Pay Equity Update: Supreme Court Rejects Appeal in Major Pay Equity Case

On October 14, 2021, the Supreme Court of Canada refused leave to appeal the Ontario Court of Appeal’s decision in Ontario Nurses’ Association v. Participating Nursing Homes, 2021 ONCA 148. The Court of Appeal’s decision had major implications on employer pay equity obligations for proxy-system employers, radically expanding their scope. With the request to appeal the decision rejected, the Ontario Court of Appeal decision remains standing as law. Our Firm has previously written at length about the Court of Appeal’s decision, its meaning, and its implications here.

How the Court of Appeal Changed the Law

The Court of Appeal’s decision reverses the traditional wisdom and long-standing direction from the Pay Equity Hearing Tribunal (the “PEHT”) about how to maintain pay equity under the “proxy method” of comparison (a form of achieving pay equity that applies widely in the developmental services sector). Under the old view of the proxy method, an employer only had to compare themselves to an external organization’s wages once in order to achieve pay equity. Pay equity maintenance after pay equity was initially achieved did not require employers to then go back and keep looking at external comparators. They just had to prevent internal gaps from re-emerging.

The new approach from the Ontario Court of Appeal will require employers using the proxy method of comparison to keep going back to compare their wages against an external comparator (presumably from the original proxy comparator if available) to ensure new pay equity gaps don’t reemerge.

The results were 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.

With the decision now standing as final, the PEHT must now 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. There is no information yet on what that process will be, how the PEHT will choose the process, and whether the public will have an opportunity to make decisions.

What This Means for Employers

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.

Until we have information from the PEHT on new procedures for proxy pay equity maintenance, employers that are subject to historic proxy orders would be well advised to:

  • Ensure that 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 information from the PEHT 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.  Seeking intervenor status with the PEHT will be a vital step as it moves to rollout any new procedures.

PooranLaw will continue to monitor legal developments related to pay equity and the issue of pay equity maintenance specifically. In the meantime, if you require legal assistance in determining how these new rules apply to you or your organization, we encourage you to reach out to your regular PooranLaw lawyer, or any member of our team.

We will keep you updated as we learn more about the transition to ONCA. In the interim, if you require legal assistance, we encourage you to reach out to your regular PooranLaw lawyer, or any member of our team. Continue to check our Insights page for further developments related to ONCA.