What’s At Stake
It’s always been illegal to pay women less than men for equivalent work at the same establishment purely on the basis of gender. The difference is that a handful of jurisdictions (including Ontario and Québec) have adopted pay equity laws requiring employers to not simply avoid but take proactive measures to identify and remedy gender-based wage gaps. Here are 8 basic FAQs providing an overview of the newest proactive pay equity law, which covers federal employers.
Question 1: Who Does the Law Cover?
Answer: The Pay Equity Act applies to both public and private sector employers (including Ministers’ offices) that are both:
- Federally regulated; and
- Have 10 or more employees..
Question 2: When Does the Act Take Effect?
Answer: The Pay Equity Act, which was passed by Parliament in 2018, officially takes effect on January 1, 2020.
Question 3: What Does the Act Require Employers to Do?
Answer: There are 4 things employers may have to do to comply with the Pay Equity Act, depending on the size of the organization:
- Establish a pay equity committee;
- Create a pay equity plan;
- Eliminate pay gaps identified; and
- Maintain pay equity.
Let’s break down each of these requirements in detail.
Question 4: What Do the Pay Equity Committee Rules Require?
Answer: Employers with 100 or more employees and all unionized workplaces with more than 10 employees must establish a joint committee made up of employer and employee representatives to develop and maintain a pay equity plan for the workplace. Committees are voluntary for employers with fewer than 100 non-union employees. Rules:
- 2/3 of committee members must be employee representatives;
- At least 50% of committee members must be women;
- In unionized workplaces, all bargaining agents must be represented on the committee; and
- Each group represented on the committee gets one vote.
Question 5: What Do the Pay Equity Plan Rules Require?
Answer: The committee has 3 years, i.e., until January 1, 2023 (or 3 years after the employer first becomes subject to the Act) to develop and post a pay equity plan that:
- Identifies all of the job classes in the workplace;
- Determines the gender predominance of those job classes;
- Defines the value of the work done by those job classes based on work conditions and the skill, effort and responsibility required to do the work; and
- Compare the predominantly female job classes to the predominantly male job classes and identify any wage gaps that exist.
Question 6: What Do the Pay Equity Elimination Rules Require?
Answer: If the committee identifies a gap between predominantly male and female job classes, the employer must increase the female job class’s compensation to close the gap. The extra compensation would first become due 3 years after the Act takes effect, i.e., January 1, 2023. Exception: If the pay increase is greater than 1% of yearly payroll, the employer can phase in the increase in accordance with schedules listed in the regulations. Employers may not eliminate male-female wage gaps by decreasing the compensation of the predominantly male job class.
Question 7: What Happens if the Pay Equity Increase Goes Against the Collective Agreement?
Answer: If there’s an inconsistency between the plan and a collective agreement, the plan prevails and the pay increase is deemed to be part of the collective agreement.
Question 8: What Do the Pay Equity Maintenance Rules Require?
Answer: After the 3-year compensation adjustment(s) are made, employers must continue to review their plans to identify and eliminate wage gaps over a 5-year maintenance cycle. Other ongoing employer obligations:
- Posting employee notices listing their pay equity duties and employees’ pay equity rights, e.g., to file complaints or comment on the plan; and
- Submitting an annual pay equity statement to the new federal Pay Equity Commissioner.