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New Pay Transparency Laws Are Coming To Ontario. Here’s What You Need to Know.

In the latest cross-country trend toward better protection for Canadian workers and job seekers, the Ontario government has announced new legislation that will require employers to disclose salary ranges in their hiring process. 

As part of the proposed Working for Workers Four Act, 2023, the Ontario Ministry of Labour has stipulated new requirements for employers that include disclosing the use of artificial intelligence in hiring processes and listing salary ranges in job postings. This move toward increased transparency is expected to give workers more information and empower them to make informed decisions about their employment. 

New pay transparency obligations.

Under the new legislation, employers and prospective employers will be required to convey the expected pay or range of pay for an employment position. According to PayScale: 2023 Compensation Best Practices Report, only 27% of employers currently share their organization’s pay range for a job with prospective employees in the job posting. This type of legislation is aligned with the trend of soft-touch business regulation where governments hope to influence behaviour without imposing heavy costs or administrative burdens on employers. In most cases, a move toward increased transparency makes things better, not worse. Adopting pay transparency is considered a best practice, especially in light of the growing trend of remote work, where the publishing of salary ranges is a basic expectation among job seekers.

New job posting obligations.

The new legislation also stipulates obligations regarding publicly advertised job postings that would require employers and prospective employers to disclose the use of artificial intelligence in their hiring process. This includes the use of AI to screen, assess or select applicants for a job posting. If used, companies will be required to include a statement directly within the job listing disclosing the use of AI. Other obligations include the prohibition against Canadian experience that will prohibit employers and prospective employers from imposing any requirements related to Canadian experience in job postings, as well as a retention requirement that will oblige employers to retain copies of all advertised job postings and subsequent applications for three years. 

Obstacles in transparency.

While the benefits of pay transparency are convincing, there are still obstacles that some organizations may have difficulty overcoming. Talking about money continues to be considered poor etiquette for many people, so pay transparency involves overcoming a cultural taboo for companies where pay secrecy has been the status quo. Pay transparency is also not a one-size-fits-all solution, meaning total transparency and full disclosure might be more harmful than helpful. This makes striking a balance and finding the right degree of pay transparency a challenge for companies to thoughtfully navigate. Finally, creating a compensation education system within an organization that includes an equitable framework for grounding pay structures in concrete data is a complex undertaking where many employers fall short. There are many factors to consider such as experience, education, industry standards, geography, and more. Companies have the challenge of developing a fair assessment of pay equity and communicating the framework with employees for the sake of robust compensation education.  

Enhanced transparency for an equitable workforce.

In the government’s news release, Ontario’s Minister of Labour, David Piccini said  “At a time when many companies are posting record profits, it is only fair they communicate transparently about how they pay workers.” As an equitable compensation practice, pay transparency can help address wage gaps and systemic barriers across the workforce. For women in Ontario who earn on average 87 cents for every dollar earned by men, the obligation to include salary ranges in job postings may help close the gender wage gap by providing an avenue to remedy any deviations from the legislation at their workplace. The inclusion of salary information can also prove valuable to prospective employees by streamlining recruitment and attracting more relevant candidates. The benefits of pay transparency ultimately serve the entire workforce by empowering employees while also putting employers in a better position to thrive. 

Keep an eye on the Orchard Benefits Blog for further updates,  as we continue to monitor this important legislation.