On March 9, 2021, the Ontario Court of Appeal released its long awaited pay equity decision in the ongoing saga that is the Ontario Nurses’ Association v. Participating Nursing Homes, 2021 ONCA 148. In upholding the lower court’s decision, the results are a win for women and workers occupying traditionally female dominated job classifications across Ontario. However, without a corresponding commitment from the government to appropriately and permanently fund pay equity related wage enhancements, this decision could have dire consequences for not-for-profit, government funded agencies that have been denied such funding for decades. We unpack the Court of Appeal’s decision below.
The Background
What is the proxy method?
Ontario’s Pay Equity Act (the “Act”) seeks to address the gender pay gap through redress in compensation for work performed by employees in female job classes. The Act requires employers to pay equal wages for work of equal value, regardless of the gender of the employee. In order to determine pay adjustments, employers use one of three methods of comparison between job classes: the job-to-job method, the proportional value method, or the proxy method. The proxy method of comparison allows organizations in the broader public sector that don’t have internal male job classifications, to obtain and apply information from another public sector organization (also known as a “proxy employer”). Under the Act, employers have an obligation not only to achieve pay equity, but to maintain it.
Tribunal Decision
In 1994, the Ontario Nurses’ Association (ONA) agreed to a pay equity plan with a group of employers that operated more than 140 nursing homes across the province (also known as “Participating Nursing Homes”). Since the nursing home employees were almost exclusively female, the proxy method of comparison was used to determine a pay equity plan with reference to male job classes. The Participating Nursing Homes achieved pay equity in 2006. However, the ONA later asserted that pay equity had not been maintained and that changed circumstances, such as job duties and responsibilities, rendered the pay equity plans inappropriate and filed a Pay Equity Complaint which was heard in 2016.
In the hearing related to the Complaint, the ONA claimed that rather than a one-time comparison with the proxy employer, the Act required ongoing comparisons between the key female job classes of the employer and similar job classes of the proxy employer in the maintenance phase. The Pay Equity Hearings Tribunal (PEHT) disagreed with the ONA and summarized pay equity maintenance obligations as follows:
Generally speaking, maintenance requires the on-going monitoring of any changes in either the compensation or the value (the amalgam of skill, effort, responsibilities and working conditions) of female job classes and the male job classes (including deemed male job classes) used for comparison purposes. In the case of proxy plans, however, maintenance does not require the monitoring of changes to the value or compensation of the female job classes in the proxy establishment….Instead, what is required is monitoring of the compensation and value relationship of the non-key female job classes and the key female job class as compared to the compensation/value relationship…that has already been determined to provide for pay equity.
While this was disappointing for those advocating for fair wages for workers in what has been traditionally considered “women’s work”, it was a relief to government funded agencies that have not received funding for pay equity obligations since 2008.
The Divisional Court’s Decision
The ONA subsequently appealed the PEHT’s decision and on April 30, 2019, the Divisional Court of the Ontario Superior Court of Justice overturned the PEHT. The Division Court held as follows:
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- The Act does not contravene the Charter.
- The Act must, however, be interpreted in a manner that is consistent with the Charter – meaning that it must be interpreted in a way that gives effect, as fully as possible, to the Charter protected right to equality for women in predominantly female workplaces.
- The Division Court held that the Act should therefore be interpreted to require ongoing reference to male comparators from the original Proxy employer for the purposes of maintaining pay equity.
- The Court also ordered the Tribunal to specify what procedures should be used to ensure that employees who achieved pay equity through the proxy methodology continue to have access to a male comparator in order to determine whether pay equity has been maintained.
Participating Nursing Homes (the employers) appealed this decision and the hearing of this matter was held back on October 6 and 7, 2020 before a panel of five judges.
The Court of Appeal’s Decision
On March 9, 2021, the Court of Appeal released it’s long-awaited decision and in a divided decision (3:2) upheld the Divisional Court’s ruling. In so doing, the Court indicated that continuing reference to a male job comparator (from the original Proxy employer presumably) is required. The Court of Appeal agreed with the lower court that the PEHT should be charged with specifying what procedures should be used to ensure that those employees, “represented by the Unions,” who have established pay equity through the proxy method, will continue to have access to male comparators to maintain pay equity.
This decision flies in the face of the traditional wisdom and long-standing direction from the PEHT that proxy maintenance merely required that employers prevent any new wage gaps from emerging within the employers operations. The Court of Appeal’s decision means that employers who achieved pay equity through the proxy method, must have continuing reference to a male comparator (presumably from the original proxy comparator).
What this means for employers who achieved pay equity decades ago and have since been relying on the PEHT’s guidance, or for employers who still have years of pay equity adjustments to make until their even achieve pay equity, remains to be seen. Furthermore, the Court of Appeal decision appeared to limit its findings to unionized employees, without providing a rationale for doing so. The confusion and uncertainty, as well as arguably unfair proxy comparators that have historically applied to agencies in some sectors, needs to be resolved once and for all. This decision should be a call to action for the government to “fix” pay equity once and for all.
What’s Next
It is important to note that this decision is likely not the final word on this matter. It would not be surprising to see the Participating Nursing Homes (or the government) appeal this ruling to the Supreme Court of Canada, particularly as 2 of the 3 judges in the case dissented and would have held that the Tribunal’s original decision, which would have maintained the status quo in Ontario. At the same time, if the governments opts to continue with a further appeal to the Supreme Court this could be politically unpopular given that the female workers that benefit from this decision (nurses and health care workers in long term care home settings) have been the backbone of the pandemic response.
The pandemic has brought to the fore the chronic under funding and understaffing that persists in government funded congregate care settings throughout Ontario. Temporary Pandemic Pay is a temporary solution that is a long standing problem. At the same time the government has signaled that it is looking at more permanent solutions. It is imperative that in implementing any solution, the government take into consideration the outstanding pay equity obligations that all agencies that achieved pay equity through the proxy method may now face in light of the Ontario Court of Appeal’s decision.
Until we have confirmation as to the status of any potential appeal and direction from the PEHT on new procedures for proxy pay equity maintenance, employers that are subject to historic proxy orders would be well advised to:
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- Ensure they understand their current pay equity status (whether they have achieved pay equity or are in maintenance);
- Maintain accurate and up to date records in relation to their original pay equity plan, records of pay equity adjustments issued each year, and the dates that pay equity was achieved for various job classes;
- Consider whether there have been changes in circumstances (such as the changing needs of people supported or new regulatory and compliance obligations) that would render the former pay equity plan inappropriate and consider any new wage gaps that have emerged;
- Continue to have reference to the original or any amended pay equity plan and associated gender-neutral comparison system when determining wage rates for any new job classifications; and
- Tread with caution in responding to employee/union requests for information or entering into any new agreements and considering waiting for the appeals process to be exhausted before making any changes in approach to pay equity.
Finally, we would recommend continuing collaboration on a sector-wide approach to advocacy on pay equity issues. The Developmental Services sector needs its voice to be heard by the PEHT as it moves forward with providing direction on what procedures should be used to ensure access to a male comparator for maintenance purposes.
PooranLaw is following this area of the law closely and will keep you informed with any new developments as they emerge. If you have any questions or wish to discuss the implications for your organization, please contact Cheryl Wiles Pooran at cwpooran@pooranlaw.com
