We’ve all heard the stories from our parents’ and grandparents’ generation. Women most didn’t work outside the home, and if they did, they were usually in lower-wage jobs or making less than their male counterparts for the same work. That’s just the way things were, but things are better now…right? Not exactly. Yes, things have gotten significantly better, but the pay gap between men and women in the workplace still exists, and it’s still significant. In 1998, the pay gap was 19%, which meant that women earned 81 cents for every dollar earned by a man on an hourly basis. By 2022, the gap had narrowed and is currently at 87 cents. Pay equity is more than just the numbers. Reports show that the situation is significantly worse for new Canadians, women with disabilities, Indigenous women, and trans women. It seems that while things may be improving, the problem is a long way from being solved. So, what is pay equity, and what do employers need to know?

What is pay equity?

At its heart, pay equity is about individuals receiving equal pay for doing work of equal value regardless of their gender. While pay inequity can stem from various factors, such as race, place of origin, sexual orientation, disabilities, or any other characteristics that may set them apart as individuals. Ontario’s Pay Equity Act specifically addresses gender-based pay disparities. The notion that those elements should not factor into salary should not be novel, but still is in some environments. The reality is that most of the inequities that occur are not directly, openly discriminatory. Most employers would never say to an employee that they’re paying them less because of their gender, race, etc. Instead, there are other determinants such as education, experience, etc. However, the end result is ultimately the same and tends to start as early as when young women first enter the workforce. There are other factors that contribute to the pay gap. Childcare is a major one. In many areas, the lack of affordable childcare leads women to take on part-time work or accept underemployment in order to juggle work and childcare responsibilities. According to the Canadian Women’s Foundation, women are often concentrated in lower-paying jobs and industries, which compounds the issue. For all that we know about the gender pay gap, much of it is still inexplicable. Whatever the reasons, the problem may be getting better, but it still persists.

Who monitors pay equity?

In Ontario, pay equity is regulated by the Pay Equity Act (the “Act”) and overseen by the Pay Equity Office. The Act is a complicated piece of legislation which subdivides work in Ontario into ‘male’ and ‘female’ job classes based on a variety of specific factors. In Ontario, the Act allows the Pay Equity Office to monitor and enforce pay equity in the public sector and for private organizations with 10 or more employees. The Pay Equity Office’s responsibilities are largely two-fold. The first is public education about pay equity, which is complicated and may be a new concept for many employers. The other half of their responsibility is the Pay Equity Hearings Tribunal, which has the power to hear complaints related to pay equity and make rulings on employer compliance.

So, what are the employer’s responsibilities?

Employers with 10 or more employees, or public sector employers, are responsible for maintaining and upholding pay equity within their workplace. This means that employers are responsible for evaluating jobs based on their job classes in the workplace, grouping jobs based on similar duties, qualifications, recruitment, and compensation. Once job classes are established, they are assessed for gender predominance based on who has historically held those roles. Generally, a job class is considered female-dominated if 60% or more of the incumbents are women, and male-dominated if 70% or more are men. Roles that don’t meet either metric are treated as gender-neutral. After determining gender predominance, employers must evaluate the value of each job class, often using hourly pay as a common metric, to compare compensation between male and female-dominated roles. It is also important to note that pay equity is not equal pay for equal work. Equal pay for equal work is protected under the Ontario Employment Standards Act, but it can apply to men or women if they feel that they are being paid less than their counterparts. Pay equity specifically applies to the value of work traditionally done by women, especially if those jobs are undervalued as compared to work traditionally done by men in the same workplace.

What happens if an employer receives a complaint?

One of the main reasons that employers are unaware of pay equity requirements is that the pay equity system is primarily complaints-based, so they may not hear of a problem until they learn that an employee has filed a complaint. If an employee does make a complaint, it will go to a Review Officer, who will then notify you that they have begun an investigation. While an investigation is going on, employers need to post a written notice that the investigation is taking place, and they will need to provide pay equity data to the Review Officer. In the meantime, an Officer’s role is to determine whether there has been a breach of the Act, and if so, what the penalties may be.  While Officers can enforce the Act, they will encourage employers and employees to settle the dispute privately and then notify the tribunal in writing if a resolution has been reached.

Why should you hire a professional?

If pay equity sounds complicated, that’s because it is. This can be a highly involved process, and not easy to navigate for those without formal training in pay equity and human resources. However, just because it’s complicated, that doesn’t mean that employers are absolved from needing to comply. Employers should have a plan in place for how they’re going to come into and stay in compliance with pay equity. While it can be complex at first, showing that you’ve taken the right steps can save significant money if your workplace comes under investigation. Otherwise, the Pay Equity Tribunal can order employers to comply retroactively, which can be an expensive proposition. If you need to get your pay equity practices up to speed, hire a professional. We routinely work with our clients to help facilitate best practices, and while we are not pay equity experts ourselves, we do have some of the top specialists in our network who can come in to assist if your situation is complicated. Leave it to the pros. Contact us today to learn more about our services.