Last week, the Government of Canada passed the Regulations Amending the Employment Equity Regulations (the “Amended Regulations“) introducing new pay transparency measures, effective January 1, 2021. The Amended Regulations aim to clarify and improve the data gathering processes that govern the reporting of salary data by federally regulated employers with 100 or more employees.

Background

Federally regulated employers are required to file an annual employment equity report with the Minister of Employment, Workforce Development and Labour on or before June 1 in each year.

The Amended Regulations were introduced in response to the federal government’s 2018-19 budget commitment to introduce pay transparency measures that address wage gaps in the federally regulated private sector. Beginning January 1, 2021, federally regulated employers that are covered by the Employment Equity Act will be required to include aggregated wage gap information in their annual employment equity report.

Summary of Amended Regulations

• Simplified Salary Calculation & Reporting: Employers are no longer required to annualize salaries (i.e., calculate all remuneration paid for work performed by an employee in the form of salary, wages, commissions, tips bonuses and piece rate payments, rounded to the nearest dollar) for the purposes of reporting. Under the Amended Regulations, employers will be required to submit information relating to specific data elements, including hourly rate of pay, bonus pay, overtime pay, and overtime hours, to determine hourly wage, bonus, overtime hours, and overtime pay gaps.
• New Definition of Designated Groups: Under the previous Regulations, employers were required to conduct a workforce survey using a self-identification questionnaire in which they could use their own definition for designated groups. The Amended Regulations now provide a definition for certain designated groups, including women, Aboriginal people, persons with disabilities, and members of visible minorities, which employers are required to use in their questionnaire. This amendment ensures consistency in self-identification data from employer to employer.
• Mandatory Record Retention: In addition to the current list of records, employers are required to maintain records of the new salary data elements. This includes employees’ salary, not including any bonus pay or overtime pay; the period over which the salary was paid; the number of hours worked that can be attributed to the salary earned; the bonus pay paid during the reporting period; the overtime pay in the reporting period; and the number of overtime hours worked to which the overtime pay can be attributed. Employers must also retain information about each employee’s occupational unit group classifications and code, consistent with the North American Industry Classification System.

Key Takeaways

Canada is now the first country in the world to make wage gap information regarding women, Indigenous people, persons with disabilities and members of visible minorities working in federally regulated workplaces publicly available.

Federally regulated employers should be ready to navigate the new requirements prescribed by the Amended Regulations. Employers will need to review and update applicable salary reporting policies and best practices to ensure they are meeting their obligations under both the Amended Regulations and also the Act.

Many thanks to Dorna Zaboli for her assistance in preparing this post.