Update on B.C. pay transparency and Ontario announcement of new pay transparency rules
To assist with the interpretation of the Pay Transparency Act (the BC PTA) that came into force in May of this year, the British Columbia government released guidelines and regulations that provide further guidance on pay transparency reporting and job posting requirements. Additionally, as predicted in our earlier Osler Update, British Columbia’s implementation of the BC PTA appears to have encouraged the Ontario government to adopt its own pay transparency legislation (notably, for the second time).
Ontario pay transparency update
The Ontario government announced, in a November 6, 2023 news release, that it is preparing to table its own pay transparency legislation the week of November 14, 2023. As in British Columbia, the purpose of this legislation is to reduce the gender wage gap. This is not the first time an Ontario government has tabled pay transparency legislation; in 2018, a prior government passed pay transparency legislation, but it was never proclaimed into force. In the same news release, the Ontario government also announced it would become “the first jurisdiction in Canada to require businesses to disclose if artificial intelligence (AI) is used during their hiring process.” No details regarding the specific pay transparency requirements or obligations with respect to the disclosure of AI tools have yet to be provided.
British Columbia guidelines
As described in our earlier Osler Update, as of November 1, 2023, the BC PTA now requires that pay information be included on any publicly advertised job posting. In advance of the November 1, deadline, the British Columbia government released a series of wage and salary information guidelines (the Guidelines).
Wage or salary information on job postings
The Guidelines specify that all job postings must include either (a) the expected pay (such as $50,000 a year) or (b) a pay range (such as $50,000-$65,000 a year). Such ranges cannot, however, include an unspecified minimum or unspecified maximum salary or hourly wage (such as “up to $30 an hour” or “$20 per hour and up”). At this time, the Guidelines do not limit the size of the pay range, but they do note that further regulations may prescribe an acceptable range.
Neither the BC PTA, nor the Guidelines, impact an employee’s ability to negotiate wages that are higher than what is advertised, nor do they prohibit an employer from paying an employee above the advertised pay range. If a posting advertises a salary of $50,000 to $65,000 a year, for example, there is nothing stopping employers from paying $66,000, so long as they do not pay less than $50,000.
The foregoing pay range information is not required to be included in a job posting if the position is not publicly posted, or if the employer is not advertising a specific job opportunity and is posting a more general “help wanted” type of advertisement. The rules do, however, apply to jobs posted by third parties on an employer’s behalf, such as on job search websites, job boards, and other recruitment platforms.
Notably, the Guidelines clarify that the pay range information requirements purport to apply to employers in provinces other than British Columbia who advertise for positions that may be filled (either remotely or in-person) by British Columbia residents. This broad application has the potential to impose pay transparency obligations on prospective employers across the country.
Pay transparency reporting requirements
The BC PTA requires all employers with more than 50 employees to eventually publish a pay transparency report. The Pay Transparency Regulations, BC Reg 225/2023 (the Regulation), which were released on October 23, 2023, specify exactly what information must be included in such reports, and how it must be organized. Additionally, to assist employers in preparing their reports, the British Columbia government has provided an example of a pay transparency report. The reports submitted by employers who were required to publish their reports by November 1, 2023 (which includes the British Columbia government and the six largest Crown corporations in British Columbia) are also now publicly available for reference.
To create pay transparency reports, employers must sort employees into four gender categories. They must then analyze a number of variables (such as salary, overtime and bonuses) across the categories to determine if there is any quantifiable inequity between groups.
The four gender categories are: Man, Woman, Non-binary and Unknown. Man, Woman and Non-Binary are meant to capture employees who fall under one of these gender identities. The Unknown category covers all other employees, including people who do not identify as male, female or non-binary, and those who, for whatever reason, do not wish to share their gender with their employer.
The “reference category” is the category that is used for the baseline in the report. In almost all cases, the reference category will be “Man” unless there are fewer than 10 men in the organization, in which case the reference category will be “Unknown” or “Non-Binary” if either of those categories contains more than 10 employees. For organizations where the gender categories “Man”, “Non-Binary” and “Unknown” each contain fewer than 10 employees, the pay transparency report must be drafted without a reference category.
Report content and structure
The Regulation mandates that the information in the pay transparency report be set out in six sections: employer information, hourly pay and overtime analysis, percentage of employees who receive overtime pay, bonus pay, percentage of employees who receive bonus pay, and rankings.
Section 1: Employer Information
The first section simply includes the employer’s information such as name, mailing address, the dates of the reporting period, the number of employees in each of the applicable ranges (50-299 employees, 300-999 employees, 1,000 or more employees), and whether the reference category is “Man”, “Non-Binary” or “Unknown”.
Section 2: Hourly pay and overtime analysis
The second section analyzes data on hourly and overtime pay, and asks employers to provide the difference between the mean and the difference between the median hourly rate of pay of employees in the reference category (most likely Man) compared to employees in the other categories (most likely Woman, Non-Binary and Unknown). The employer must then complete the same analysis for overtime pay and overtime hours.
Section 3: Percentage of employees who receive overtime pay
The third section asks employers to analyze the percentage of employees in each gender category who received overtime pay during the reporting period.
Section 4: Bonus pay
The fourth section requires employers to conduct a similar analysis to the one completed in Section 2, but instead of analyzing hourly and overtime pay, they must assess bonuses. Employees must provide the difference between the mean and the difference between the median amount of bonus pay employees receive in the reference category, then compare that to the amount of bonus pay received in the other gender categories.
Section 5: Percentage of employees who receive Bonus Pay
The fifth section mandates that employers analyze who in the organization is receiving bonus pay, and to break it down by gender category to determine if a higher percentage of people in the reference category receive bonus pay compared with the other gender categories.
Section 6: Rankings
In the sixth section of the report, employers are required to rank all their employees from the highest earners to the lowest, and then split the employees into quartiles. They must then look at what percentage of employees in each of the quartiles come from the four gender categories. For example, if 60% of people in the highest quartile of earners were in the “Man” category, that could indicate some pay inequity.
Employers should keep in mind that the collection and handling of gender information is a sensitive endeavour and consent from employees will need to be obtained to complete the reports. Internal and external stakeholders and advisors will need to be consulted by employers in the course of complying with the BC PTA requirements and the Regulation to ensure that information is collected and handled in a sensitive and legally compliant manner. While there are no enforcement mechanisms yet set out in the BC PTA, the release of the Guidelines and the Regulation demonstrate that the British Columbia government is focused on encouraging employers to comply with pay transparency obligations.