In the wake of recent transparency legislation proposed in Ontario and enacted in B.C. that will require employers to include salary ranges in public job postings, some experts say these laws are a step in the right direction towards closing the pay equity gap.
The new “Working for Workers” legislation in Ontario is a series of new labour laws centring workplace protections for employees in hopes to close the gender pay gap.
Meanwhile, British Columbia’s pay transparency legalisation took effect at the start of November, mandating wage disclosures in the province in an effort to tackle pay secrecy.
This comes after Prince Edward Island and Newfoundland and Labrador enacted pay transparency laws in June 2022 and November 2022 respectively.
All provinces’ transparency laws include similar language prohibiting employers from asking applicants about salary histories, requiring salary ranges to be included on job postings and penalizing salary discussions.
Ontario’s law would also require employers to disclose the use of AI in hiring processes and feature penalties for employers that fail to comply with the transparency requirements.
Travis O’Rourke, president of recruiting agency Hays Canada, said these new laws will go a long way in addressing the pay equity gap that exists in many Canadian workplaces. Pay equity is the concept that equal work deserves equal pay, regardless of an employee’s gender, race, ethnicity, age, or other status.
“We want pay equity across all areas of an organization. When everyone comes in at the same point — clear what that job is paying — that’s a large step towards that,” O’Rourke said in a phone interview with CTVNews.ca.
Lisa Cabel, a partner and national leader at KPMG in Canada’s employment and labour law practice, agreed.
Allowing employees to be aware of the compensation of other employees enables them to compare how they are paid against another position that provides similar value to the business, Cabel explained to CTVNews.ca in an email.
Pay transparency laws help managerial and non-managerial employees better assess if there is any underlying unfairness in current compensation, and employers can then start to develop a policy to address any such discrepancies, she added.
Cabel said these new pieces of legislation will build upon existing laws such as Ontario’s Pay Equity Act, which aims to ensure that employers pay women and men equal pay for work of equal value.
“Its combination with pay transparency and pay equality built in the human rights system is a framework promoted more for equal access to compensation for men and women, and potentially more than just a gender,” said Cabel.
PAY EQUITY AT A GLANCE
Despite efforts by employers and governments to address the pay equity gap in workplaces over the years, some discrepancies still exist. Statistics Canada found that the salary gap between women and men in Canada is $0.89 to $1 in 2021 for female employees aged 25 to 54 — 11.1 per cent less per hour on average than their male counterparts.
Data from the Organisation for Economic Co-operation and Development (OECD) also revealed a 17.1 per cent difference between the annual median earnings of women and men in Canada as of 2022.
A previous version of Ontario’s pay transparency law was passed under the former Liberal government, but after taking office in 2018, the Conservatives did not move the legislation forward.
The proposed legislation at that time required gender earning gap reports to be reported to the province. Requirements differed according to the number of employees employers had.
“Concerns about wage gaps aren’t new,” said Bea Bruske, president of the Canadian Labour Congress, in an emailed statement to CTVNews.ca.
“The labour movement has been fighting for robust and proactive pay equity legislation for years. For too long, the impact of the gender wage gap or the wage gap for racialized workers or other equity-deserving groups, has meant that certain groups of workers have been treated unfairly.”
Cabel said implementing pay transparency laws are “helpful for all employers, even those already engaging in pay transparency” prior to any legislation being introduced, since it standardizes what is required of employers.
“The legislation offers guidance on the direction employers should take when drafting their company policy and can help to provide the best outcome for both the employer and their employees,” she added.
CLOSING THE PAY GAP
A 2019 Statistics Canada research paper released findings on the impact of pay disclosure laws on university faculty salaries across Canadian provinces. It revealed that the laws reduced the gender wage gap by 2.2 to 2.4 percentage points, representing a 30 per cent reduction in the gap, from a base of seven to eight per cent, which was the gender wage gap that prevailed at the time of the first series of transparency reforms in Canada.
The study also found that the effects of salary disclosures on average wages and the gender wage gap were more pronounced in unionized workplaces compared to non-unionized workplaces.
Women’s wages increased by one percentage point in unionized universities, compared to no change in non-unionized workplaces.
Indeed Canada reported in a 2022 study that 70 per cent of employers who indicated their company discloses salary on job postings agreed it was helpful towards closing pay gaps in workplaces.
The study also found that 75 per cent of Canadians were more likely to apply for a job if the salary range was listed in the job posting.
Disclosing the compensation for a position not only benefits a prospective employee, but the employer as well, O’Rourke said.
“The biggest one is going to be time saved,” he said. “You’ll have a lot of candidates who apply to a job knowing that they would never accept it if the pay rate has been clearly disclosed. You’ll have employers who never would have called that candidate if the payroll had been advertised because the application wouldn’t have come in.”
SOUTH OF THE BORDER
In the U.S., eight states have enacted pay transparency laws and 15 states are considering the move.
Half of all job postings have been advertised in U.S. jurisdictions with some form of salary information as of August 2023, according to research conducted by Indeed’s Hiring Lab.
New York’s pay transparency law came into effect September 2023, while California’s legislation was active in January 2023.
An analysis by Recruitonomics found that Colorado’s pay transparency law — the first state to adopt this law in January 2021 — resulted in a 1.5 per cent boost in the labour force participation rate compared to Utah, a neighbouring state without a similar law in place.
With pay transparency laws still relatively new in Canada, Cabel said more time is needed to assess how effective the enforcement strategies will be.