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New Employer Monitoring Program 2018

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Contents                                                                           


1: Executive Summary

As of September 5, 2018

2: Introduction

Ontario’s Pay Equity Act (PEA or the Act) requires private sector employers with 10 or more employees (and all public sector employers) to identify and correct the gender discrimination that may be present in their pay practices; adjust the wages of employees in female job classes so that they are at least equal to the wages of employees in male job classes found to be comparable in value based on skill, effort, responsibility and working conditions; and, maintain pay equity. According to the Act, all employees – both men and women – in undervalued female job classes would receive pay equity wage adjustments.

As part of its mandate, the Pay Equity Office (PEO or the Office) conducts proactive monitoring programs to educate employers about pay equity requirements and to help them ensure their current compensation practices comply with the Act. Monitoring programs allow the Office to assess the state of pay equity knowledge and compliance in a targeted manner, and to proactively promote awareness of the Act.

This report summarizes and outlines findings from the New Employer Monitoring Program (N-Monitoring).

3: Background

In 2014, the PEO mailed out 14,000 letters to new employers to advise them of their pay equity obligations. The contact information was provided by the Workplace Safety and Insurance Board (WSIB) and the criteria included new employers across Ontario who had been in business for three years, and had 10 or more employees. Following this initial contact, an updated list was requested for monitoring purposes to ensure compensation practices provide for pay equity. From 2015-2018, 351 files were opened for monitoring, mainly from Toronto and the Greater Toronto Area. These files constitute the N-Monitoring Program.

The key benefit to contacting new employers was to raise awareness of pay equity while a company is new. Having compensation practices that provide for pay equity early in the life of a business minimizes the risk of large adjustments being necessary.

The majority of employers in the program represented small businesses. Of those who reported on size, and had 10 or more employees, 190 employers, or 75%, had 10-49 employees. Five employers, or 2%, had 500 or more employees. Seven employers, or 3%, had between 250 and 499 employees. Eleven employers, or 4%, had between 100 and 249 employees. Thirty-nine employers, or 16%, had between 50-99 employees.

The majority of employers in the program were also private businesses. Of those who reported on sector, 305 employers, or 97%, were in the private sector. Ten employers, or 3%, were in the public or broader public sector.

4: Results

The statistics in this report are current as of September 5, 2018. They provide a general overview of the N-Monitoring Program and its impacts. 

It should be noted that the sample size of 351 files is not considered representative of new employers in Ontario. Care should therefore be taken in drawing conclusions or generalizing the findings.

4.1 Case Disposition

Files opened under the N-Monitoring Program had a case disposition assigned by a Review Officer when a file was closed. Please note that 29 of 351 files remain open (8% of total files). However, approximately 78% of N-Monitoring files were closed in under a year. This indicates that where possible, files were closed quickly, but when needed, working with employers to ensure their compensation practices provide for pay equity, no matter the timeline, was the priority.

Case dispositions, for the purposes of this report, are described as follows:

Compliance without an order

  • These files were closed by a Review Officer after further investigation. Many employers undertook pay equity comparisons with the assistance of a Review Officer without an Order being required. The employers were deemed to have compensation practices that provide for pay equity because they did a pay equity analysis and made any necessary pay equity adjustments.
  • Review Officers issued 278 Notices of Decision which found no contravention of the Act (86% of closed files).

Ordered

  • These files relate to employers found to be in contravention of the Act who were not willing to voluntarily comply, necessitating that an Order be issued.
  • A total of 12 Orders were issued under the N-Monitoring Program (4% of closed files).

Abandoned/Administrative Closure

  • This disposition relates to files where the employer was found to be no longer in business, or had moved.
  • A total of 32 files fall into this disposition category (10% of closed files).

4.2 Adjustments

Twenty-five employers of 322 closed files owed adjustments. From these 25 employers, at minimum 55 female job classes received adjustments, benefitting at least 199 employees. In total, as of September 5, 2018, PEO records indicate that N-Monitoring resulted in $336,517.72 in adjustments. It is important to note that even where compliance with the Act was achieved as a result of the program, adjustments were not necessarily owed.

The majority of employers who owed adjustments (18/25 employers or 72%), owed under $10,000. Only one employer owed over $100,000.[1]

4.3 Experience

In terms of the method used to compare job classes and achieve pay equity, 73 files, or 36% of files that reported on method, indicate the employer used a combination of Job-to-Job and Proportional Value. A further 69 files, or 34% of files that reported on method, indicate employers used the Proportional Value method only. Job-to-Job was solely used in 58 files, or 29% of files that reported on method.

Thirty-seven files, or 11% of files, indicate the employer hired a consultant. Consultants may be used to assist the employer with coming into compliance with the Act.[2] Consultants come at an expense to the employer. However, files indicate that employers used the Pay Equity Mini-Kit in 139 of 351 of files (40% of files). The Mini-Kit is freely available on the PEO website. Ninety-one files (26% of files) indicate the employer made use of website manuals, such as A Guide to Interpreting Ontario's Pay Equity Act. These resources could be reviewed and potentially improved so employers would not deem it necessary to make additional expenses to engage in pay equity analysis.

For example, the Ontario Chamber of Commerce (OCC), in their July 16, 2018 report titled Blueprint for Making Ontario Open for Business, specifically prioritized, “the development of digital tools to help employers assess and report on pay equity”. The OCC also supports the building of a ‘one-window’ concierge service to help small business navigate regulation.

5: Conclusions

The mainly small, private sector employers that were a part of the N-Monitoring Program generally proactively took steps to provide for pay equity once they were aware of their obligations under the Act. This group of employers were responsive to achieving and maintaining pay equity.

When compared to other monitoring programs, the adjustments owing for N-Monitoring seem relatively low. This is in part because of the number of small employers in the program. Moreover, it speaks to an important lesson suggested by the program: ensuring compensation practices provide for pay equity at the inception of a business minimizes the risk of future large adjustments. This also indicates that outreach to new employers is crucial. It may be useful to consider the Quebec approach in reaching new employers. All employers in Quebec, regardless of size, must electronically make a simple ‘Employer Pay Equity Statement’ under the law. This requirement spreads knowledge of the Act and obligations.

The experience of the program also indicates that it may be useful to review the resources made available to employers to assess how to better assist employers in providing for pay equity. More modern self-managed tools or applications for employers undertaking a pay equity analysis, as suggested by the OCC, may be a resource that merits exploration.

 



[1] More information is available upon request.

[2] Please note that the PEO does not ‘authorize’ or endorse consultants to offer employers any assistance with pay equity.