Quebec firms have 10 months to comply with law
Ten years after Quebec’s pay equity law came into effect in 1996, a government report found one-half of employers had not completed pay equity programs. Under new legislation, delinquent employers have until the end of 2010 to comply or face financial penalties.
Part of the reason for the lack of compliance was confusion around the difference between pay equity and equal pay, said Florent Francoeur, president and CEO of the Ordre des conseillers en ressources humaines agréés (CRHA), Quebec’s HR association.
But there also wasn’t any pressure from the government for employers to comply, he said.
“Companies in Quebec had to comply before Nov. 21, 2001, and, to be honest, after 2001 nothing happened,” said Francoeur. “There was no fine or pressure to correct the situation.”
To address the lack of compliance, the government enacted Bill 25, an Act to amend the Pay Equity Act, in May 2009.
“They gave a last chance to employers to complete their pay equity programs,” said Suzanne Thibaudeau, a lawyer at Heenan Blaikie in Montreal. “If not, not only will these employers have to make salary adjustments retroactive to Nov. 21, 2001, plus interest, but after a certain delay additional penalties will be added. It can end up being very costly,”
Under the Pay Equity Act, Quebec employers with 10 to 49 employees must ensure employees in predominantly female job classes receive the same compensation for work of equal value as employees in predominantly male job classes. The amendment gives these employers until Dec. 31, 2010, to make any necessary adjustments, paid with interest from Nov. 21, 2001. However, these employers don’t have to create a pay equity plan.
Employers with more than 50 employees need to create a pay equity plan (see sidebar) to ensure workers are receiving equal pay for work of equal value, regardless of gender. Those with more than 100 employees need to set up a pay equity committee to allow employees to participate in the creation of the pay equity plan.
Under the amendment, organizations with more than 50 employees that haven’t yet created a pay equity plan have until Dec. 31, 2010, to do so. The adjustments must be paid with interest from Nov. 21, 2001.
Complaints against employers that don’t meet the deadline can be filed with Quebec’s pay equity commission as of Jan. 1, 2011. Employers will then have to pay the adjustments, with interest, as well as an additional penalty, said Thibaudeau.
Those that already have a plan in place must complete an audit of the plan by the end of the year. Going forward, these audits must be conducted every five years where previously the act only required the pay equity plan be “maintained.”
“It was seen as a continuous obligation but a lot of employers did not maintain pay equity and others were only doing sporadic checks,” said Thibaudeau.
If an employer grows to have 10 or more employees in the course of a given year, it will be subject to the law the following year. Previously, only those employers with 10 or more employees in 1997 were covered by the law.
“To identify job categories, to prepare an evaluation plan, to make the analysis and then to determine whether or not adjustments have to be made is not an easy task,” said Louise Laplante, a senior partner at Ogilvy Renault in Montreal.
While it can be time-consuming for large organizations, these usually have large HR departments to take it on, she said. It can be more daunting for small- and medium-sized organizations that don’t have the same internal resources.
External consultants can help smaller organizations navigate the process or, at the very least, provide the basics if an organization doesn’t have a lot of money to spend, said Laplante.
“My best advice is to start,” she said. “The more you delay, the worse the situation is going to be.”
If there is a complaint against an employer but it can show it is working on a pay equity program, the commission is more likely to be lenient, said Laplante.
Since adjustment payments are retroactive to 2001 and subject to interest and possible fines, the sooner employers take action, the lower the costs will be, said Francoeur. There are other benefits to pay equity as well, he said.
“Pay equity helps maintain a good work environment. In addition, establishing a pay equity plan enables employers to better understand what their employees do and is a valuable tool in developing better compensation policies. And, in the end, all that improves an organization’s performance,” he said. “Pay equity is probably the main issue we have to resolve in HR right now.”
CRHA has developed a number of practical tools to help employers create and maintain pay equity plans. The tools can be accessed at www.portailrh.org/ equite.
Pay equity plan
Quebec law includes 4 steps to preparing pay equity plan
• Identify which job classes are predominantly female and male.
• Describe the method and tools selected to determine the value of the job classes and develop a value-determination procedure.
• Determine the value of the job classes, compare the classes, assign a value to any differences in compensation and determine any required adjustments.
• Determine the terms and conditions of payment of any compensation adjustments.
Source: Quebec Pay Equity Act
