Ontario, Canada Introduces New Legislation Banning Compensation Questions

The interview process is a time-consuming, planned procedure in which the parties seek to learn as much as possible about each other before determining whether it is a match. In addition to probing the candidate’s qualifications, one of the most important areas is compensation.

Employees want to know how much the job pays, while employers may be interested in knowing how much the applicant was making at his or her previous jobs. This compensation history is often used as a guide in determining the applicant's salary upon hire. Unfortunately, evidence suggests that this process may negatively impact women, because in many industries, women are still being paid less than men for doing the same job, and it is therefore difficult to break the cycle.

In an effort to combat gender discrimination and increase transparency during this process, on March 6, 2018, the Ontario government introduced The Pay Transparency Act (the “PTA”), which, as the name suggests, establishes requirements concerning disclosure of compensation particulars of employees and prospective employees.

If passed, the PTA, which is proposed to come into force on January 1, 2019, will prohibit employers from asking candidates about their compensation history, whether personally or through an agent, with few exceptions. It will also require employers to:

  • include a range of expected compensation for any publicly advertised job posting; and
  • prepare a “transparency report”, which will highlight compensation gaps, if any, based on gender and diversity, which will be submitted to the government.

The PTA contains anti-reprisal language, prohibiting employers from, for example, penalizing employees for making inquiries about compensation or disclosing his or her compensation to another employee. The Ontario Labour Relations Board (the “Board”) imposes a reverse-onus on employers to prove that it did not engage in the alleged reprisal behavior and the Board retains broad discretion, if a finding of reprisal is made, to impose discipline “as seems just and reasonable in the circumstances.”

Ontario, which has allocated up to $50 million over the next three years in connection with the PTA and related initiatives, is the first Canadian jurisdiction to introduce this type of legislation, although similar laws exist in certain areas of the United States, Germany, Australia and the United Kingdom.

In addition to keeping an eye on the PTA, Ontario employers should be aware of existing legislation that affects the hiring process, for example:

  • The Ontario Employment Standards Act, 2000 which requires equal pay for equal work regardless of sex or employment status;
  • The Integrated Accessibility Standards, made under the Accessibility for Ontarians with Disabilities Act, requires employers to notify the public about the availability of accommodation for applicants with disabilities in the recruitment process; and
  • The Ontario Human Rights Code prohibits job advertisements from directly or indirectly classifying or indicating qualifications based on a prohibited ground of discrimination.

We will be closely monitoring the PTA and will provide updates as required. 

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.