Will new pay transparency rules help to eliminate the wage gap?

[RavenLaw gratefully acknowledges the contribution of this post by articling student Kundera Provost-Yombo]

In January 2021, the Government of Canada implemented amendments to the Employment Equity Regulations that imposed disclosure obligations to on federally regulated private sector workplaces. These new measures will make salaries publicly available, and help to identify wage gaps experienced by women, indigenous people, members of visible minorities, and people with disabilities. The key question is – will this increase in pay transparency lead to any meaningful change in the wage gap?

What is the Wage Gap?

There is overwhelming evidence that women, indigenous people, members of visible minorities, and people with disabilities earn less income than workers who don’t fall into these four categories. For instance, a study conducted by Statistics Canada found that in 2018, female workers aged 25 to 54 earned on average13.3% less per hour than their male counterparts, or $0.87 for every dollar earned by men.

This wage gap generally materializes in one of three ways:

1. Women, indigenous people, members of visible minorities, and people with disabilities may be paid less than others for performing the exact same job.
2. Women, indigenous people, members of visible minorities, and people with disabilities may be paid less for work of ‘equal value’—that is, work that requires substantially the same level of skills, effort, and responsibilities than work performed by others.
3. Job classes traditionally dominated by women, indigenous people, members of visible minorities, and people with disabilities may be paid less than other job classes. For example, certain types of jobs traditionally performed by women (e.g. childcare) are systemically underpaid.  

What do the Employment Equity Regulations do about the wage gap?

The amendments to the Employment Equity Regulations that are now in force impose pay transparency in federally regulated private sector workplaces. Employee salaries will be publicly available, with added emphasis on the existing wage gaps experienced by women, indigenous people, members of visible minorities, and people with disabilities.

Before these amendments, federal private sector employers were already required to prepare employment equity reports each year, reporting information on representation data, employee occupational groups, employee salary ranges, and the number of employees hired, promoted, and terminated. 

This data was reported to the Minister of Labour, but now, under the new amendments, will also be made available to the public. The data will be published through aggregate statistics, based on occupational group and employment status. Through this aggregate data, wage gaps will be identified, for example, through the average difference in hourly wages between men and women working in an occupational group. No information that can identify individual employees will be included in the public data. 

Employers of federally regulated private sector workplaces will have to meet the disclosure obligations and include aggregated wage gap statistics in their annual employment equity reports by June 2022. The first production of aggregated wage gap data is expected to be published in winter 2023, through an online application currently being developed. 

Which employers must comply with the new Regulations?

The new pay transparency measures apply to employers of federally regulated private-sector workplaces. Federally regulated private-sector workplaces are defined in parts I, II, III, and IV of the Canada Labour Code, and include industries such as banks, transportation, telecommunications, postal services, and most federal Crown corporations. 

What do these new rules mean for employees?

The new amendments will allow workers in the federal private sector to better understand whether they are currently experiencing wage discrimination. The wage gap is perpetuated in part because it is hidden. As a result, the pay transparency measures adopted by the Government of Canada will raise awareness about the wage gaps in federal private sector workplaces.

Using this information, workers can better advocate to eliminate the wage gap. It is difficult for workers to compel their employers to close wage gaps if they are not aware that they are being underpaid. Pay transparency will enable workers and their advocates to access more detailed data to advance the fight towards pay equity. 

In theory, greater pay transparency may also encourage employers to proactively work towards pay equity in their workforces. Publicizing wage disparities may create public pressure and incentivize employers to address wage gaps within their workplaces.

Unfortunately, pay transparency alone does not necessarily lead to pay equity. It is unclear whether these new measures will meaningfully change existing wage gaps in federal private sector workplaces. It is, however, undoubtedly a step in the right direction, and will allow workers and their advocates to at least understand the scope of the problem.

[This article is for informational purposes only and is not legal advice, which cannot be given without an assessment of your individual circumstances.]