Overview

On April 26, 2018, Bill 3: Pay Transparency Act, 2018 (the “Act”) passed its third reading in the Ontario Legislature. More importantly, this legislation creates requirements for employers to disclose information relating to compensation for both employees and prospective employees. The Act seeks to support open dialogue, while promoting gender equality and equal opportunity in the workplace through increased pay transparency, workforce composition and the disclosure of pay inequities. Further, the Act seeks to eliminate gender and other biases in hiring, promotion, employment status and other pay practices. More broadly, the Act also seeks to encourage economic growth by advancing equity in employment and in the workplace for women and other groups.

The following bulletin provides an overview of the new legislation. Please note that this information is based on the most recent version of the bill and may be subject to minor changes when the Act is published in final form.

Comes into Force

With the exception of one forthcoming amendment to the Act relating reprisal complaints made by police officers, the Act will come into force on January 1, 2019.

How will the Act affect Employers in Ontario?

Disclosing Compensation in Job Postings

Employers must include information about the expected compensation or range of compensation in any publicly advertised job posting for that position. The Act broadly defines “compensation” to include “all payments and benefits paid or provided to or for the benefit of a person who performs functions that entitle the person to be paid a fixed or ascertainable amount”. A “publicly advertised job posting” means an external job posting for a specific job that an employer advertises to the general public in any manner, but does not include recruitment campaigns, general help wanted signs or positions that are only advertised to existing employees of the employer.

No Asking about Compensation History

Employers are prohibited from seeking any compensation history information about an applicant for a position, whether personally or through an agent. However, an applicant may disclose their compensation history information voluntarily. Employers may also seek information regarding ranges of compensation or aggregate compensation provided for positions comparable to the position for which the applicant is applying. Where the applicant discloses their compensation history or the employer obtains information on compensation in comparable positions, the employer may rely on this information to determine the applicant’s compensation.

Pay Transparency Reports

Larger employers with 100 employees or more (and prescribed employers which have not yet been defined) are also required to prepare pay transparency reports which will include information about the employer, their workforce composition and differences in compensation in the employer’s workforce with respect to gender and other prescribed characteristics.

Currently, employers with 250 employees or more must submit their first pay transparency report no later than May 15, 2020 and employers with 100 to 250 employees must submit their first pay transparency report no later than May 15, 2021. Employers must submit these reports to the Ministry of Labour (the “Ministry”) and post them either online or in a conspicuous area of the workplace. The Ministry must also publish these reports.

Reprisal and Enforcement

The Act also features an anti-reprisal provision that prohibits employers, or persons acting on their behalf, from intimidating, dismissing or penalizing employees, or threatening to do any of the foregoing, for:

1. making inquiries about the employee’s compensation;
2. disclosing their compensation to another employee;
3. making inquiries about a pay transparency report;
4. providing information to the Ministry about the employer’s compliance or non-compliance with the Act; or
5. asking the employer to comply with the Act or the regulations.

Complaints by employees under this section may be resolved through arbitration (where a collective agreement exists) or by the employee filing a complaint with the Ontario Labour Relations Board (the “Board”). Where any complaint of this nature is before the Board, the onus to show compliance is on the employer or person acting on their behalf.

The Act also discusses the powers and duties of compliance officers who may be appointed for enforcement purposes. Compliance officers may conduct compliance audits without a warrant and may enter and inspect any place to investigate a possible contravention of the Act or ensure compliance. The Act affords broad powers to compliance officers including requiring production of records, removing or copying records for review and questioning any person on matters that may be relevant to the investigation. If an officer believes that a person has contravened a provision of the Act or the regulations, the officer may issue a notice of contravention to the person with a prescribed penalty. If the employer fails to apply to the Board for a review of the notice within 30 days of the date the notice was served (or an extended time if considered appropriate by the Board), the employer is deemed to have contravened the Act. The Ministry may then publish, among other things, the employer’s name and a description of the contravention. A notice of contravention can also be filed with the court and subsequently be enforced in the same manner as a judgment or order of that court.

If the employer wishes to dispute a notice of contravention, the Board must hold a hearing. In this hearing, the onus is on the Ministry to establish that the employer (or person named in the notice) contravened the Act. While the decision of the Board is supposed to be binding, the Act does not preclude judicial review.

Despite these broad provisions for enforcement, there are also some rigorous timelines involved. The Act states that no notice of contravention shall be issued more than one year after the occurrence of the last act or default upon which the contravention is based. Further, where the Board has commenced a review hearing and no decision has been made in the six months following the hearing, a party may apply to terminate the proceeding. However, the chair of the Board retains discretion and may re-institute the proceeding in the future.

To learn more about Ontario’s new legislation and how it affects your workplace, please contact a member of the Employment, Labour and Equalities Group.