ARTICLE
11 September 2020

Is Your Business Growing? Make Sure You're Compliant With Pay Equity Obligations

AB
Aird & Berlis LLP

Contributor

Aird & Berlis is a leading Canadian law firm with offices in Toronto and Vancouver, serving clients across Canada and around the world. We provide strategic legal advice on business, regulatory, constitutional, administrative law and public policy matters. Our lawyers and intellectual property professionals represent domestic and international clients, including multinational corporations, startups, individuals, governments and Indigenous nations. Aird & Berlis advises clients in all principal areas of law, such as capital markets, corporate, financial services, real estate, Aboriginal law, projects & infrastructure, restructuring & insolvency, intellectual property, litigation, municipal, land use planning & development, tax, technology and workplace law. Aird & Berlis is recognized as one of Canada’s leading law firms by national and international guides to the legal profession, including Chambers & Partners, Best Lawyers, The Legal 500, Lexology Index and Lexpert.
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").
Canada Corporate/Commercial Law

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.

If your business has 10 or more employees, but has not yet assessed or implemented pay equity, you should act quickly to ensure that you are complying with the PEA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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