Pay equity: Gender wage gap program
Last year, the Ontario Pay Equity Commission launched what it calls the Gender Wage Gap Program. The purpose of the program is to measure the extent of gender wage gaps in the public and private sector workplaces in Ontario. The measures will determine how effective the Pay Equity Act has been in establishing equitable compensation practices since its inception, and whether gender discrimination in pay practices is still prevalent in workplaces. The program is ongoing.
According to the commission,
The gender wage gap is the difference between wages earned by men and wages earned by women. The gap can be measured in various ways, but the most common method is to look at full-time, full-year wages. It is also possible to measure the gender wage gap on the basis of hourly wages. The most recent Statistics Canada data shows that the gender wage gap in Ontario is 28% for full-time, full-year workers. This means that for every $1.00 earned by a male worker, a female worker earns 71 cents. In 1987, when the Pay Equity Act was passed, the gender wage gap was 36%. The gender wage gap has been narrowing slowly over time.
Back to the program; the Pay Equity Commission sent out and is still sending out letters of inquiry in the form of a survey to employers requesting they submit current, basic wage data on positions within their organizations.
At first, the commission targeted companies with 500 or more employees and thereafter, included companies with 250 to 500 employees, but note that the program is not designed to be sector-specific. The commission is contemplating canvassing all Ontario workplaces (regardless of sector or size) by the end of the program in order to provide a comprehensive report. Thus, small to medium size businesses (those with less then 250 employees) may be receiving such a query in the near future.
The query letter is looking for details of employees in Ontario, including:
- Each job title or position in their workplace (for each employee)
- Gender (male or female)
- Pay as of a certain date
- Salary range for the position, if applicable
- Years of service
This information will be assessed on the basis of several factors, including merit adjustment, type of work performed and years of service with the employer. If the assessment suggests that there are gender wage gaps in the employer’s workplace, the organization will be referred to a review officer, who will then monitor their compliance with the Act.
In addition, the commission notes that if the employer does not respond to the request for data by a specified deadline, the employer will also be referred to a review officer.
It is important to note that the Ontario Pay Equity Act covers all employees who work in the public sector, and private sector organizations with 10 or more employees, as well as their bargaining agents, if any. Employers that do not comply with the Act are at risk. If a complaint is filed with the Pay Equity Commission, or a review officer finds the employer has not complied with the Act, the employer may be ordered to comply immediately and any adjustments required under the terms of the Act may be retroactive. The costs associated with non-compliance are not worth the risk.
What is the Pay Equity Act?
The Act requires:
- Formulating a pay equity plan for each establishment in Ontario that employs 10 employees or more, or are part of the public sector. If a union is certified at an establishment, the employer must formulate and negotiate a separate pay equity plan with the union(s) representing employees, and post the pay equity plan(s).
- Posting a pay equity plan for employees to examine and comment on. If no concerns are raised, the pay equity plan will be considered approved. Note that organizations with 100 or more employees are required to post a pay equity plan. Organizations with more than 9 but fewer than 100 employees are not required to post a plan, but may voluntarily decide to do so. They are required to adjust wages, as necessary, to achieve pay equity.
- Making pay adjustments for employees to achieve pay equity
- No employee’s compensation can be reduced to achieve pay equity
- Maintaining compensation practices that provide for pay equity
Moreover, it requires employers to use a “gender neutral comparison system” to compare male and female job classes in their organization in order to determine whether male and female job classes of equal value have the same rate of pay. If they do not, the job rate for the female job classes is increased to bring it up to that of the male job class. This method of comparison is known as the “job-to-job” comparison method.
Another method that can be used under the Act is the “proportional value” method of comparison of job classes. Briefly, this means that if the job-to-job comparison method left one or more female job classes without a male comparator, the employer is required to conduct a further proportional value assessment. Proportional value involves choosing a representative group of male job classes and determining the relationship between the value of work performed and their job rate. The female job classes are then analyzed to determine if the same pay relationship or pattern applies to them. Typically, this is done by developing a job rate line or by regression analysis. If the female job classes are lower paid than the representative group of male job classes, pay equity adjustments must be made.
You may find it useful to engage a qualified professional, on a contract basis, to establish a job evaluation program and proper pay equity practices for the organization. In the long run, this should save time while, coincidentally, giving the employer an opportunity to learn the techniques of job evaluation in order to maintain proper compensation practices for the future.
Don’t forget that maintaining pay equity is a requirements under the Act. Hence, employers should review their existing pay equity plan to ensure that it continues to reflect the realities of the organization, the employees and staffing positions and structure so that pay equity is maintained.
If you have recently received a letter or before you receive a letter, ensure you are complying with the Act and that you have taken the required measures to achieve pay equity. Take affirmative action to redress gender discrimination in your organization if identified.
First Reference Human Resources and Compliance Managing Editor