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DESPERATELY SEEKING PROXY: COURT OF APPEAL DECISION MAKES PAY EQUITY MAINTENANCE AND CATCH-UP A LOOMING ISSUE

Ontario's Pay Equity Act aims to remedy systemic gender discrimination in terms of pay in predominantly female occupations. This is normally done by comparing male and female job classes within an organization.  However, many employers with jobs that are in “predominantly female occupations” lack comparable male groups within the organization. In such cases, the legislation provides a "proxy" method that involves looking at comparable women elsewhere who have achieved pay equity with men.

Through a complicated process involving proportional value comparisons and points, comparable job classes are selected.  One difficulty for “proxy-seeking employers” – who tend to be smaller organizations in the broader public sector – is that the necessary comparator classes are often only found in large public sector employers (hospitals, municipal long term care facilities).  The practical implication of this is that the gap will never close, meaning that these employers are always playing catch-up – typically by applying 1% of their annual payroll to pay equity adjustments based on the original comparator rate.

Now, Ontario’s Court of Appeal has essentially affirmed a previous Divisional Court decision (we wrote about it here) that has potential repercussions even for those employers who have previously achieved pay equity through the proxy method.  After the introduction of the Pay Equity Act in 1994, those proxy employers who were able to achieve pay equity tended to have done so within 5 – 10 years.  The Court of Appeal, however, in Ontario Nurses’ Association v. Participating  Nursing Homes has said that is not good enough, pronouncing that “"the text, context, scheme and purpose of the act make it clear that ongoing access to male comparators through the proxy method is required to maintain pay equity."  As a result, those employers who achieved pay equity and then didn’t give it another thought may now have to go back and compare again, to see if they continued to maintain pay equity after having achieved it – if not, they might be on the hook for years, or decades, of maintenance payments.

Although this particular decision currently applies only to those organizations who were parties to the litigation, it is easy to see how the reasoning can and may be applied more broadly; indeed, other public-sector unions have been waiting on the outcome of this litigation, especially on the heels of the 2018 Supreme Court of Canada decision in Quebec (Attorney General) v. Alliance du personnel professionnel et technique de la santé et des services sociaux that shot down a legislative attempt to do away with ongoing maintenance obligations.

It is also worth reminding readers that this case originally started as a case before the Pay Equity Hearings Tribunal, which decided that the Pay Equity Act did not require ongoing comparisons once pay equity was achieved.  As referenced by Justice Huscroft in his dissent at the Court of Appeal, the Pay Equity Hearings Tribunal is precisely the type of expert administrative tribunal whose decisions are typically given a significant degree of deference on appeal before the courts.  The fact that the Court of Appeal has here seen fit to overturn such a decision likely means that the litigation is not over.

In the interim though, to echo our previous advice: broader public sector employers will need to dust off their pay equity plans to evaluate their current pay equity status, make sure their record keeping of their pay equity efforts are in order and carefully consider their position in any collective bargaining negotiations until this issue is played out in the courts. 

CCP will keep you posted on any new developments with this case.   For a list of CCP team members with expertise in pay equity, please click HERE.