What is Pay Equity?

Pay equity is “equal pay for work of equal value”. Pay equity recognizes that work historically performed by women has been undervalued and therefore, underpaid. As a result, there is a wage gap – a difference in earnings – between men and women.

Ontario’s Pay Equity Act seeks to close this wage gap by redressing systemic gender discrimination in compensation for work performed by employees in jobs traditionally held by women – that is, in female job classes. Some examples of female job classes are: secretaries and receptionists, nurses and personal support workers, teachers and social workers. The Pay Equity Act sets out the minimum requirements with which employers must comply to ensure that their compensation practices provide for pay equity for all employees in female job classes.

What Does the Pay Equity Act Require of Employers?

The Pay Equity Act applies in Ontario to all public sector employers, as well as to all private sector employers with 10 or more employees. The Act requires these employers to establish and maintain compensation practices that provide for pay equity in all of the employer’s establishments. This means that all employers covered by the Act must firstly, identify gender discrimination that may be present in their pay practices and secondly, correct any such discrimination by adjusting the wages of employees in female job classes so that they are at least equal to the wages paid to employees working in comparable male job classes. Under the Act, all employees – both men and women – who are working in undervalued and underpaid female job classes should be entitled to pay equity wage adjustments.

The Pay Equity Act does not determine the hourly rates, salaries or benefits of an employer’s employees. Rather, the Act requires employers to assess their pay and benefit practices to ensure that female job classes are not underpaid in comparison to male job classes of equal value in the same organization.

How is Pay Equity Achieved?

In order to meet the minimum requirements of the Pay Equity Act and achieve pay equity, an employer covered by the Act must have completed four activities:

• First, the employer must determine the job classes in its establishment, including the gender and job rate of job classes;
• Second, the employer must determine the value of job classes based on factors of skill, effort, responsibility and working conditions;
• Third, the employer must conduct job comparisons for all female job classes using a job-to-job, proportional value or proxy method of comparison; and
• And finally, an employer must adjust wages of employees in underpaid female job classes so that they are paid at least as much as employees in a comparable male job class.

Once pay equity is achieved, all employers covered by the Act must maintain pay equity for employees in female job classes. The purpose of maintaining pay equity is to prevent wage gaps that have been closed from re-opening or widening, and ensuring that new gaps are not created, as a result of changes to job values or job rates.

The process of achieving and maintaining pay equity can be quite technical and complicated. Therefore, many employers subject to the Pay Equity Act hire lawyers or consultants to assist with compliance.

What is the Deadline for Complying with the Pay Equity Act?

An employer’s compliance deadline depends on whether the establishment is in the public sector or private sector, when it came into existence and the number of employees the employer had on certain dates. For example, all private sector employers must achieve pay equity on the day they hire or hired their tenth employee. Therefore, for some employers, the deadline for achieving compliance with the Pay Equity Act has passed.

Employers who have not implemented pay equity according to their deadlines will have to complete job evaluations and comparisons as if these tasks were completed on time and, potentially, will be required to make immediate retroactive pay equity wage adjustments to employees in female job classes, and pay interest on these amounts.

The Act does not set out specific deadlines to follow for maintaining pay equity. Maintenance is an ongoing process to be reviewed by employers.

Who Oversees the Pay Equity Act?

The Pay Equity Commission oversees compliance with the Pay Equity Act. The Pay Equity Commission is comprised of two separate and independent bodies: the Pay Equity Office and the Pay Equity Hearings Tribunal.

The Pay Equity Office is a regulatory agency that is responsible for enforcing the Pay Equity Act. Complaints about an employer’s pay practices that do not comply with pay equity are dealt with by Review Officers at the Pay Equity Office.

The Pay Equity Hearings Tribunal is a quasi-judicial body that adjudicates disputes arising from the enforcement of the Act by the Pay Equity Office. For example, orders made by Review Officers at the Pay Equity Office can be challenged by an employer, employee or a trade union on behalf of employees before the Pay Equity Hearings Tribunal.

What is Not a Pay Equity Issue?  

Pay equity is not about other forms of workplace gender discrimination or harassment. For instance, issues such as gender discrimination in hiring, promotion, termination of employment, or matters of sexual harassment are not covered by the Pay Equity Act or overseen by the Pay Equity Commission. Statutes such as the Human Rights Code, Occupational Health and Safety Act or Employment Standards Act deal with forms of workplace discrimination outside of pay equity.

Pay equity is also not about evaluating a specific employee’s job performance, setting wages and benefits, or providing entitlements to employees in underpaid male job classes or gender neural jobs.  

What Should I Do if I Receive a Pay Equity Complaint?

If you are an employer who has received a pay equity complaint from an employee, former employee or trade union, or if your pay practices are being audited by the Pay Equity Office, please seek legal advice. The legal and financial implications of not complying with the Pay Equity Act can be serious. As lawyers with experience in pay equity disputes, we can assist employers with resolving complaints, limiting or eliminating possible financial liability, and achieving compliance with your legal obligations.

Lisa Corrente explains the goals of the Pay Equity Act and provides an overview of an employer’s obligations under the Act