August 7th, 2018 | Sterling
How Will Ontario’s Pay Transparency Act Impact the Hiring Process?
The interview is the “get to know you” portion of the hiring process for both the employer and the applicant. Candidates want to learn more about the company and what is required for the position. Employers are trying to learn as much about the candidate to see if they are qualified and “a fit” for the company. A salary history question, either on an application or during an interview, has been used as a guide for determining a candidate’s future salary. However, there is evidence that this process can negatively impact women. According to an American Association of University Women study, the pay gap between men and women starts at college graduation even when the course of study is the same. The organization found on average, women who work full time earn about 80 cents for every dollar a full-time male worker earns. The wage gap persists across all racial and ethnic groups and is found in every U.S. state and has been going on for decades.
Some states and cities in the U.S. have been starting to pass laws that ban asking salary history questions during application and interview process. These laws each have slightly different requirements, but the laws consider it a discriminatory practice to inquire about salary history at any stage of the employment process, unless provided willingly and unprompted by the applicant.
Ontario’s Pay Transparency Act
On March 6, 2018, the Ontario government introduced legislation to ban salary questions, The Pay Transparency Act. The bill passed the third reading on April 26, 2018, and will go into effect on January 1, 2019. Ontario is the first Canadian jurisdiction to introduce this type of legislation. The purpose of the Act is to promote gender equality and equal compensation between men and women by removing one of the factors that perpetuates unequal compensation.
The Pay Transparency Act fits together nicely with the Equal Pay for Equal Work requirement of the Employment Standards Act, which states that employees performing substantially the same kind of work in the same establishment, requiring the same skill, effort and responsibility cannot be paid differently based on sex. Ontario also has the Pay Equity Act which requires that women receive equitable pay to men for performing different jobs of equal value.
Pay Transparency Act Requirements
The Pay Transparency Act includes the following provisions:
- Employers must publicly advertise job postings to include a salary range
- Employers are prohibited from asking candidates about their past compensation
- Employers are prohibited from penalizing employees who discuss or disclose compensation
- Employers must establish a reporting framework that will require employers to track, report and post compensation gaps based on gender and other diversity characteristics
- Candidates/employees may bring a complaint to the Ontario Labour Relations Board if they believe their employer has violated the Act
Lexology goes into further detail about the act, “The Minister of Labour will appoint compliance officers to conduct compliance audits to determine whether an employer has breached the Act. This includes conducting inspections and making demands for production of documents. Compliance officers will also issue notices of contravention and impose fines and penalties (without holding hearings).” Compliance officers will be able to impose financial penalties on employers who do not comply with the Act. There will be a one-year limitation period on employer liability for breaches of the Act.
Specific Regulations to Be Determined
Employers will be required to file a pay transparency report with the Ministry of Labor on May 15th of each year. The specific rules around what must be included in the report are still being determined. There are graduated deadlines for organizations to present their first report to the Ministry of Labour, depending on the number of employees they have: May 15, 2020, for employers with 250 or more employees and May 15, 2021, for employers with 100 – 249 employees. The reports must be posted online or in a conspicuous place in the workplace and the Ministry will make the reports available to the public.
It is imperative to stay up-to-date on the latest human resources and background screening trends, laws and compliance standards. Sterling Talent Solutions is here to help with information on the latest legislation that could impact employment background screening. We recently presented a webinar on Ontario’s New Police Record Check Reform Act. You can watch “Ontario’s New Police Record Checks Reform Act (Bill 113): What Happens on November 1st?” OnDemand at your convenience.
This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.