New pay equity rules arrive for federally regulated fleets

For every dollar a man earns in Canada, a woman earns 89 cents. It goes without saying that women and men should receive equal pay for equal work. An employer’s failure to ensure the equal treatment of its employees may result in a discrimination complaint under human rights laws – but it is up to the individual employee to pursue the complaint to enforce this right.

Effective Aug. 31, all federally regulated employers in Canada are required to comply with the Pay Equity Act. Interprovincial and cross-border trucking companies are federally regulated when it comes to employment laws, and if they employ 10 or more employees they must take steps to comply.

pay equity illustration
(Illustration: istock)

The Act provides for a proactive pay equity regime, and a federally regulated employer is required to establish a pay equity plan.  Pay equity compares the compensation paid to workers in different jobs — and compares compensation in predominantly female classes to predominately male classes — to ensure women are not paid less than men for doing work of equal value, even though the positions they hold are not the same. In this regard, pay equity goes beyond “equal pay for equal work”.

By Nov. 1, 2021, employers subject to the Act must post a notice in the workplace informing their employees that they will be establishing a pay equity plan. The plan itself must be established within three years — by Aug. 31, 2024 — and the notice must remain posted until the plan is finalized. If the employer has 100 or more employees, or has unionized employees, they also need to form a pay equity committee to engage management in developing the plan. At least 50% of the committee members must be women.

In developing the plan, an employer must:

  1. identify the different job classes in their workplace;
  2. determine whether each job class is predominantly male, predominantly female, or gender-neutral;
  3. determine the value of work for each predominantly male and predominantly female job class;
  4. calculate the compensation (which is defined to include salary, vacation pay, commission, bonus) for each such job class;
  5. compare the compensation between the predominantly male and predominantly female job class doing work of equal or comparable value. The Act and its regulations provide the details for how an employer is to achieve each of these steps.

Once this is completed, the employer must then increase the compensation in any predominantly female job class that is receiving less pay than the male counterpart. Depending on the employer’s size, the employer will have between three and five years to eliminate these pay gaps.

The employer must update their plan every five years to ensure that they are maintaining pay equity, and that any new gaps which might develop are closed.

The Pay Equity Commissioner, appointed under the Canadian Human Rights Act, is responsible for administering and enforcing the Act.  Once an employer has developed a final plan, it must submit an annual statement to the Pay Equity Commissioner regarding the status of its plan along with other prescribed information.

The Pay Equity Commissioner has the power to order an employer to conduct an internal audit or prepare a report on the results of its pay equity plan. They can also issue monetary penalties for non-compliance, ranging from $30,000 to $50,000 depending on the size of the employer.  The Act also sets out a dispute resolution regime that governs any dispute between an employer and employee when it comes to developing or implementing the plan.

Federally regulated employers may think that they have plenty of time to prepare the required pay equity plan, but there is significant work involved in developing these plans. The posting of the notice is required this fall, and if a committee is required, that should be established sooner rather than later.

In addition to ensuring compliance with legal obligations, it is also the right thing to do, to ensure gender pay equity in the workplace.

Carole McAfee Wallace is a partner at Fernandes Hearn LLP, and can be reached at 416-203-9551. This column is intended for information purposes only and does not constitute legal advice.

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