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Who has salary transparency laws and why we need them

WHY DO WE HAVE SALARY TRANSPARENCY LAWS?

Salary transparency laws are implemented to address issues related to pay inequality and promote fairness in the workplace. Here are some reasons why such laws exist:

  1. Addressing pay discrimination: Salary transparency laws aim to tackle pay gaps and prevent discrimination based on gender, race, or other protected characteristics. By requiring employers to disclose salary information, these laws can expose disparities and enable employees to identify potential pay inequities.
  2. Promoting fairness and equity: Transparency in salary information helps create a more equitable work environment. When employees have access to information about their colleagues’ salaries, it becomes easier to identify cases where individuals with similar qualifications and experience are being paid significantly different amounts. This promotes fairness and reduces the likelihood of unfair compensation practices.
  3. Encouraging employer accountability: Salary transparency laws hold employers accountable for their compensation decisions. When salary information is publicly available or accessible to employees, organizations must ensure their pay practices are fair and based on objective criteria. This can deter employers from engaging in discriminatory practices or arbitrary decision-making.
  4. Empowering employees to negotiate better compensation: Salary transparency can empower employees during salary negotiations. When individuals have access to salary ranges and information about what others in similar roles are earning, they can better advocate for themselves and negotiate fair compensation packages. This helps level the playing field and reduce information asymmetry between employers and employees.
  5. Fostering a culture of transparency and trust: Transparency in salary information can contribute to a more open and trusting work culture. When employees have visibility into compensation structures, they may feel more confident that their employers are making fair decisions. This can improve employee morale, job satisfaction, and foster a sense of transparency and trust within the organization.

It’s important to note that the specifics of salary transparency laws can vary across jurisdictions. Some laws require employers to disclose salary ranges for specific job positions, while others might make salary information available upon request. The intention behind these laws is to promote fairness and address pay disparities in the workplace.


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PAY TRANSPARENCY ACROSS CANADA

There are several other Canadian jurisdictions that have already implemented various forms of pay transparency laws.

 

PRINCE EDWARD ISLAND SALARY TRANSPARENCY LAWS

Amendments to Prince Edward Island’s Employment Standards Act, effective June 1, 2022, require private sector employers to include pay in publicly advertised job postings. Employers are also prohibited from asking applicants about their pay history or retaliating against employees for disclosing information about their pay to other employees.

Newfoundland and Labrador have enacted the Pay Equity and Pay Transparency Act which requires private sector employers to include pay in publicly advertised job postings and to prepare pay transparency reports. Employers are also prohibited from asking applicants about their pay history or retaliating against employees for disclosing information about their pay to other employees. However, while the Pay Equity and Pay Transparency Act itself has come into force, the Newfoundland government has not yet announced when these transparency provisions will come into force.

 

ONTARIO

On March 21, 2024, the Working for Workers Four Act, 2024 (“Bill 149”) received Royal Assent. Bill 149 amends the Ontario Employment Standards Act, 2000 (the “ESA”) to include a new section pertaining to job postings, which contains new pay transparency provisions, prohibits the posting of requirements relating to Canadian experience, and requires disclosure of the use of artificial intelligence (“AI”) in the recruitment process. Bill 149 also makes certain changes to the ESA in respect of vacation pay and wage protection.

The changes with respect to job postings, pay transparency and AI will not come into force until a future date, to be proclaimed by the Lieutenant Governor.

 

BRITISH COLUMBIA SALARY TRANSPARENCY LAW

British Columbia is looking to close the gender pay gap in the province with new legislation. The provincial government has introduced new pay transparency legislation that will require all employers to include wage or salary ranges in all publicly advertised jobs.

“People deserve equal pay for equal work… all employers need to be transparent about what people are being paid to close the pay gap between men and women,” says Kelli Paddon, parliamentary secretary for gender equity. “Our work doesn’t end here. We’re determined to continue our engagement with all of our partners to close the pay gap and ensure people get the fair payment they deserve.”

The requirement will be introduced to different employers in stages to give them time to prepare, according to the government:

  • Nov. 1, 2023: BC Public Service Agency and Crown corporations with more than 1,000 employees (ICBC, BC Hydro, WorkSafeBC, BC Housing, BC Lottery Corporation and BC Transit).
  • Nov. 1, 2024: all employers with 1,000 employees or more
  • Nov. 1, 2025: all employers with 300 employees or more
  • Nov. 1, 2026: all employers with 50 employees or more

Pay transparency can be a great tool for recruiting talent – but there are potential downsides to consider, said Pierre Chaigneau, associate professor of finance at the Smith School of Business at Queen’s University in Kington, Ont., in a previous interview with Canadian HR Reporter.

The B.C. legislation also prevents employers in the province from asking prospective employees for pay history information, or punish employees who disclose their pay to co-workers or potential job applicants.

The new rules will take effect Nov. 1 this year if the legislation is passed.

B.C. is also developing regulations that will provide employers with more details about how they will be required to report on the pay gap.

WHILE EMPLOYERS ARE GENERALLY COMPLYING WITH THE LETTER OF THE LAW, THERE’S ALSO EVIDENCE THAT MANY AREN’T COMPLYING WITH THE SPIRIT OF THE LAW

This raises a question around whether – in the long run – well-intentioned salary transparency laws will actually move the needle in a notable way at all.

CANADIAN FEDERAL TRANSPARENCY LAWS FOR FEDERALLY-REGULATED PRIVATE SECTOR EMPLOYERS

In the federal jurisdiction, amendments to the Employment Equity Regulations under the Employment Equity Act introduced new pay transparency reporting obligations in 2021, requiring federally-regulated private sector employers with at least 100 employees to include more detailed salary data – including raw gender-based wage gap data – in their annual employment equity reports. This data is expected to be made public by Employment and Social Development Canada (ESDC) in a searchable format. Our bulletin provides more details on these significant new disclosure obligations.

 


BEYOND CANADA’S BORDERS: UNITED STATES SALARY TRANSPARENCY LAWS

Demands for transparency

Amid the legislative changes in the US, most estimates say approximately a fifth of the American labour force is now covered by some kind of law relating to pay transparency. These laws have a similar essence, though the details vary.

WHICH US CITIES HAVE SALARY TRANSPARENCY

South of the border, a number of states have introduced (or have announced that they plan to introduce) pay transparency laws, including

  • California
  • Washington
  • Colorado
  • Maryland
  • Connecticut
  • Nevada
  • Rhode Island
  • New York State
  • Illinois
  • Massachusetts
  • Pennsylvania
  • South Carolina.
  • Some cities, such as New York City, have also introduced laws that require employers to include pay ranges in job postings and, in some cases, make annual disclosures regarding their pay data.

READ MORE on our sister site Bee Happy HR – Diverse Talent Hive

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