Proposed Pay Equity Regulations

Summary#

Published November 14, 2020, this notice sets out proposed Pay Equity Regulations to explain how the new Pay Equity Act would work in practice. The rules spell out how federally regulated employers must check for, fix and report pay gaps between predominantly female and predominantly male job classes.

What it does#

• Sets rules about how and where employers must post pay-equity documents. Postings must be accessible (for example: audio, large print, braille or accessible PDF). Draft plans must stay posted for at least 60 days.
• Fixes deadlines for key steps and filings. Employers generally have 3 years to develop an initial pay equity plan after the Act applies to them. Some notices to the Pay Equity Commissioner must be filed within 60 days or 12 months, depending on the item.
• Prescribes the math for comparing pay. The regulations give formulae for the two main methods in the Act (the “equal average” and “equal line” methods) so employers can calculate how much to raise pay for underpaid female‑predominant job classes.
• Explains what to do when regression lines cross. If the male and female compensation lines cross under the equal line method, employers can use (a) the equal average method, (b) a segmented-line method, or (c) a “sum of differences” method.
• Offers ways to create male comparators when a workplace has no predominantly male job classes. Employers can either use a “proxy” (male jobs from another similar employer) or three fictional “typical job classes” (maintenance worker, technician, manager).
• Describes maintenance (updating) of plans. Employers must take periodic “snapshots” of workforce and pay data (annual dates specified) and update plans at least once every 5 years. Any pay gaps found must be closed, including retroactive lump-sum payments and ongoing wage adjustments.
• Sets rules for frozen or bargaining‑round pay and for phasing in large adjustments. Employers with 100 or more employees may phase in increases over up to 3 years; employers with 10 to 99 employees may phase in over up to 5 years.

Who's affected#

• Federally regulated employers with 10 or more federally regulated employees (private and public). This is referred to in the notice as the Federally Regulated Private Sector (FRPS) and the Public Service of Canada (PSC).
• Employees in those workplaces — especially people in predominantly female job classes who may get pay increases.
• Bargaining agents and unions that represent employees covered by these plans.
• The newly described Pay Equity Commissioner, housed at the Canadian Human Rights Commission, who would administer and enforce the Act and these regulations.
• Small federally regulated employers. The notice estimates about 3,584 small employers would be directly affected.

Why it matters#

• It turns a complaint‑based right into a proactive system. Instead of waiting for individual complaints, employers will be required to search for and fix pay gaps. That can make pay equity easier to find and correct.
• It could lead to substantial payouts to employees. The government’s cost‑benefit estimates for the private sector include employer payouts of about $1.950B over 10 years, total regulatory costs to employers of about $1.953B, and total estimated benefits of about $1.982B, for a small net benefit of $28.7M (all figures are present‑value estimates in the document).
• Small businesses face upfront work and some costs. The analysis estimates about $100.6M in present‑value costs to small federally regulated businesses over 10 years, and an average estimated cost per impacted small employer. The Act does include some extra time (longer phase‑in) for smaller employers.
• The rules add clarity on technical points that can be hard to apply (how to compare pay, what to do when data cross, how to handle frozen wages). That clarity is intended to reduce disputes and legal costs over time.
• The proposal is just that: a set of draft regulations. They were published for comment and would come into force only when the Act and the regulations are brought into force (the notice expected implementation later in 2021).