Tierney Stauffer LLP Lawyers

The Ontario Court of Appeal recently dismissed an appeal brought by 143 nursing homes and the Ontario Government concerning the issue of pay equity. The crux of the argument between the nursing homes, Attorney General, and the Ontario Nurses Association (ONA) and Service Employees International Union (SEIU) centres on the “proxy method” to achieve and, more importantly, to maintain pay equity. Whereas the ONA and SEIU argued that the proxy method should be used to maintain pay equity, in an ongoing manner, the participating nursing homes and the Attorney General believed it was only required to establish pay equity, as opposed to maintaining it.

Employment and Pay Equity in Ontario

Pay equity legislation in Ontario is premised on the affirmative action model to redress gender discrimination as it relates to compensating workers employed in female job classes in the province.

In Ontario, jobs are designated as ‘female’, ‘male’ or ‘gender-neutral’ by the provincial Pay Equity Commission based on how the percentages of those performing the role break down. The classes are defined as follows:

  • Female job class: at least 60% of the incumbents are female
  • Male job class: at least 70% of the incumbents are male
  • Gender-neutral job class: the number of male and female incumbents is relatively even

When considering job class, it is also advised that employers consider both the gender-specific associations or stereotypes associated with a role, as well as the historical incumbency of a particular role.

Importantly, subject to certain exceptions, Ontario’s Employment Standards Act prohibits employers from paying one employee less than another employee on the basis of sex, where both employees perform substantially the same nature of work in the same organization, and their work requires substantially the same skill, effort and responsibility and is performed under similar working conditions.

Ontario’s Pay Equity Act, a human rights legislation, aims to redress systemic gender discrimination, and it applies to all employers in the public sector, among other sectors. Under the Act, “pay equity” entails an assessment of all jobs in an organization in addition to an unbiased comparison of the work done by women to the work done by men. This assessment and comparison is intended to determine whether women employees are being compensated equitably.

Section 7 of the Act imposes a “proactive obligation” on employers to achieve pay equity via the system noted above, namely, assessment and comparison. Once the assessment is completed, employers are required to duly increase compensation for underpaid women’s work as revealed by the assessment. The next important employer duty is to maintain pay equity once it has been achieved.

Determining Gender Discrimination and Pay Equity

The Ontario Court of Appeal poignantly noted that the first step to achieve pay equity is to determine whether gender discrimination in pay exists in the first place. This determination requires employers to compare the skill, efforts, responsibility, working conditions, and pay provided to female job classes in their organization with that of male job classes (or their proxy equivalents) using a gender-neutral comparison system.

The Pay Equity Act sets forth three means of comparison, one of which is the proxy method. The gender predominance of the job classes in a given workplace will determine the method used. Where no male job classes exist in an establishment, as is the case for nursing home care workers, employers are directed to use the proxy method. Stripped of its complexities, this method involves comparing a female job class in the employer’s organization, in this case, the participating nursing homes, to a female job class at a proxy employer’s establishment that has already achieved pay equity. Municipal Homes for the Aged was used as a proxy in this case.  

Maintaining Pay Equity

The key disagreement between the parties, namely the ongoing requirement for male comparators to maintain pay equity, was dissected by the Court through an in-depth analysis of s. 5.1(1) of the Pay Equity Act, which establishes the parameters for the achievement of pay equity.

5.1 (1) For the purposes of this Act, pay equity is achieved in an establishment when every female job class in the establishment has been compared to a job class or job classes under the job-to-job method of comparison or the proportional value method of comparison and any adjustment to the job rate of each female job class that is indicated by the comparison has been made.

The Court of Appeal underscored a key observation concerning s. 5.1(1), lending to its determination requiring ongoing male comparators to maintain pay equity. The Court noted that the opening phrase of the section, “For the purposes of this Act,” necessarily includes both establishing and maintaining pay equity, which are cited as the two purposes of the Pay Equity Act.

Furthermore, the Court determined that “not using the proxy method to maintain pay-equity-compliant compensation practices would undermine the purpose of the Act.” The Court of Appeal underscored the fact that female employees in establishments without male comparators are most at risk of being affected by discrimination, and further pointed out the potential for systemic discrimination to re-emerge, in job-to-job and proportional value establishments. As such, the Court noted the need to have ongoing and continual reference to male comparators. “The regular reference back to male comparators is undertaken because women’s work continues to be systemically undervalued.”  

Contact Ottawa Employment Lawyers Tierney Stauffer LLP to Discuss Your Pay Equity Obligations

Our employment law lawyers can advise on how to ensure your business complies with complex and exacting pay equity requirements as well as many other employment matters. Contact Tierney Stauffer LLP in Ottawa & Eastern Ontario for experienced advice on the management of your business. Call the firm at 1-888-799-8057 or contact them online to schedule a confidential consultation.

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