How pay transparency laws are coming into effect across Canada

New pay-transparency requirements for Ontario employers are expected to emerge in the coming months, the latest in a cross-country trend toward stronger protections for workers and job seekers.

First announced earlier this month by the Ministry of Labour as part of the proposed Working for Workers Four Act, new rules for employers would include disclosing the use of artificial intelligence in hiring and listing salary ranges in public job postings — information that was featured on just 37 per cent of Ontario postings in 2022, according to the province.

“At a time when many companies are posting record profits, it is only fair they communicate transparently about how they pay workers,” said Ontario Labour Minister David Piccini in the Nov. 6 announcement.

In an international survey conducted last year by data firm Payscale, 45 per cent of respondents reported that they included a pay range in job postings, but 18 per cent specified that they only did so when required by law.

“The overall takeaway is that most [organizations] do not appear to be ready for pay transparency laws,” a report on the survey from Payscale reads. “Adopting pay transparency is a best practice, regardless of the law.”

Anil Verma is a professor emeritus of industrial relations and human-resources management at the University of Toronto. He calls the proposed AI rules “commendable,” and says that so long as it’s done with the right amount of specificity, the disclosure requirements are a step in the right direction.

“Everywhere that we have tried transparency, it has made things better, not worse,” he said in an interview on Friday with CTVNews.ca.

To Verma, maintaining salary ranges, not dollar amounts, is key to the objectives behind better transparency, and to protecting the privacy of individual workers. Too much specificity, he says, can backfire.

Decades ago, the Ontario government began to publish all salaries over $100,000 for public employees. The intent, Verma described, was to reign in high-end salaries through public pressure, but instead, the move ultimately pushed some salaries higher.

“The idea was to publicize and prevent such excesses,” Verma said. “But what happened was that when I saw that my colleague, the guy whose office is next door to mine, is making 50 per cent more than I am, I immediately go to my boss and say … ‘how do you explain this?’”

Ultimately, he said, it’s about striking a balance.

“It’s a good idea to have more disclosure, and it’s good to make it within ranges and for groups of people, rather than for individuals.”

Ontario joins growing transparency trend

The policy move has Ontario joining three other provinces in a growing trend toward demystifying wage equity.

“Transparency laws are popular now because they align generally with a trend towards soft touch business regulation,” said David Doorey, a professor of work law at York University, in an email to CTV News.

“Governments hope to alter behaviour in pursuit of policy goals, such as reduced pay discrimination, without imposing much cost or administrative burden on employers.”

In November 2021, Prince Edward Island established its own salary-disclosure requirements on public job postings, followed by Newfoundland and Labrador a year later and British Columbia, this May.

In addition, the B.C. and Atlantic-region laws establish new restrictions on how employers can control payment discussions, prohibiting them from asking applicants about their past salaries and from penalizing employees for disclosing their wages amongst themselves.

The latter rule, sometimes called anti-reprisal protections, already exists in Ontario under the Employment Standards Act (ESA).

While business leaders note that B.C.’s law doesn’t currently feature penalties, both Atlantic-region laws include potential fines for employers who fail to comply with the transparency requirements.

In Newfoundland and Labrador, individuals may be liable for up to $1,000, with corporations and public bodies potentially subject to a $25,000 fine. P.E.I. employers, meanwhile, could face fines of between $200 and $10,000 under the broader labour laws involved.

Ontario’s own proposed penalties aren’t immediately clear, though general violations of the ESA can carry penalties as high as $50,000 in individual fines and $100,000 for corporations, on first offences alone.

In Canada, support for the measures appears widespread. A recent survey by recruiting firm Talent.com found that 84 per cent of Canadian respondents either greatly or somewhat supported legal requirements for salary ranges in job postings.

The same survey found that just 45 per cent of workers felt they were fairly compensated for their work, and that roughly one in four were considering leaving their job within the next year.

Second time’s the charm

Working for Workers Four represents a second try at legislating pay transparency at this scale in Ontario. In 2018, the then-Liberal government passed the Pay Transparency Act, carrying the same rules for job postings, salary history and non-reprisal as those in B.C., P.E.I. and Newfoundland and Labrador.

Described at the time as the first legislation of its kind in Canada, the Wynne government highlighted the positive effects of transparency on wage equity for women, empowering them through more informed salary negotiations.

“Pay transparency legislation will not only highlight pay inequities, it will help shift attitudes and biases that prevent women from achieving equal pay for equal work,” said then-minister of the status of women Harinder Malhi.

That incarnation of the law never came into force, as later that same year, the newly elected Ford government shelved it.

Similar proposals were brought by the Manitoba NDP, then its province’s opposition, in March of 2022. The private-member’s bill did not advance past first-reading, but since then, the Manitoba NDP have won a majority government in the province.

Edited by CTVNews.ca Special Projects Producer Phil Hahn