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Federally regulated employers to face new Pay Equity Act requirements

The federal government has published proposed  Pay Equity Regulations (the Regulations) in the Canada Gazette. The proposed Regulations will support the implementation of the Pay Equity Act  (the Act), which is designed to help ensure that, on average, women and men in federally regulated public and private sector workplaces receive equal pay for work of equal value (as discussed in the January 2019 News & Views). The Act and Regulations will come into force on a date to be proclaimed by the federal government that is expected to be in 2021.

Background: the Pay Equity Act

The Act requires federally regulated employers of ten or more employees to establish a pay equity plan to identify and compare the compensation associated with predominantly female and predominantly male job classes of similar value.
If a pay equity plan discloses differences in compensation between predominantly female and predominantly male job classes, the employer must increase compensation to employees in the underpaid predominantly female job classes as required by the pay equity plan. These pay increases must begin within three years of the Act being proclaimed into force, although phased-in increases are permitted in some circumstances. 
In addition, employers of 100 or more employees, as well as unionized employers, are required to establish a pay equity committee to develop and update the pay equity plan.

Finally, a Pay Equity Commissioner appointed within the Canadian Human Rights Commission will administer and enforce the Act.

The Pay Equity Commissioner will facilitate dispute resolution and issue binding orders where necessary, promote compliance through a system of administrative monetary penalties, and conduct compliance audits and investigations.

Proposals for the Pay Equity Regulations

The proposed Regulations would support the implementation of the Act by providing details on specific aspects of the process. In order to give effect to the Act, the Regulations propose to provide the following:

  1. Requirements for posting of documents in the workplace: The proposed Regulations would require employers to make posting available in either electronic or printed forms, leaving it to the employer or committee to choose the appropriate format, provided the posting is easily accessible.
  2. Time limits for applications and notices with the Pay Equity Commissioner: The proposed Regulations set time limits for the submission of the applications and notices that are required under the Act to be submitted to the Pay Equity Commissioner throughout the pay equity process.
  3. Mathematical factors for comparing compensation: Under the Act, two possible methods are available for comparing the average compensations between predominantly male and predominantly female job classes, the “equal average” method and the “equal line” method. The proposed Regulations set the formulae for the two methods.
  4. Steps to follow when regression lines cross under the equal line method: Under the equal line method two regression lines are created, one for males and one for females, each one representing the relationship between job values and hourly rates of compensation. Instructions are provided for what to do when female and male regression lines cross, resulting in part of the female line resting higher than part of the male line.
  5. A method for developing a pay equity plan when there are no predominantly male job classes: Two options are provided for situations in which there is no male comparator available, the “proxy” method and the “typical job classes” method. The proxy method would require an employer or pay equity committee without a male comparator to select three or more predominantly male job classes from another organization or business covered by the Act and to develop proxy male job classes in their plan. The proposed Regulations would set out requirements to be met by both the employer of the proxy workplace and by
    the employer or committee in need of a male comparator. The typical job classes method would require an employer or pay equity committee without a male comparator to use three fictional predominantly male job classes (maintenance worker, technician, and manager) set out in the proposed Regulations to complete their pay equity plans. A similar method is used in Quebec’s pay equity regime using two fictional job classes.
  6. A process for updating pay equity plans: The proposed Regulations include a list of the types of changes that could have an impact on pay equity and therefore warrant re-examination.

Comment

Once they come into force, the Act and Regulations will impose considerable obligations on mid-sized and large federally regulated employers, requiring them to take proactive steps aimed evaluating their own approaches to compensation and taking remedial steps where necessary. Federally regulated employers of ten or more employees should begin to take steps to create a pay equity plan and, in the case of employers of 100 or more employees, to establish a pay equity committee. Employers that anticipate having to report significant discrepancies between male- and female-predominant job classes should begin considering the costs involved with remedying those imbalances within the specified timelines.


News & Views - February 2021 (PDF)