While Ontario has had equal pay for equal work legislation for years, it changed considerably when new rules recently took effect as part of the Fair Workplaces, Better Jobs Act, 2017.
As of April 1, it is now mandatory for employers to pay casual, part-time, temporary and seasonal employees, who are doing substantially the same work as full-time or permanent employees, the same rate of pay as full-time or permanent employees.
Employees in these categories can now ask their employer to review their rate of pay if they believe they’re not receiving the same rate of pay as full-time or permanent employees performing substantially the same work.
And employers will have to respond by either adjusting the employee’s pay or giving the employee a written explanation.
Why the change?
The equal pay for equal work provisions have been in place for decades, but were largely overtaken when pay equity came into effect in the 1980s, said Paul Broad, a lawyer at Hicks Morley in Toronto.
“It wasn’t that these provisions went away, but they didn’t get used the same way as much because people were focused on pay equity.”
There was also a concern from a policy perspective, rightly or wrongly, said Carl Cunningham, a partner at Bennett Jones in Toronto, that given the evolving workforce, with more freelance and contract work, the Employment Standards Act (ESA) needed to be updated to make sure those precarious or vulnerable workers received entitlements that at least met the minimum for the act.
“It’s not a wholly surprising move,” said Claire Vachon, a partner at Fasken in Ottawa, and is really a response to what is perceived as a growing gap or imbalance between the rich and poor and precarious and secure employment.
Similar prohibition added
Ontario’s ESA already provided that an employer could not pay an employee of one sex at a rate of pay less than that paid to an employee of the other sex when: both employees performed substantially the same kind of work in the same establishment; their performance required substantially the same skill, effort and responsibility; and their work was performed under similar working conditions, she said.
The new provisions add a similar prohibition based on employment status.
This is defined as a difference in the number of hours regularly worked by the employees, or a difference in the term of their employment, including a difference in permanent, temporary, seasonal or casual status, said Vachon.
“Depending on the circumstances, a casual employee may be doing the exact same thing and having the exact same responsibility as a full-time employee. But, in many cases, they don’t, they won’t do the full responsibility of the job.”
For example, an occasional teacher may not be paid the same rate as a permanent teacher because he has different skills or responsibilities, she said.
As part of the new legislation, employers are exempt from the new rules if the wage difference is based on: a seniority or merit system; systems that measure earnings by quantity or quality of production; or “other factors.”
What will be interesting is the catch-all category of “other factors,” said Broad, because looking at old cases, a lot of the other factors were actually differences in employment status, such as part-time employees.
Today, “other factors” might refer to temporary assignments, people going through training or probationary-type situations, he said.
Responding to the new rules
The first thing employers should do is look to see where there are differences in the rates of pay, and then check if the provisions even apply, said Broad.
For example, if they pay a part-timer $5 per hour less than full-timers, then — and this is where the real work begins, he said — what’s the basis for the difference?
If there is a difference, then they have to assess whether or not that test is met. If it is, they’re supposed to adjust the pay rate, he said.
“If it isn’t, then the way the act is now structured is the employer would be responding and saying, ‘We’re not and, basically, here’s why.’ And that could be either ‘It’s not the same work,’ or sufficiently the same, or ‘It is the same but here’s why you get paid less than they get paid, and we think that satisfies the exceptions.’”
Employers should review their current workforce in Ontario to determine if any employees at any of their establishments are performing substantially the same kind of work requiring substantially the same skill, effort and responsibility under similar working conditions and are being paid different rates, said Cunningham.
If yes, they should look for any exceptions — such as a seniority system or merit system — and if there are none, consider increasing pay rates before a wage review request to ensure employees are being paid equally, regardless of their employment status.
Employers should also be ready for part-time or casual employees asking to have their rate of pay reviewed, he said. In anticipation of that, employers should carefully document performance management and employee evaluations.
“A lot of this is just another reminder for employers of the importance of following best practices when it comes to performance management,” said Cunningham.
“If an individual who’s being paid less has a two out of four instead of a three out of four (in their evaluation), well… you’re going to use that as your answer for why there’s a difference it pay. It doesn’t have to do with full-time versus part-time, it has to do with ‘There’s your evidence for the differentiation based on a quality of work issue.’”
An employer may have a job performance system to assess how people meet their goals, and if a part-time employee doesn’t do as well as a full-time employee, that could justify a different salary, said Vachon.
“What will be important for employers is to document that, and have a formal system where they can establish that it’s being done in a rational fashion.”
It will be important to set expectations for employees, and when delivering the job evaluation results, emphasize why a person may not get a full merit increase, she said, “so you can then prove why the employee is actually paid less.”
Job posting concerns
Employers should also be careful in drafting job postings and job descriptions, as these can be used later on to justify differences in employee pay rates, said Cunningham.
“If all (the employer has) done is copy and paste a full-time general labourer position and changed ‘full-time’ to ‘part-time,’ you’re creating a document that’s consistent with the employee being able to prove the first part of the test.”
Often, the job posting or description is what’s used to evaluate a job, said Vachon, “so you have to capture those differences right off the bat because if you don’t capture them, you’ll evaluate the job, and they’ll look the same.”
However, in looking at old cases involving equal pay for equal work, the test isn’t really the job posting, said Broad.
“Clearly that won’t help you if the job postings are identical — that’s going to be hard to turn around and say, ‘No.’ But cases do say it really is (about) looking at what people are doing, so what are the core duties of the job, and that’s what tests focus on,” he said.
“You always want your job posting to be accurate but that’s not going to be a defence if a person is actually doing potentially the same work and passes all those tests.”
Set up standardized procedure
Hopefully employers are already identifying those areas where there are differences in the rates of pay, to at least see if these provisions may be engaged, said Broad.
“Internally, they should have a process set up so when requests come in, they get funneled appropriately to HR who can then look at it and then deal with it the way the act requires. That’s key, being ready for it — because there will be requests.”
In anticipation of employee wage review requests, employers should also determine standardized procedures for how they’ll be handled and how decisions will be communicated, said Cunningham.
There should be a person in human resources designated to deal with this, along with a standard form people have to fill out to very clearly figure out what it is they’re asking and what the comparison is, he said.
“Maybe they don’t even have a right, so you want to have a standardized process… for how the request comes in so you can then process it in a manner that (figures out)… does it even engage the provisions of the act?” said Cunningham.
“(It’s about) going through in a logical manner (so) before you respond to the employee, you’ve investigated the potential relevant factors.”
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