Premier Kathleen Wynne announced this morning that the Ontario government would introduce new legislation aimed at increasing pay transparency as part of a broader strategy to advance women’s economic empowerment entitled “Then Now Next: Ontario’s Strategy for Women’s Economic Empowerment”.
Unlike the recent Bill 148 amendments to the Employment Standards Act, the Ontario government now proposes to introduce standalone legislation aimed at increasing pay transparency.
Although the details are not yet clear, the legislation will require certain employers to track and publish information about compensation in their organizations.
Notably, the government has announced that the legislation will:
- Require all publicly advertised job postings to include a salary rate or range
- Bar employers from asking a job candidate about their past compensation
- Prohibit reprisals against employees who discuss or disclose compensation
- Establish a framework to require larger employers to track and report compensation gaps based on gender and other diversity characteristics, to be determined through consultation. Once fully implemented, these measures would require employers to publicly post that data within their own workplaces, in addition to reporting them to the province.
The disclosure measures will being with the Ontario Public Service, and will extend to larger employers following consultation. Currently, the government proposes to extend the disclosure measures to employers with more than 500 employees, and eventually to those with over 250 employees. In addition to gender, the government plans to extend its reporting requirements to other prescribed criteria, presumably other grounds enumerated in the Human Rights Code such as race, disability etc., following further consultation.
There are several concerning issues which stand out from this initial announcement. There are many legitimate reasons that organizations do not publicly advertise compensation information in job postings, especially for higher-level and executive roles. Organizations may wish to invite applications from candidates with diverse skills and experience. In that situation, a salary range may be so broad as to be meaningless. Further, many organizations have complicated compensation structures involving non-salary components such as equity, bonuses, and commissions. If the proposed legislation incorporates the Employment Standards Act definition of “wages”, which includes all of these things, employers may be forced to make these compensation structures public. This may jeopardize the competitive advantage of Ontario businesses.
Aside from these obvious employer concerns, the draft legislation would also impact employee privacy. It would become a matter of public record what an employee who occupies a position likely makes. Unlike the so-called “sunshine list” of publicly funded salaries over $100,000, the draft legislation cannot similarly be justifiable on the basis of efforts to enhance government transparency, accountability and to avoid waste. In some organizations, this requirement may be tantamount to forcing employers to publicly post an individual’s wage information if steps are not taken to anonymize this data – such as where there is only one person who works in a small department within a larger organization.
Further, as noted, the government proposes to force larger employers to publicly post data in their workplaces regarding pay disparities in their organizations, in addition to submitting that data to the province. It is not clear how data will be collected in a useful format, or how it will account for differences in roles and responsibilities in an organization.
Stringer LLP will be following the development of this legislation as it moves forward and will post further information as it becomes available. We encourage concerned employers to participate in the eventual consultation process.