'Now's a good time for all employers to review their policies, practices, job postings and employment contracts'
Canada’s westernmost province is now mandating pay transparency for certain employers.
The legislation is initially in place for B.C.’s six largest crown corporations and government employees, but by Nov. 1, all employers with 1,000 employees or more will have to comply, followed by those organizations with 300 employees in 2024 and 50 employees or more in 2025.
So, what do employers have to know about this new law?
“First and foremost, they need to review their current hiring practices and make sure that it’s in line with requirements under the act,” says Roza Milani, associate at Mathews Dinsdale in Vancouver.
“For example, specify the expected salary or salary range for publicly advertised job opportunities; [and] make sure that they don’t ask job applicants about what they’ve been paid in positions with other employers,”
As well, the Pay Transparency Act provides protection for employees.
“Employers can’t dismiss or suspend or demote or discipline, harass or otherwise disadvantage or threaten to disadvantage an employee in a variety of circumstances, including: when they asked their employer about pay; if they disclose information about an employee or job applicant; if they asked about a pay transparency report; if they ask their employer to comply with its obligations under the act; or if they report non-compliance with the act to the director of pay transparency,” says Abigail Cheung, associate at Harris & Company in Vancouver.
Annual statements key part of legislation
In addition to requiring employers to create a transparent pay structure, B.C.’s new legislation will need them to prove compliance each year.
“Employers will need to collect information and prepare and post pay transparency reports containing information about their employee salaries and gender in public places,” says Cheung.
At this time however, the guidance from the government is “fairly limited” but “real wage data, which is dollar amounts, will not be reported,” she says.
The ministry has promised to develop an online tool for employers to enter details about organizational pay, says Milani.
“So far, the information we have that the provincial government has noted is that employers will be required to report the pay gap as a difference between hourly wage overtime and bonuses received by men, women and non-binary people.”
As well, organizations must break this down “in quartiles. So top 25% of earners; high 25%, mid 25% and lowest,” she says.
Before it unveils the online tool, “the ministry plans to engage in consultation with employer groups and payroll associations in developing the tool so there should be an opportunity to provide some feedback on what works or what doesn’t,” says Cheung.
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How to get started on pay transparency
Before implementing a system, prudent employers should first develop a strategy, says Milani.
“The planning stage is likely the most important. Employers need to consider a salary or comparable position in the marketplace, as well as an organization’s own internal structure framework for salaries and develop an internal philosophy or rationale for setting pay rates. For example, do we pay top dollar? Do we offer balance? Do we offer benefits? And develop and refine accurate job descriptions to tie the job to the pay rates.”
When developing this in the early stages, HR should remember to involve upper management so there is executive buy-in, says Cheung.
“You’ll also need a data analyzing team that can look at existing compensation measures, and provide the relevant analysis to identify those gaps; and then you also want to make sure that someone who can communicate — either the communications team or someone within HR — to make sure that companywide comments about pay transparency or pay equity, those changes land well.”
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When finally rolling out the new transparency regime, the right messaging can go a long way to ensure it is a success, says Cheung.
“It’s not a matter of simply publishing all your employees’ compensation — that could lead to some backlash depending on whether or not there are gaps between different groups of employees. So it’s managing that conversation quickly and communicating effectively.”
“Now’s a good time for all employers to review their policies, practices, job postings and employment contracts to make sure that they comply with the new Pay Transparency Act,” she says.
Benefits to being transparent about pay
For those organizations who have already implemented pay transparency, the advantages are clear, according to Milani.
“There’s a good number of research studies on this topic actually leading with transparency helps attract and retain talent. It sets the expectations from the beginning and ensures that both employee and employers expectations are fulfilled. It could lead to job satisfaction, which in turn can boost individual task performance: ‘If I’m happy in my job, I do better in my job,’” says Milani.
“It also improves application diversity and could reduce inequalities in pay and deter employers from making these discriminatory pay decisions.”
