Regulations

Canada Proposes New Equal Pay Act

Canada Proposes New Equal Pay Act

Canada is poised to join the trend of countries passing legislation to close the gender wage gap.

In October, the Canada House of Commons held a “First Reading” or introduction of legislation entitled “ the Pay Equity Act.” The Pay Equity Act would require certain federally regulated public and private employers with 10 or more employees to proactively address gender-based waged discrimination. One of the most significant requirements of the Act is to compel covered employers to develop “pay equity plans” within three years of the Act going into effect.

Some of the major components of the required equal pay plans are as follows:

1. Identify the number of employees and delineate the workforce into job classes.
2. For each job class, identify the gender makeup (i.e. are there more males or females or are the jobs evenly distributed?)
3. Evaluate the value of work performed by each job class.
4. Identify pay levels for each job class.
5. Compare the identified pay levels for predominantly female and predominantly male job classes performing work of similar value.
6. Identify whether compensation remediation should occur and when the pay increases will be made.

In addition to creating a plan, organizations may be required to create an equal pay committee, depending on the size and makeup of their organization.

A full list of the plan requirements can be found here. A reading of these requirements indicates that there are still many questions to be answered concerning this potentially major shift in Canadian law. For example, is there a preferred or accepted method for determining the value of work performed by certain job classes? What about for employers who have operations across several industries? What is clear, however, is that the Canadian government is attempting to tackle pay equity in much the same way as companies in the U.S. and abroad are: by first conducting a pay equity analysis or audit to determine the scope of the gender wage gap.

Once an employer has completed their plan, “the employer must post the draft as well as a notice informing employees to whom it relates of their right to provide the employer or committee, as the case may be, with comments on the draft and the time within which and the manner in which they may exercise that right.”

Canada recently released a Pay Equity Stakeholder Consultation Report summarizing feedback from over 40 stakeholders, including key employer, employee and advocacy stakeholders. Those who participated in the report broadly supported the principle of equal pay for work of equal value. In a press release, the Canadian federal government said it was “drawing upon the valuable feedback gathered through these consultations” as it proceeds with its proposed equal pay legislation. “When Canadian women can count on equal pay for work of equal value, our economy grows stronger, families prosper and communities thrive, said Patty Hajdu, the Canadian government’s Minister of Employment, Workforce Development and Labour. “Combined with the action we’re taking on other fronts – such as enhanced parental leave flexibility, pay transparency, and better access to flexible work arrangements – we expect to really move the dial and make progress towards greater gender equality in Canada.”

If the new act is passed, Canada would join countries like France, Iceland, and the U.K. in passing new equal pay legislation. Will the U.S. be next to join these ranks? An increase in the number of elected women officials in government could help move the needle on equal pay in the .U.S. Significant equal pay laws were passed in Iceland after a 2016 election that saw women win 30 seats in Iceland’s parliament, bringing the split between men and women legislators to about 50%. By comparison, women make up about 20% of the U.S. Congress. That is changing after the 2018 U.S. midterm elections in which it was predicted that a record number of women will serve in the next U.S. Congress. At least 125 women will serve overall, increasing the percentage of women in Congress from 20% to 23% at a minimum. With Democrats as the new majority in the U.S. House of Representatives, could we see a renewed effort in Congress to pass the Paycheck Fairness Act, which would amend and expand on the Fair Labor Standards Act of 1938 (Fair Labor Standards Act)? Already, several states have taken action to more aggressively advocate for equal pay and remove barriers to achieving that goal.

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