Ontario Finalizes Pay Transparency Act, 2018, Targeting Large Employers

As we reported in March of 2018, the Ontario government recently introduced legislation designed to create pay transparency by prohibiting employers from asking job applicants about pay history, requiring employers to report their pay practices to the Ministry of Labour, and authorizing the appointment of compliance officers to investigate whether employers have complied with the bill’s requirements, among other things.

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 of 2018. The new Pay Transparency Act, 2018, clarifies several of the new rules that will apply to Ontario employers starting in 2019, with an initial focus on targeting larger businesses. But it also leaves a number of uncertainties that will need to be clarified in future regulations (i.e., rules made by the government outside of the formal lawmaking process).

Under the Pay Transparency Act, 2018, the following rules will come into force on January 1, 2019:

1. Employers will be prohibited from seeking information about a job applicant’s compensation history, regardless of whether the employer seeks this information directly from the employee or through indirect means.




2. Employers that publicly advertise job openings will be required to include “information about the expected compensation for the position or the range of expected compensation for the position” in those job postings.  




3. Employers will be prohibited from retaliating against an employee who:
   
   
   1. makes an inquiry to his or her employer about his or her compensation (reprisal for such inquiries could also run afoul of Ontario’s recent Bill 148 amendments relating to equal pay);

   
   

   2. discloses his or her compensation to another employee;

   
   

   3. makes inquiries about a pay transparency report filed with the Ministry of Labour;

   
   

   4. gives information to the Ministry of Labour about his or her employer’s compliance or noncompliance with the Act; or

   
   

   5. asks his or her employer to comply with the Act.

   
   




4. If an employee believes that his or her employer retaliated against him or her in violation of the Act, he or she may bring a complaint to the Ontario Labour Relations Board. The complaining employee may bring a grievance and/or initiate arbitration under a collective bargaining agreement if he or she is a unionized employee governed by such an agreement. Employers will bear the burden of proof to demonstrate that they have not breached the Act.




5. 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). The full powers of compliance officers remain to be explained by regulation, but it appears they will have powers similar to those of Ministry of Labour inspectors under the Employment Standards Act, 2000.

   If an employer wants to dispute a notice of contravention, it will be required to apply to the Ontario Labour Relations Board to challenge the notice “within 30 days after the date of service of the notice.” The Board will then hold a hearing to determine whether a contravention has taken place and will have the power to vary the fine or penalty imposed.




6. There will be a one year limitation period on employer liability for breaches of the Act.

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. Although the regulations specifying what must be included in employers’ reports have yet to be written, the Act 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 prescribed characteristics (which have still not been determined).

• Employers with 250 or more employees in Ontario must submit their first pay transparency 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 at least one conspicuous place in every workplace of the employer” in Ontario.
• The ministry will publish all pay transparency reports that are filed. It is expected the reports will be published online.

Key Takeaways

Regulations applicable to this Act have yet to be drafted, and until they are drafted, there is very little in the way of guidance as to the categories (besides gender) for which an employer must track differences in compensation and report them to the minister, and what other information employers will need to file in their reports to the minister. As the earliest reporting deadline is not until 2020, employers will have some time to plan based on what the regulations will prescribe.

In any event, 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.