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Over $3 million in adjustments following wage gap monitoring: continued need for monitoring is clear

wage gap monitoring

Ontario’s Pay Equity Commission recently released results of the Wage Gap Monitoring Program 2018.

What is the Pay Equity Act?

Did you know? In Ontario, female workers receive on average 28 percent less in wages than male workers based on full-time, full-year wages; several factors contribute to this phenomenon, one of which includes gender discrimination in the workplace.

In Ontario, the Pay Equity Act aims to identify and correct gender discrimination that may be present in compensation practices by adjusting the wages of employees in female job classes so that they are at least equal to the wages of employees in male job classes when they are found to be comparable in value based on skill, effort, responsibility and working conditions. The result is the creation of more objective pay practices that are free of gender bias. The Pay Equity Office administers and enforces the Pay Equity Act.

To that end, in Ontario, all public sector employees and private sector employees with 10 or more employees must have compensation practices that provide for pay equity. This applies to all workers, whether they are full-time, part-time, or seasonal. That said, the Pay Equity Act does not apply to employees who work in Ontario for the federal government or in an industry regulated by the federal government such as banks, airlines, post offices, and television and radio stations.

Achieving the goal of pay equity is accomplished by first grouping jobs into job classes. Job classes consist of jobs that have similar recruitment practices, similar duties and responsibilities, and have the same compensation schedule. Subsequently, information is collected about female and male job classes. Each job class is valued using the four factors:

  • Skill
  • Effort
  • Responsibility, and
  • Working conditions

Once all job classes are valued, female job classes are compared to male job classes. Where the values are comparable, the job rate of the female job class must be at least equal to the job rate of the comparable male job class – if the job rate of the female job class is lower, the employer is required to adjust the job rate of the female job class.

How are unions involved in this process? In unionized workplaces, employers and unions negotiate: the different female and male job classes; the method used to compare the job classes; the rate and timetable for wage adjustments; and the pay equity plan itself.

What is the difference between “pay equity” and “equal pay for equal work”?

Pay equity involves equal pay for equal value, and compares jobs usually done by female employees with different jobs usually performed by male employees. This means that an adjustment could involve all employees (male employees and female employees) in an undervalued female job class to receive pay equity wage adjustments. This principle falls under pay equity legislation. Essentially, the pay equity gap is closed when all female job classes are paid at least the same as male job classes of comparable value.

On the other hand, equal pay for equal work means that if a male employee and a female employee are doing the same work, they must receive the same pay. This principle typically falls under the scope of employment standards legislation. This is what is meant by the gender wage gap – these gaps are closed when men and women are paid equitably regardless of their gender.

The Wage Gap Monitoring Program 2018

The Wage Gap Monitoring Program was created in order to allow the Pay Equity Office to assess the state of pay equity knowledge and compliance, and proactively promote awareness of the Pay Equity Act.

The Wage Gap Monitoring Program completed in 2018 built upon the Wage Gap Pilot Program of 2011. In fact, employers who did not respond during the 2011 Pilot Program, and also employers who were found to have an apparent wage gap were referred to The Wage Gap Monitoring Program completed in 2018. To be found to have an apparent wage gap in 2011, an employer would have had to meet at least two of five criteria involving: clustering of jobs; natural breaks in clusters of jobs; seniority vs job rate; distribution of jobs; and job to job comparisons.

In the Wage Gap Monitoring Program completed in 2018, there were 292 files opened in 2018, whereby employers were required to provide evidence that their current compensation practices provided for pay equity. Review Officers then analyzed payroll records, salary grids, job descriptions, and job evaluation systems in order to ensure that employers were making the required pay equity comparisons.

It was encouraging to note that several files were closed following voluntary compliance without the need to issue an order. That is, many employers undertook pay equity comparisons and adjustments with the assistance of the Review Officer and ultimately had compensation practices that provided for pay equity. As a result, in 232 of the files (80 percent) no contravention was found.

However, some files did have contraventions of the Pay Equity Act because the employers were not willing to voluntarily comply, so there were 13 Orders (four percent) issued.

There were 37 files (13 percent) that had to be abandoned or administratively closed because the employers were found to no longer be in business or had moved.

Lastly, there are 10 files (3 percent) that are still open.

However, what is most striking is that 77 employers owed adjustments – 324 female job classes received adjustments, and this benefited at least 499 employees. Practically speaking, the Wage Gap Monitoring Program of 2018 resulted in $3,349,642.41 in adjustments. Yet, it is important to note that most employers owed adjustments that were under $10,000; only two employers owed over $500,000. In fact, about $2.5 million of total adjustments were owed by only eight employers.

Why 292 files for this program? This number was not considered representative of Ontario, so it is important to keep this in mind when drawing conclusions about the findings. Also, the majority of the files (98 percent) were nonunionized workplaces. Most of the files (99 percent) involved private sector employers, and most employers (61 percent) were in the manufacturing industry. With respect to size of employers, there was a wide range, with 10–49 (10 percent), 55–99 (12 percent), 100–249 (27 percent), 250–499 (22 percent), and 500 or more (32 percent) employees.

What does this mean for employers?

The Pay Equity Office has indicated that it will continue to use the information gleaned from this most recent Wage Gap Monitoring Program to refine its future monitoring efforts. The Pay Equity Office also aims to conduct further study for better understanding connections between wage gaps and pay equity.

Given the high number of required adjustments (over $3 million of adjustments) that resulted from this Wage Gap Monitoring Program, the Pay Equity Office has concluded that there is a continued need for these monitoring programs; what is more, there is a need for ongoing employer outreach and engagement to ensure compliance with the Pay Equity Act.

What is especially clear is that there needs to be increased awareness of the resources that are freely available to employers that can be used to ensure compliance. In fact, results from the program indicated that very few employers made use of the free website manual and materials on the Pay Equity Office website (links are provided below). The Pay Equity Office has also endeavored to review these resources to assess how better to assist employers in complying with the Pay Equity Act.

For helpful materials on the Pay Equity Office website, see A Guide to Interpreting Ontario’s Pay Equity Act and the Pay Equity Mini-Kit.

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Christina Catenacci

Christina Catenacci, BA, LLB, LLM, was called to the Ontario Bar in 2002 and has since been a member of the Ontario Bar Association. Christina worked as an editor with First Reference between February 2005 and August 2015, working on publications including The Human Resources Advisor (Ontario, Western and Atlantic editions), HRinfodesk discussing topics in Labour and Employment Law. Christina has decided to pursue a PhD at the University of Western Ontario beginning in the fall of 2015. Read more
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