Ontario Finalizes Pay Transparency Act, 2018, Targeting Large Employers

The Ontario government recently passed Bill 3, the Pay Transparency Act, 2018, making Ontario the first province in Canada to enact pay transparency legislation. Bill 3 replaces the original Bill 203 that had been introduced in March 2018.

On January 1, 2019, the Pay Transparency Act, 2018 will impose the following rules:

1. Employers may not directly or indirectly seek information about a job applicant’s compensation history.




2. Employers that publicly advertise job openings must include “information about the expected compensation” or “the range of expected compensation for the position.”




3. Employers may not retaliate against an employee for:
   
   
   1. asking his or her employer about his or her compensation;
   2. disclosing his or her compensation to another employee;
   3. asking about a pay transparency report filed with the Ministry of Labour;
   4. notifying the Ministry of Labour about the employer’s compliance with the law; or
   5. asking the employer to comply with the law.




4. Employees who believe that their employers have retaliated may complain to the Ontario Labour Relations Board in the form of a grievance and/or arbitration under a collective bargaining agreement. Employers bear the burden of proof that they have not breached the law.
   
   
   The Minister of Labor will appoint compliance officers to conduct compliance audits to determine whether an employer has breached the law. Compliance audits may include inspections and demands for production of documents. Compliance officers will also issue notices of contravention and impose fines and penalties (without holding hearings).




5. Employers that want to dispute a notice of contravention must apply to the Ontario Labour Relations Board “within 30 days after the date of service of the notice.” The Board will then hold a hearing and will may vary the fine or penalty imposed.




6. The law imposes a one-year limitation period on liability for employer breaches.

By May 15 of each year, employers with 100 or more employees in Ontario will be required to file a pay transparency report with the Ministry of Labour, which will publish all pay transparency reports that are filed. The law contemplates that an employer will be required to report its workforce demographic composition, as well as differences in compensation in relation to gender and other characteristics. Specifically, employers with 250 or more employees in Ontario must submit their first reports by May 15, 2020. Employers with 100–249 employees must file their first reports by May 15, 2021. The pay transparency reports must be posted online or in a conspicuous place.

Comments

The new law leaves a number of uncertainties that will need to be clarified in future regulations. As a result, there is very little in the way of guidance as to the categories (besides gender) for which an employer must track and report differences in compensation. In addition, it is unclear what other information employers will need to file in their reports to the minister. As the earliest reporting deadline is not until 2020, employers have time to plan after any regulations are issued.

In the meantime, employers may want to consider how they may need to change their job postings and their compensation negotiation strategies to comply with this new law. The prohibition on asking about compensation history and the requirement to provide information about expected compensation or a range of expected compensation will come into force on January 1, 2019.

Written by Michael Comartin of Ogletree Deakins