David M. Brown
The Pay Transparency Act (PTA), introduced in British Columbia in May 2023, is provincial legislation designed to address pay inequities among women and other minority groups. The PTA, which applies exclusively to BC employers and their agents involved in recruiting, is geared towards ensuring transparency in hiring and compensation processes.
The PTA is underpinned by the theory that women and other minorities are often paid less partly due to a lack of information about pay. It aims to create public pressure on companies to address pay disparities by enforcing transparency in pay scales and practices. Furthermore, increased pay transparency will provide more negotiating power to workers, enabling them to be more informed when discussing wages with their employers.
There are two obligations that are already in effect under the PTA. First, employers may no longer inquire about an applicant’s current or past pay. This rule was established to prevent the underpayment of women and minorities based on their previous salaries. Additionally, employers are prohibited from restricting or sanctioning employees and applicants from discussing their pay (base and incentive), thus fostering an environment where information regarding pay can be freely discussed.
Another significant change is the requirement for all job postings to include a pay range or rate, effective from November 1, 2023. This will enable applicants to be aware of the full range so they can negotiate for the higher end. However, it’s important to note that this does not apply to non-public job postings such as internal postings or emails sent to a friend about a job.
Looking forward, the PTA calls for a phased implementation of pay transparency reporting over the next four years. Employers are expected to collect gender and wage information from their employees to prepare a Pay Transparency Report. This report will detail what percentage of employees identifying as a man, non-binary or a woman fall within each quartile of the company’s wages (top 25% of earners, high 25%, mid 25% and lowest 25%).
The reporting requirement will begin with the BC government and the six largest Crown corporations by November 1, 2023. The requirement will then extend to all employers with 1,000 employees by November 1, 2024, to all employers with 300 employees by November 1, 2025, and finally to all employers with 50 employees by November 1, 2026. Upon completion, employers are required to post their pay transparency reports on their websites. This phased approach is designed to give employers of different sizes adequate time to adjust their practices and policies to the new transparency requirements.
The PTA is not without potential consequences. Small employers who pay less may attract fewer applicants, and some may struggle to decide what pay range to advertise for new jobs. Others might post wide pay ranges to maintain flexibility and uncertainty. By prohibiting restrictions on discussing wages, firms will need to remove any policy or contract term requiring confidentiality of pay or bonus, and hiring managers and recruiters must avoid asking applicants about their current or past pay.
It’s crucial to note that as currently drafted, the PTA lacks enforcement mechanisms. We anticipate that this may change as the PTA is implemented and regulations are passed. However, its impact on promoting pay transparency and equity cannot be underestimated. As employers, it’s time to review application forms, train HR teams and managers, ensure recruiters comply with the new rules, and abolish rules about pay confidentiality.
On February 27, 2023, Ascent Employment Law Partner, David Brown, gave a short presentation on this topic with Geoff Howard, Howard Employment Law. This presentation is publicly available through our YouTube channel and may be viewed here: https://youtu.be/4f1kU-Clrzs
If you have questions about the PTA, contact us. We want to help!