Labour and employment lawyers predict pushback on Pay Transparency Act

 

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Written By: Amanda Jerome

 

Ontario’s recently launched pay transparency legislation may make the province a leader in tackling pay equity, but labour and employment lawyers are predicting a pushback as companies are still adjusting to recent amendments to the Employment Standards Act.

Bill 203, Pay Transparency Act, 2018, introduced on March 6, is meant to ensure that compensation is based on a job’s requirements by having publicly advertised job postings include a salary rate or range.

If passed, the legislation would also prohibit employers from asking a job candidate about their past compensation and require large companies to track and report compensation gaps based on gender and diversity.

 

Inna Koldorf, Miller Thomson LLP

Inna Koldorf, a partner at Miller Thomson LLP in Vaughan, said she believes public disclosure of salary rates will be an issue for employers on several fronts.

“I think that in certain circumstances it’s really going to impact their competitive advantage depending on the type of position that they’re recruiting for or the types of positions that they have in the organization,” she said, adding that this will prove difficult when recruiting candidates for executive positions.

“Those compensation packages typically tend to have many moving parts than just the wages and the benefits. If the new legislation adopts the Employment Standards Act definition of wages it would include all aspects of the employee’s compensation. And so, I think it would be difficult to disclose that due to the many moving parts,” she explained.

Koldorf also noted that this legislation may, inadvertently, lead to situations where a company’s confidential information could be disclosed through different aspects of the compensation structure.

“It leaves companies in the position where they really do have to put everything out publicly and the ramifications, depending on the legislation, may be really big,” she said.

Koldorf believes companies are going to find ways around the legislation by advertising broad ranges of salary.

“What glares at me right now is the fact that there’s a permission to use ranges as opposed to just salary rates. And I think that’s going to give employers a lot of flexibility when it comes to publicly advertising information,” she said, adding that she’s not sure how increased transparency will impact the gender wage gap.

Koldorf noted that Ontario introduced pay equity legislation 20-30 years ago and that the province still struggles with inequality in the workforce. She said the wage gap must be closed, but legislation may not be the way to do it.

“I think a lot of it is social and that perhaps education is needed in school, before women get out in the workforce, to give them the tools to negotiate. That will make a much bigger difference, in my opinion. I’m not sure that transparency is going to do it,” she said.

 

Ella Forbes-Chilibeck, Forbes-Chilibeck Employment Law

Ella Forbes-Chilibeck, of Forbes-Chilibeck Employment Law, said transparency may not create equity, but it would alert applicants to where there is a disparity in the pay structure.

“To a certain extent I think it would affect the competitiveness of certain organizations if they weren’t careful,” she said.

“It’s coming on the heels of an increase in the minimum wage, so I think there’s going to be pushback. I think employers are going to have trouble with this and they may feel that it’s a burden they can’t afford or carry and I think that’s a concern,” she added.

Forbes-Chilibeck largely represents employees and says she often sees a disparity in women’s salaries, especially in senior management roles.

The Ottawa-based lawyer recalled a situation where a female candidate and a male candidate, working in the same position, were alerted to the disparity in their salaries and it led to the man reducing his salary, so the difference could be split between the two positions. She said the introduction of pay transparency legislation doesn’t necessarily mean that women’s salaries are going to be increased.

“It could be that the difference between the two [salaries] is going to be shared and one will go down while the other will go up. It would require a commitment to equitable pay, salary and compensation. If you’re at a senior level that’s a moral imperative that you feel is important regardless of your gender,” she said.

Through her practice, Forbes-Chilibeck has also noticed that women are less likely to negotiate for a higher salary than men.

“They’re more willing to say ‘well, this is what they’re offering and I’ll take that.’ This is very frustrating to me,” she said, adding that she hopes the Pay Transparency Act might give women more confidence to negotiate.

Resistance has already begun as the Progressive Conservative Party of Ontario has filed a delay motion on the Act. Minister of Labour Kevin Flynn shared his disappointment via social media over the motion calling the delay “unacceptable.”

"By taking immediate and meaningful steps, Ontario stands out as a true leader when it comes to ending income inequality. Our government is committed to breaking down barriers to employment, closing the gender wage gap and helping to support all women in the economy,” Flynn said in a statement.

The PC Party did not respond to request for comment.

If the Pay Transparency Act is passed it will come into force on Jan. 1, 2019. Pay transparency will begin with Ontario Public Service positions before applying to firms with more than 500 employees and then to those with more than 250 employees.

According to a government release, women in Ontario earn around 30 per cent less than men.

Ella Forbes-Chilibeck