New pay equity obligations for federally regulated employers
On December 13, 2018, the federal government’s Bill C-86, which among other things establishes a new Pay Equity Act (the Act), received royal assent. The Act, which comes into force on a date to be proclaimed by the federal government, will create new requirements for federally regulated employers with the aim of providing that women receive equal pay for work of equal value.
The Act requires federally regulated employers of ten or more employees to establish a pay equity plan within three years of the Act being proclaimed into force. Different deadlines apply to provincially regulated employers that become subject to the Act as a result of becoming federally regulated after the Act comes into force.
The pay equity plan must:
- Indicate the number of employees;
- Identify job classes within the workplace;
- Indicate what gender is predominant in each class;
- Evaluate the value of work performed by each job class;
- Identify the compensation associated with each job class;
- Compare the compensation associated with female- and male-predominant job classes of similar value;
- Set out the results of the comparison, identifying which female-predominant job classes require an increase in compensation and when increases in compensation are due; and
- Provide information on the dispute resolution procedure available to employees.
Employers will also be required to post notices setting out their obligations and reporting on their progress in fulfilling them. The pay equity plans must be reviewed and updated at least once every five years.
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. Different deadlines apply to provincially regulated employers that become subject to the Act as a result of becoming federally regulated after the Act comes into force.
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. The committee must comprise a minimum of three members, at least two thirds of whom must represent employees covered under the pay equity plan and at least half of whom must be women. The committees must include representatives of the employer, nonunionized employees and, in the case of unionized workplaces, the union. Non-unionized employees must have one or more representatives, chosen by a majority vote. In the case of unionized employees, there must be at least the same number of representatives as there are bargaining agents.
Finally, a Pay Equity Commissioner and Pay Equity Unit will be appointed within the Canadian Human Rights Commission to 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.
Since 1977, the Canadian Human Rights Act has prohibited discrimination in wages between federally regulated male and female employees performing work of equal value. The new Pay Equity Act imposes additional requirements on federally regulated employers that will require them not only to refrain from discrimination contrary to the Canadian Human Rights Act, but also to take proactive steps to ensure men and women receive equal pay for work of equal value. Federally regulated employers of ten or more employees should prepare to take steps to create a pay equity plan or, 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 may also wish to being contemplating the costs involved with remedying those imbalances