Life After Bill 148: What is “Equal Pay for Equal Work”?

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By: Jordan Rodney | Published in TLOMA Today >>

Chief among the sweeping legislative changes to the Ontario Employment Standards Act, 2000 (“ESA”) introduced by the Fair Workplaces, Better Jobs Act, 2017 (“Bill 148”) was to the Act’s “Equal Pay for Equal Work” provision. The Ontario government has championed the significance of this amendment by indicating that, “Ontario will become the first jurisdiction in North America to mandate equal pay for equal work between casual, part-time, temporary and seasonal workers, and full-time or permanent workers.”1

The Provision:

Specifically, as of April 1, 2018, the “Equal Pay for Equal Work” provision provides that:

No employer shall pay an employee at a rate of pay less than the rate paid to another employee of the employer because of a difference in employment status when,

(a) they perform substantially the same kind of work in the same establishment;

(b) their performance requires substantially the same skill, effort and responsibility; and

(c) their work is performed under similar working conditions.

For clarity, this provision essentially stipulates that if two Ontario employees are performing similar work equally, they must be paid equally, notwithstanding their employment status. This represents a significant shift in the provision – which was formerly narrowly focused on ensuring pay equity between men and women towards incorporating a definition that now includes the all-encompassing term, “employment status.” The Ontario government enacted this amendment after the Province’s official research study entitled, The Changing Workplaces Review Final Report, discovered that “differential treatment based on part-time, casual, temporary contract or seasonal status was an unfair practice that affects one in four employees in Ontario.”2

How will this affect my organization?

This provision empowers employees, by providing them with the right to request a review of their pay rate, without reprisal. What’s more is that the legislation does not require the employee to present substantive proof of unequal treatment in support of their request. Rather, upon receiving a request the onus falls squarely on the employer to either:

  • Adjust the employee’s rate of pay; or
  • Provide the employee with a written response explaining the reasons why the employer does not agree with the employee’s belief.

It is important to be mindful that the legislation stipulates that employers cannot reduce the rate of pay of a comparable employee to comply with their obligation to provide equal pay. However, the legislation does outline that differential pay can be justified on particular objective grounds including:

  • a seniority system;
  • a merit system;
  • a system that measures earnings by quantity or quality of production; or
  • any other factor other than sex or employment status.

Why is compliance important?

The Ontario government has promised to enhance workplace enforcement and penalties to ensure complete compliance with the new “Equal Pay for Equal Work” provisions in addition to the rest of Bill 148.

The province has indicated that they will hire up to 175 additional employment standards officers and are aiming to perform inspections at one out of every 10 businesses in Ontario.3 Should your organization be deemed non-compliant, the government has increased penalties issued by Employment Standards Officers from $250, $500 and $1,000 to $350, $700 and $1,500, respectively, for the first, second and third (or subsequent) contravention of the ESA within a three-year period.

How do I ensure my organization is compliant?

Given that the legislation was recently enacted, employers still have a significant opportunity to proactively prepare themselves against potential employee reviews.

Accordingly, some of the best practices that we have been advising employers to consider implementing include:

  • Proactively reviewing employee salaries and salary ranges and maintaining a similar level of compensation amongst employees performing the same role;
  • When differentiating roles, to consider creating more defined roles which have significantly different job requirements and can be looked at objectively as different enough to substantiate a pay differential;
  • Implementing new Policies and Procedures to establish an objective criteria for evaluating subjective factors like merit or quality of production and to communicate these measures to employees prior to granting any differential pay;
  • To establish a system to effectively keep comprehensive records of when and why differential pay was granted to ensure that the employer can, not only justify, but also continue this practice going forward; and
  • To consult with any Temporary Help Agencies that the organization currently engages, to ensure that they are compliant with the new legislation.

It goes without saying that this legislation poses a number of significant challenges for employers across Ontario. However, given the increased enforcement and penalties discussed above, it is imperative that employers fully understand their legal obligations and comply accordingly by instituting proper workplace policies, procedures and agreements.

If your organization requires assistance complying with this new legislation your best course of action is to confer with a firm that specializes in employment law. An employment lawyer can perform an audit of your organization to identify potential flaws and advise you on how to effectively respond when employees start to question their pay rates.

This article provides general information and should not be relied on as legal advice or legal opinion.

Special thanks to Articling Student, Arjun Dhir for his assistance with the research and writing of this article.

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