Canada: Soft Opening Of Pay Transparency In British Columbia

In the same year that Claudia Goldin's research on women's progress in the workforce earned a Nobel Prize, British Columbia introduces pay transparency legislation.

The B.C. Pay Transparency Actcame into effect on May 11, 2023, in what can only be described as a soft and soundless opening. While B.C.'s Human Rights Code already prohibits discrimination in wages based on sex, the new Pay Transparency Act is designed to ensure information is readily available to determine compliance with that existing law.

This legislation is new to British Columbia; however, several other provinces have pay transparency legislation, including Prince Edward Island, Newfoundland and Labrador, Ontario (not in force) and Manitoba. Federally, the Employment Equity Regulations to the Employment Equity Act require pay transparency.

The B.C. government reports that in 2021, B.C.'s median pay gap between men and women was 16.7 percent, much higher than the national median of 12.9 percent, with only Alberta having a higher gap than British Columbia at 19 percent. While the Act in British Columbia will bring greater awareness to the gendered pay gap within organizations, unlike the federal Pay Equity Act or the Ontario Pay Equity Act, which aim to ensure equal pay for work of equal value, the B.C. Act performs a more standard apples-to-apples comparison, focusing on equal pay for equal work, and—more importantly—the B.C. Act does not require employers to actually correct the gendered pay gap.

The following summarizes what the Pay Transparency Act (the Act) requires employers to do and when it requires those actions to be taken.

1. Pay Information Publicly Advertised Job Opportunities (Effective November 1, 2023)

Section 2 of the Act requires that employers include: (1) the expected salary or wage for the job, or (2) the expected salary or wage range for the job, in all publicly advertised job opportunities. This requirement comes into effect on November 1, 2023, and applies to all employers in British Columbia.

Does it apply to my workforce? The above pay information applies to all B.C. employers in respect of all publicly advertised job opportunities. In addition to jobs posted directly by the employer, the requirement to include the above pay information also applies to jobs posted by third parties engaged by the employer (i.e., on job search websites and other recruitment platforms). Notably, the B.C. government also suggests that this legislation should reach beyond provincial borders, indicating that the "requirement applies to jobs advertised in other jurisdictions if the position is open to B.C. residents and may ever be filled by someone living in British Columbia, either in person or remotely". General help wanted advertisements and general recruitment campaigns that do not reference specific job opportunities are not captured by the above requirement. Further, if the job posting is not advertised to the public, the employer does not need to include the above pay information.

What must be included? Presently, the B.C. Government advises that employers do not need to include information on bonus pay, overtime pay, tips or other employment related benefits in the job posting.

Ranges? Employers must specify a minimum and maximum amount for a wage or salary for a publicly posted job opportunity. For example, employers may not say $50,000 and up, but instead can say $50,000-$70,000. Currently, the Act has does include provisions on how large the pay range can be.

Note, posting the pay range does not prevent the employee from asking for higher pay and does not prevent the employer from agreeing to pay more than advertised.

2. Prohibitions (Effective May 11, 2023)

Section 3 of the Act prohibits employers from seeking pay history information from an application for employment by any means, whether directly through the applicant or through a third party, unless the pay history is publicly available.

Section 4 of the prohibits an employer from dismissing, suspending, demoting, disciplining, harassing or otherwise disadvantaging an employee (or threatening to do so) because the employee:

• made inquiries of the employer about the employee's pay;
• disclosed information about their pay to another employee of the employer or an individual who has applied for employment with the employer;
• made inquiries of the employer about their pay transparency report or information in the report;
• asked the employer to comply with the Act; or
• made a report to the Director of Pay Transparency about the employer's compliance with the Act.

Employers will need to update their recruitment policies and practices to ensure they are not asking candidates about their pay history. Furthermore, employers will need to update any internal policies, which prevent employees from discussing their compensation with other employees and applicants.

3. Reporting Requirements (Rolling Implementation Schedule Starting November 1, 2023)

Part 3 of the Act requires that "reporting employers" must on or before November 1 of each year, prepare and post a pay transparency report, which includes the information prescribed by the regulations.

Does it Apply? Most employers are not yet "reporting employers" but will be by November 1, 2026.

Starting November 1, 2023, some employers will be required to prepare a pay transparency report containing the "prescribed information", which is to be clarified through subsequent regulations.

This reporting requirement is to be rolled out in stages over 4 years, as follows:

• November 1, 2023: the B.C. Government and the six largest Crown corporations.
• November 1, 2024: all employers with 1,000 employees or more.
• November 1, 2025: all employers with 300 employees or more.
• November 1, 2026: all employers with 50 employees or more.

Which employees are included? The B.C. government confirms that these requirements only apply to employees in British Columbia, not elsewhere in Canada or globally.

What goes in the Report? The regulations will include details on the content and the format of the report. Employers will be required to report the pay gap as the difference between hourly wages, overtime and bonuses received by men, women and non-binary people. Employers may also be asked to report the percentage of each gender in quartiles (i.e., top 25 percent of earners, high 25 percent, mid 25 percent and lowest 25 percent). Real wage data such as dollar amounts will not be reported.

In order to prepare this report, employers will need to collect gender information from their employees in accordance with B.C.'s new Gender and Sex Data Standard (see here). The B.C. government advises that they are going to create a reporting tool to assist employers in using this collected data to prepare their pay transparency reports. Employers must include this data in their pay transparency reports in respect of all their employees in British Columbia.

Employees can decline to provide their gender information to their employer for the purposes of preparing the report and employers must inform employees that providing the information is voluntary. Employers must give employees an opportunity at least annually to provide and update their information.

What do I do with the Report? Employers must publish their report on their publicly available website. If the employer does not have a publicly available website, it must make a copy of the report available to employees in at least one conspicuous place in each of its workplaces and make a copy of the report available to any member of the public who requests one. The employer must make the report available until they make a new report the following year.

4. Annual Reports and Consultation with Indigenous Peoples

The minister is to publish annual reports, beginning in 2024, outlining the differences among prescribed groups of individuals with respect to pay, providing a description of trends in relation to those differences and disclosing the number of non-compliant reports. Indigenous governing entities whose rights or interest could be affected by the publication of that report are to be receive written notice and opportunity to require consultation prior to the publication of this annual report.

5. Key Take-Aways:

• Given the current status of the Act, which is devoid of regulations, employers are left with much uncertainty as to what information is to be gathered from employees or included in the transparency reports. There is also no direction now on exemptions or repercussions for non-compliance.
• The Act does not contain any provisions requiring an employer to close the gendered wage gap. However, employees may have the ability to bring a human rights complaint pursuant to the B.C. Human Rights Code.
• Employers should be mindful of privacy legislation when collecting, using and disclosing information that is gathered for the purposes of preparing the pay transparency report.

In addition to the standard queries on compliance, planning and drafting, we anticipate an increase in privacy concerns as employers attempt to collect, use and disclose personal employee information, as well as human rights concerns as employees receive a layout of their organization's compensation matrix.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.