Pay Equity Decision has Dramatic Implications for Employers Subject to Proxy

On April 30, 2019, the Divisional Court of the Ontario Superior Court of Justice overturned a Pay Equity Hearings Tribunal (Tribunal) decision with dramatic implications for employers using the proxy method.

As outlined in our previous newsletter , the Ontario Nurses Association (ONA) sought judicial review of a 2016 decision of the Tribunal which found that employers did not have an ongoing obligation to maintain pay equity by continuing reference to the proxy comparator named in their original proxy order.   Instead, the Tribunal said that he employers could base pay equity maintenance on internal comparisons between job classes.  The ONA sought review of this decision on the basis that Pay Equity Act (the “Act”) itself contravened the Canadian Charter of Rights and Freedoms (the “Charter”) and that the Tribunal’s interpretation of the Act (i.e. not requiring continuing reference to the proxy employer) contravened Charter values.

The Divisional Court made a number of key findings:

1. 1. The Act does not contravene the Charter.
   2. 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.
   3. 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.
   4. 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.

This decision could have devastating consequences for not-for-profit organizations in the broader public sector, particularly in developmental services and home care and community services where pay equity liability has been unfunded by the government for more than a decade. The potential pay equity liability will only increase when current job rates from original proxy employers (typically hospitals) are made the new standard for assessing pay equity maintenance.

It is important to note that this decision is likely not the final word on this matter.  We understand that the Participating Nursing Homes intend to appeal this ruling to the Ontario Court of Appeal.  It would also not be surprising to see some action from the Ford government in relation to this issue.

As this situation unfolds, employers that are subject to proxy orders would be well advised to:

• • 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 collaboration and the development of a sector-wide approach to advocacy on pay equity issues with the government and potentially in the appeal process, to ensure that the sector specific issues and implications are given due consideration.

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