal to the compensation received by those working in the comparator male job class.

Equal Pay/ESA

The “equal pay for equal work” protections are set out in the ESA, and they address situations in which both men and women do the same work, requiring the same demands, level of skill, effort, responsibility and decision making.

The concept of equal pay is similar to that of pay equity, however, there are some differences. Equal pay for equal work refers to the goal that people of any gender doing the same job are entitled to the same compensation. Pay equity refers to equal compensation for work that is of equal value, even if the work is entirely different (i.e. comparing a nurse, who are predominantly female, to a mechanic, who are predominantly male).

There are, however, permitted exceptions to the “equal pay” requirement. A difference in compensation between a male and female worker is justified when it is based on seniority, merit or a system that measures earnings by quantity or quality of production.

An employer cannot reduce an employee’s wage in order to comply with the rules of equal pay. If an employer is unable to justify the difference in pay based on factors such as seniority or merit, the employer is forced to increase the wage of the lower-earning employee.

Pay Transparency/PTA

In March 2018, the then Liberal Ontario government proposed the PTA, with the aim of promoting women’s economic empowerment by eliminating the gender-based wage gap.

The PTA would have imposed new obligations on employers to eliminate and expose pay disparity, including:

prohibiting employers from asking candidates about their past compensation;
requiring a salary rate or range with all publicly advertised job postings; and
requiring employers with 100 or more employees to track and report compensation gaps based on gender or other prescribed characteristics in pay transparency reports on an annual basis.

The PTA was initially set to come into force on January 1, 2019, however in the late fall 2018, the then newly elected Progressive Conservative government postponed the implementation of the PTA, claiming that “[c]omplying with the [PTA’s] current reporting requirement would have significantly increased costs for businesses and affected some sectors more than others.” It is unlikely this legislation will be enacted so long as a PC government is in power.

Human Rights Code

Unlike the PEA, the ESA and the (proposed) PTA, the Code[i] goes beyond the male/female distinction in assessing wage discrimination: it is explicitly open to non-binary employees. In its current state, PEA requires an employee wishing to make an equal pay claim to identify as a binary sex group, and then compare their pay status to a colleague of the opposite (binary) sex in the same position. If an employee does not identify with either sex, it is unclear how they should proceed.

The Code grants protection to those who have experienced discrimination on a wider set of grounds – i.e. sex, gender expression and gender identity – and without the requirement of a male/female comparator group. The absence of these requirements makes the Code route a more flexible and inclusive process than those in the PEA and the ESA.

Further, the focus of the Code is on the Applicant’s specific employment experience, rather than on conducting an exhaustive review of those in the same, similar or comparable job groups. The audit-like review processes under the PEA and ESA make them less accessible than the Code process.

A recent Code decision about pay equity

A decision by the HRTO in September affirmed that the Ministry of Health and Long-Term Care had discriminated against the provinces’ midwives since 2005 in setting their compensation. The HRTO ordered that the parties work out a new compensation regime and payment for historic inequity.

The decision in the midwives’ case shows the flexibility of the human rights process in dealing with gender/sex wage discrimination claims.The HRTO determined that midwives, who are primarily women, suffered sex-based discrimination with regards to their pay. In its argument, the AOM described midwifery as:

a gender “trifecta” of services provided by women, for women, in relation to women’s health; and
an undervalued profession, which was reflected in their compensation.

Although the MOHLTC denied that gender played any role in its compensation decisions, the HRTO found that “…sex [was] more likely than not a factor in the treatment they experienced and the compensation gap that has developed.” The HRTO faulted the MOHLTC for failing, on one hand, to take the appropriate steps to ensure the compensation process was free of any discrimination and, on the other, to monitor changes in midwives’ work.

PH Takeaways for Employers

As awareness and concern about the gender wage gap grow, and as the PEA and ESA become increasingly stale, we think there will be more gender wage discrimination claims under the Code.

The province has now sought judicial review of the HRTO’s decision in the midwives’ case, arguing that it is “workload, and not gender” that underpins the pay disparity. The judicial review application is set to be heard in January 2020.

Assuming that the court upholds the HRTO decision and that the current focus the gendered wage gap, how can employers avoid being the next target in a pay discrimination complaint?

Act as though the PTA is in force: The requirements under the proposed PTA are good practices that target pay inequity. They promote corporate social responsibility and also provide a good defence in the event of a Code application. It’s 2019: don’t ask about a candidate’s prior salary and include a salary range in your job postings.
It’s not just about male-female: Besides the male-female wage gap, employers should also consider potential wage gap affecting transgender or non-binary employees.
Hire the experts: There are third parties who provide pay equity review services and who can spot the hidden inequities in your compensation scheme.
Ignorance is not a defence: Employers may not be aware that they are paying employees differently based on gender or gender identify, but that is not a defence. Employers should review their compensation policies and practices in order to identify hidden issues that may emerge over time. For example, in the midwives’ decision, the HRTO faulted the MOHLTC, in part, for not monitoring the changing work demands in the field when assessing their pay.
Excuses, excuses, excuses: Once a gender wage gap is identified, employers must determine whether there is a legitimate basis for the disparity. For example, there is no discrimination where a male employee is compensated more than his female colleague working in the same position if that discrepancy is explained by a seniority or another permitted exception under the legislation.
Change is good: If, however, the identified disparities are not justified, employers must take reasonable steps to correct the situation – i.e. by increasing the pay of the lower paid employee.