Fair pay initiatives continue to sweep the globe. Canada is the latest to consider legislation.
On October 29, 2018, the Government of Canada announced the introduction of an “Act to Establish a Proactive Pay Equity Regime within the Federal Public and Private Sectors (Pay Equity Act).” The Act would address a number of legislative findings on gender pay equity in Canada, including the following:
- In 2017, women working full-time for hourly wages made 88.5 cents for every dollar earned by men, but just 69 cents for every dollar when looking at overall annual earnings;
- Women are overrepresented in part-time work;
- Labor market segmentation has left women in predominantly lower-paying jobs; and
- Women are significantly underrepresented in senior positions.
The Act is unique in its approach to pay analyses. Under the Act, employers would be required to:
(1) Identify job classes predominated by men and women;
(2) Evaluate the “value of work” performed by male- and female-predominant job classes;
(3) Compare the compensation associated with male- and female-predominated job classes that are “of similar value”;
(4) Identify female-predominant job classes that require an increase in pay as compared to male-predominant job classes performing work of similar value; and
(5) Identify when the pay increases are due.
The Act would apply to federally regulated public and private employers with at least 10 employees. It also would require pay analyses to be included in a “pay equity plan” to be prepared within three years of the Act’s effective date.
The Pay Equity Act also requires employers to:
- Update pay equity plans every five years;
- Post employee notices regarding their Pay Equity Act obligations and their progress toward “key milestones in fulfilling these obligations”;
- Provide employees an opportunity to comment on the proposed the pay equity plan and updates, and consider those comments before finalizing the plan; and
- File “annual statements” with the Pay Equity Commissioner regarding their pay equity plans.
If the Act passes, the Pay Equity Commissioner is expected to issue regulations providing details on identify job classes performing work of “similar value,” as well as the types of analyses that would suffice to identify pay disparities requiring pay adjustments.
Common provisions in pay equity legislation include:
(1) Employers must proactively and periodically analyze pay to determine if employees are paid fairly, regardless of race and gender;
(2) To be fair, pay among employees performing similar, substantially similar, or equal work (depending on the specific law) must be based on relevant, race- and gender-neutral pay factors; and
(3) Race and gender pay disparities that cannot be justified based on neutral pay factors must be remedied.