The recent enactment of British Columbia’s Pay Transparency Act (the “Act”) has piqued widespread interest from both employers and employees throughout British Columbia. The Act, which took effect on May 11, 2023, endeavors to address the documented gender-wage gap in B.C. by imposing certain restrictions and obligations on BC employers.

Under the Act, employers are now prohibited from soliciting prior salary information from job applicants and from penalizing employees who share their salary information with fellow employees or prospective applicants, or those who seek information regarding their compensation or their organization’s pay transparency reports (discussed in greater detail below). Moreover, the Act mandates that employers disclose the anticipated pay range for each job opportunity that they advertise. The introduction of these restrictions and obligations has generated discussions regarding potential impacts on current workplace policies, as well as recruitment and employee retention.

The aspect of the Act that has, arguably, garnered the most attention is the introduction of annual pay transparency reports, requiring certain employers to highlight any differences in pay between employees of different genders within their organization. While many support the fact that this requirement increases employer accountability, it has also raised concerns regarding the potential for infringement on employee privacy.

Given some of the uncertainty surrounding the Act, we have set out to answer some of the questions raised by employers and employees during the Act’s first few months in force.

QUESTIONS FROM EMPLOYERS

Question #1: Does the Act apply to me?

If you are a provincially regulated B.C. employer, the Act applies to you. The Act does not apply to federal employers.

If the Act applies to you, you should consider whether you are a ‘Reporting Employer’, as defined under the Act. If so, you are required to submit annual pay transparency reports. Reporting Employers are employers that have the following number of employees on January 1st of the applicable year:

1. for 2024, 1,000 or more;
2. for 2025, 300 or more;
3. for 2026, 50 or more;
4. for a year after 2026, more than the lesser of 49 and any prescribed number.

Question #2: I have always had policies in place that prohibit employees from discussing their salaries with each other – what does the Act mean for these policies?

The Act now makes these policies unenforceable. If you were to take steps to enforce these policies by penalizing or disciplining an employee who shared their salary with another employee, you would be in breach of the Act. We recommend having a lawyer review your employee policies to ensure they comply with current legislation.

Question #3: If an applicant’s previous salary is available on a public website, am I able to look at that information when considering the applicant for a role at my company? If the applicant’s salary isn’t publicly available, could I ask the applicant’s reference or former supervisor about the applicant’s previous salary?

If an applicant’s previous salary is available on a public website, then, yes, you may access that information.

If an applicant’s previous salary is not publicly accessible, the Act explicitly prohibits you from seeking that information through alternative means, including asking the applicant directly or soliciting that information from a third party, such as a reference or former supervisor.

Question #4: I know that I need to include intended pay ranges in my job postings – how large can these ranges be? Does this information include bonus pay, overtime pay, commissions, tips, or benefits?

At this time, the Provincial government has not provided any guidance on the size of the pay ranges that employers must include in their job postings. The pay ranges advertised in job postings do not need to include bonus pay, overtime pay, commissions, tips, or benefits. Nonetheless, pay ranges should be established in good faith.

Question #5: I am a Reporting Employer under the Act – what is a pay transparency report and how do I prepare one?

The current regulation published under the Act (the “Regulation”) sets out the information that must be included in Reporting Employers’ pay transparency reports. This information mainly pertains to differences in pay, including mean and median hourly rates, overtime pay, and bonus pay, between employees of specified gender categories.

The Regulation establishes the following gender categories: “man”, “woman”, “non-binary” and “unknown” (each a “Gender Category”). The “unknown” category is for employees that do not identify as being part of the other three Gender Categories or who do not wish to specify which Gender Category they identify with.

Employers must make reasonable efforts to collect the gender information necessary to complete the reports and, while doing so, should notify employees of the purpose of collecting such information; however, employees are not required to provide this information. If an employee does not wish to disclose their gender, their salary information will still be used in the report and their gender will be categorized as “unknown”.

Once the necessary gender and salary information is compiled, Reporting Employers must report on the mean and median hourly pay gap, overtime pay, and bonus pay of employees within each Gender Category. Reporting Employers must also rank their employees from lowest to highest rate of hourly pay and divide that list of employees into roughly equal quartiles representing the “Lowest Hourly Pay Quarter”, the “Lower Middle Hourly Pay Quarter”, the “Upper Middle Hourly Pay Quarter” and the “Highest Hourly Pay Quarter”, and then report on the percentage of employees that identify with each Gender Category within each quartile.

Additional guidance and examples of pay transparency reports can be found here.

Question #6: What are the repercussions for failing to comply with the Act?

As things currently stand, the government does not have the authority to impose fines or penalties for non-compliance of the Act, however this may eventually change.

That said, the Act establishes the position of “Director of Pay Transparency”, whose duties include supporting employers in complying with the Act and other prescribed responsibilities. Therefore, we expect that this role may one day expand to include enforcement. We further expect that the government will encourage compliance by publicly disclosing lists of non-compliant employers, or other similar means.

Notwithstanding the above, employers should continue to ensure that they are complying with the British Columbia Human Rights Code, which prohibits discrimination between employees on the basis of sex, amongst other protected grounds.

Question #7: Should I be concerned about these new requirements impacting company morale and employee retention?

Not necessarily. In fact, there are numerous advantages to enhancing pay transparency within an organization.

Pay transparency can help organizations to identify and rectify any internal discriminatory pay practices and create more standardized pay structures, leading to reduced discrimination and arbitrary discrepancies in pay among employees. 

Additionally, transparency promotes trust. When employees are uncertain how their compensation compares to that of their colleagues, it can lead to speculation and rumors. By providing employees with a more comprehensive view of the organization’s pay structure, pay transparency can bolster employee engagement and satisfaction.

Further, by increasing fairness and trust within organizations, pay transparency can promote lower turnover rates and reduce recruitment and training costs.

QUESTIONS FROM EMPLOYEES

Question #1: Will my personal information now be publicly available?

Not exactly. Pay transparency reports do not reveal the specific genders or salaries of individual employees, but rather the percentage of employees within a salary range that identify with certain gender categories.

Question #2: Do I need to provide my employer with information required to complete their pay transparency reports?

No, employees are not required to provide gender information to employers for the purpose of pay transparency reports. Your employer will already have your salary information, but any additional disclosure is voluntary. Additionally, you are entitled to at least one opportunity per year to update or make additions to any information you have provided your employer for the purpose of completing their pay transparency reports.

Question #3: Can I see my employer’s pay transparency reports?

Yes, Reporting Employers are required to post their pay transparency reports on their company website or, if they do not have a website, in a conspicuous place in the workplace. Reporting Employers must also make their pay transparency reports available to members of the public upon request. Further, your employer cannot penalize you for asking questions about its pay transparency reports. 

Question #4: What should I do if my employer has breached the Act?

While the Act does not contain any enforcement mechanisms, its stated aim is to establish a societal norm that values and promotes equal pay and pay transparency. Employees are encouraged to assert their rights and hold their employers accountable for fulfilling their obligations under the Act.

If you feel comfortable, we recommend speaking with your employer directly about any breach of the Act as your employer may not yet understand their obligations under the new legislation.

If you feel that you have been discriminated against on the basis of sex or any other protected ground and your employer is not willing to address or rectify the situation, consider consulting a lawyer about your rights under the British Columbia Human Rights Code.

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Article prepared by Jessica Jacobson and Connor Levy.

If you have any further questions about how the Act affects you or your organization, you can contact the Provincial government directly at PayTransparency@gov.bc.ca or through their general inquiries page here, or reach out to our MT+Co. Workplace Law Group.