Equal Pay for Work of Equal Value: Employers' guide
As an employer within the federal jurisdiction, you have a responsibility to ensure that workers in your establishment receive equal pay for work of equal value.
Equal pay for work of equal value, or pay equity, has been a requirement of the Canadian Human Rights Act since 1978. It is now policy in eight of Canada’s provinces and the Yukon Territory, as well as some countries of the European Economic Community, the Scandinavian countries, Australia, New Zealand and many American states.
The Canadian Human Rights Commission ensures compliance with federal equal pay policy with Labour Canada, and encourages employers to actively achieve pay equity through their own initiatives. Enforcement of federal equal pay legislation relies on complaints and investigations rather than mandatory timetables. It is, however, no less an employer’s obligation. This booklet will explain to employers governed by the Act what their rights and responsibilities are. It will also discuss why pay equity legislation was introduced, what its costs are, how it is implemented and the Commission’s role.
The wage gap
To understand why pay equity is required by Canadian law, we must look at the difference between salaries for male-dominated and female-dominated jobs. Women working full-time make an average of only seventy-two cents for every dollar earned by men. This is due partly to the lower salary scale of those jobs in which women tend to be concentrated, such as clerical work, sales and nursing. The wage gap between men and women has narrowed just eight percentage points since the late 1960s.
The persistence of the wage gap is more than an interesting statistical footnote. The underpayment of women workers has a direct effect on the financial well-being of many Canadian women and their families.
Causes of the wage gap
We all know that the market — supply and demand — plays a central role in wage setting. Differences in education, hours of work and experience are all partly responsible for pay discrepancies between men and women. But not all of the wage gap is caused by market forces. Canadian economists have estimated that twenty to thirty percent of the gap is due to discriminatory attitudes toward women and the jobs they have traditionally held, attitudes that have become ingrained in the economic system. Pay equity programs deal with this part of the wage gap.
Some of the wage gap is a result of deliberate policies in the past. Minimum and "family" wage laws passed in the first decades of this century effectively set women’s base salaries about a third lower than men’s. As a matter of fact, the legal minimum wage in some parts of Canada was lower for women until the early 1970s.
Why was this so? Partly because of prevailing perceptions about family responsibilities. Since men were seen as the breadwinners who supported the family, it was thought they should be better paid than women. Wages earned by women were regarded as little more than "pin money" or pocket change for secondary expenses.
A more general tendency to undervalue women’s work also played a role. Studies show that to this day, many people give lower ratings to resumés, works of art or job performance if they believe they are evaluating a woman’s efforts rather than a man’s.
Lower pay rates for female-dominated occupations became an accepted part of compensation systems. Although women’s roles and attitudes toward them have changed dramatically, the undervaluing of work done by women has not yet been eliminated from compensation practices. Few employers today consciously pay women less for their work. But such patterns remain in the system and they must be understood and dealt with before true equality between the sexes can be attained.
Pay equity seeks to narrow the wage gap by comparing jobs that could not be compared under the "equal pay for equal work" legislation passed in the 1950s because the latter required comparisons between jobs that resembled each other in every way. In contrast, pay equity relies on comparisons between jobs that have a similar overall value. It is the jobs themselves that are neutrally evaluated, not the people in those jobs. When jobs have the same total value, discrimination in wages is not permitted regardless of how many male and female employees are doing those jobs.
What is "equal value?"
Pay equity legislation defines value as a composite of four factors — skill, responsibility, effort and working conditions. Job evaluation plans are used to determine the value of each job in a consistent, equitable manner.
Job evaluation plans are not new. They have been used in large corporations for half a century. Data collected by government agencies show that a majority of establishments use job evaluation plans that could be adapted for pay equity purposes. The principle is simple. Each job must be rated in a way which is fair, unbiased and uniform. The content of jobs is broken down by the job evaluation plan into a standardized set of elements which fall under the four factors mentioned above. Points are awarded to jobs being evaluated, element by element, according to a standard scoring system. Evaluators must be careful not to overlook elements of work done by women that have been ignored or undervalued in the past, elements such as manual dexterity, record-keeping and exposure to illness.
After jobs are rated on each factor, the evaluator totals the scores. Jobs that appear quite different may still deceive the same final score. Let’s say, for example, that the male-dominated job of hospital research technician receives 125 points for skill, 55 for responsibility, 50 for effort and 20 for working conditions. That job is "worth" a total of 250 points. Now let’s say that the female-dominated job of nutritionist working in the same hospital receives 145 points for skill, 65 for responsibility, 30 for effort and 10 for working conditions. Overall, it also scores 250 points. Therefore, the nutritionist should be paid the same salary as the technician.
Under federal legislation, dominance of men or women in jobs is determined through the use of simple percentages — 70 per cent of the occupational group if it has fewer than 100 members in the establishment being considered, 60 per cent if it has 100 to 500 members and 55 per cent if it has over 500 members.
Only a few situations exist in which unequal wages for work of equal value may be justified. Under the Act, they include gaps-resulting from different performance appraisals, seniority, red-circling, demotion, training assignments and internal labour shortages. Unless a wage difference identified through job evaluation is produced by one of these factors, the employer must eliminate it.
How is pay equity implemented?
Once job evaluation has been used to determine the worth of different jobs, the wage rates of underpaid female-dominated jobs must be adjusted. The size of adjustments is calculated by plotting the job scores of male-dominated jobs and female-dominated jobs on a graph against wages.
Unjustified wage differences must be eliminated through increases in the salaries of underpaid employees. The law does not allow any lowering of pay to achieve equity. There are various methods for raising undervalued female-dominated jobs to the salary levels of male-dominated jobs. One widely used approach is to draw a line through the average salaries of relevant male-dominated jobs and bring each of the average salaries of the underpaid female-dominated jobs up to that line. Whatever method is chosen, the basic result must be the same — no job can be less well paid just because it is dominated by members of one sex.
How much does it cost?
Implementing equal pay for work of equal value costs less than one might think. In Ontario, which legislated comprehensive pay equity in 1987, the average cost of adjustments has been estimated at between 0.8 and 2.5 per cent of one year’s payroll.
Cost to the economy as a whole is also limited. Employment of women does not drop significantly, for example, even when wages rise to ensure equality. In Australia, which implemented across-the-board pay equity in 1972, female employment rates fell just 0.5 per cent as a result of wage adjustments. Also, the adoption of equal pay for work of equal value by most Western countries means that pay equity’s impact on competitiveness is minor. Moreover, recent research has indicated that raising the salaries of undervalued jobs may actually increase profitability by improving morale and productivity while reducing turnover.
In any case, what is spent on pay equity is only what those working in predominantly female jobs should always have been getting. Low women’s wages have, in fact, been subsidizing employers and male employees for decades. Adjustments made to salaries in female-dominated fields are not gifts; they are the right of all employees who have not been paid fairly in the past.
Starting the process
Under the Canadian Human Rights Act, persons working within federal jurisdiction, including employees of the federal public service, Crown corporations, and of the banking, interprovincial transportation and telecommunications industries, have the right to file a complaint with the Canadian Human Rights Commission if they feel underpaid because of their sex. After the Commission has been contacted by an employee, it examines the allegations to confirm that they may, in fact, constitute a case of pay discrimination which falls under the Commission’s jurisdiction. If so, the Commission appoints an investigator who gathers job-related information, conducts a job evaluation and reports to the Commission on whether there is discrimination and what wage adjustments, if any, are needed. All parties are informed of the investigator’s recommendations and are free to negotiate a settlement at any time in the course of an investigation. If they fail to reach a settlement and the Commission believes that further action is warranted, a conciliator may be appointed or a tribunal established to settle the case. Tribunal decisions may be appealed to the courts. To date, a little more than half of all equal pay complaints have been discontinued or dismissed. The remainder have been settled with wage adjustments.
The complaints process, unfortunately, is long, litigious and often expensive. The Commission believes it is far better when employers take the lead on equal pay by launching initiatives to close the wage gap in cooperation with employees and their unions. If carried out properly, pay equity initiatives can resolve equal pay problems before they reach the complaint stage, improve morale in the workplace and ensure compliance with legislation without causing unnecessary confrontation, disruption and costs. The Commission welcomes such initiatives and is always prepared to provide technical advice to help ensure their success.
How to contact the Canadian Human Rights Commission
The Commission would like to hear from you. We have material on equal pay for work of equal value and cases dealt with under the current legislation which you may find useful. We also organize periodic workshops to inform employers and employees about their rights and responsibilities under the Act.
''This document reflects the views of the CHRC at the time of publication and is subject to developments in jurisprudence and academic theory.''
Please contact one of the Commission’s regional offices in Halifax, Montréal, Toronto, Winnipeg, Edmonton or Vancouver or contact the national office in Ottawa.