Pay Transparency Act rules now in effect will change hiring and job searching practices
We are writing further to our Employer Alert of June 12, 2023 on the Pay Transparency Act (PTA) to confirm it has now been passed, although some provisions come into force later. Under Phase 1 of the PTA, employers will have to change how they communicate about pay when recruiting as follows.
- employers must not sanction or take adverse actions against employees who share their pay information or discuss their pay;
- employers may no longer ask job applicants about their pay at their current or other past employers;
- From November 1, 2023: employers must post pay or pay ranges for all publicly advertised job opportunities;
While the PTA does not specifically make reference to recruiters, employment agencies, or other individuals acting as agents on behalf of employers, we believe that the same rules in the PTA would apply to those agents. Otherwise, employers would be able to skirt their obligations under the PTA by simply using an agent.
Some potential practical implications of these new rules include:
Impact 1: Reduced confidentiality of pay: Employers who fiercely protect the confidentiality of pay for each employee and have a policy or even a contractual clause prohibiting discussion of pay need to cease such practises and adapt to greater pay transparency. Unfortunately, this rule and the requirement to post pay ranges for all jobs also means competing employers (and their recruiters) are better able to gather intelligence on pay scales and target “underpaid” employees.
Impact 2: Expect wider pay ranges in some job postings: Employers who either prefer to keep pay rates confidential from co-workers and competitors or really just are not sure what pay to post may decide to post broad pay ranges to make it difficult for applicants, competitors and co-workers alike to really know the pay on offer.
Impact 3: Employers are unable to calibrate a pay offer to a candidate’s existing pay:. Under the new rule banning such enquiries, employers will have to formulate pay offers without asking for current pay. In cases where an employee rejects a pay offer as “less than I am making now,” a skeptical employer may want to respond that they would only consider increasing the offer if they received verification of such higher earnings – but without explicitly asking for it.
Impact 4: Smaller employers will have to consider and post a pay range for each new job: The many small and medium sized employers who traditionally did not post a pay range now have to invest time in deciding what a reasonable pay range is, possibly with help from pay consultants or recruiters. Job searchers (and hiring managers) may save time by not applying for jobs with pay ranges below their requirements, although in some cases miss out on hearing about offsetting advantages such as stock options.
Overall, the PTA should improve competition in the labour market, in particular by allowing both job applicants and incumbent employees in a similar role to gather better information about pay rates and thus ask for and get higher pay. Capitalist market theory says this will ultimately lead to higher overall wages and higher pay for the most qualified/in demand talent.
Still to come under the PTA are regulations which will require employers down to 50 employees in B.C. to post aggregated information about pay received by various levels or categories of employee with breakdown by gender and potentially other criteria.
For a more detailed discussion of the PTA see Geoffrey Howard’s article in Business in Vancouver: https://biv.com/article/2023/06/pay-transparency-act-rules-will-change-hiring-and-job-searching-practices
Note: As of June 22, 2023, HEL is pleased to announce its strategic alliance with BC-based employment and labour law firm Ascent Employment Law. Read more about this at: https://howardemploymentlaw.ca/hel-announcement-of-strategic-alliance-with-ael/
