Employers with 10 or more employees in Ontario are required to preserve pay equity in accordance with the Ontario Pay Equity Act, RSO 1990, c P7 (“PEA”). When many American or international companies first expand into Canada, their operations are small enough that the PEA often does not apply. However, as they grow, companies should be aware of their pay equity obligations.
Pay equity is not about equal pay for equal work in the traditional sense of a woman and a man being paid the same wage for the same job. Instead, it focuses on whether traditionally female jobs are being paid the same as traditionally male jobs of equal value. Implementing pay equity is a four-step process. First, employers must identify the job classes within the establishment, including the gender and job rate of each class. Second, they must ascribe the value of each job class based on skill, effort, responsibility and working conditions. Third, they must compare all female job classes by using the prescribed methodology of compensation. Finally, if female job classes are underpaid, their wages must be adjusted to eliminate that gap.
Once pay equity is achieved, it is important that employers work actively to maintain it, especially as jobs are added or eliminated. There are penalties for failure to comply, including back payments to make up for past inequity and fines if there is wilful disregard of the rules. When there is a failure to abide with pay equity obligations, the rectification process can be onerous. Pay equity compliance is fairly straightforward to achieve at the onset, but can be difficult to remedy after non-compliance has already occurred.