Understanding Pay Transparency and Pay Equity Legislation: Insights for Employers

With the evolving landscape of pay transparency and pay equity legislation across Canada, employers face increasing complexities and compliance challenges. 

Below are some practical considerations for employers navigating this dynamic regulatory environment.

1. Context and Evolution: The push for pay transparency is a response to ongoing wage disparities. As public awareness grows, and legal requirements become more stringent, Canadian workplaces are poised for significant shifts in how pay transparency is implemented and enforced. 
2. Provincial Legislation: Ontario, Quebec, British Columbia, P.E.I., Nova Scotia, and Newfoundland and Labrador, have all enacted or proposed pay transparency and/or pay equity legislation to enhance pay equity. Each jurisdiction has developed unique frameworks tailored to its specific regulatory environment.
   
   B.C.’s pay transparency legislation is arguably the most comprehensive in the country. It mandates clear communication of pay ranges in job postings, prohibits pay history inquiries, and requires pay transparency reports, which will come into effect between 2023 and 2026, depending on the employer’s size.
   
   Recent amendments in Ontario also require employers to include pay ranges in job postings, but the amendments are not yet in force, and details on their implementation are pending.
3. Compliance and Enforcement: Regulators such as the federal Pay Equity Commissioner and the Pay Equity Commissions in Ontario and Quebec are tasked with overseeing pay equity legislation. Employers may face increased scrutiny and audits to assess compliance with pay equity requirements.
4. Risk Management: Non-compliance with pay transparency and pay equity rules may result in monetary penalties, administrative sanctions, such as compliance orders or directives, lawsuits or claims alleging discrimination, unequal pay practices, or violations of employment standards legislation, reputational damage, and loss of business opportunities, including government contracts, partnerships, and funding opportunities.
   
   Employers can mitigate risks by being proactive: update pay practices, train staff, ensure vendor compliance, maintain records, and review job postings. 
5. Outlook: As pay transparency gains momentum and more jurisdictions worldwide adopt similar measures, Canadian provinces are likely to continue legislating in this area. Employers should prepare for potentially stricter approaches that could include enhanced reporting requirements, increased penalties for non-compliance, and expanded regulatory oversight.

Have more than five minutes? Watch our recent webinar on this topic or contact any member of our Employment & Labour group to learn more.