ONCA Advances Pay Equity Legislation Enforcement of Proxy Method in Ontario Nurses’ Association v Participating Nursing Homes

On March 9, 2021, the Ontario Court of Appeal (“ONCA”) ruled in favour of Ontario Nurses Association (“ONA”) and Service Employees International Union (“SEIU”) Local 1 on the pay equity case Ontario Nurses’ Association v Participating Nursing Homes, 2021 ONCA 148 [ONA v PNH]. The case was a judicial review of the Pay Equity Hearings Tribunal (“Tribunal”) in 2016, and so the main question was whether the Tribunal was reasonable in its coming to its decision that employers like the Participating Nursing Homes (“Nursing Homes”) are required to maintain pay equity through the ‘proxy method.’ Ultimately, the ONCA ruled that the Tribunal’s decision was unreasonable since the Pay Equity Act (“Act”) makes it clear that proxy method to allow comparative analysis with male job classes is required to maintain pay equity. ONA v PNH has implications for enforcement of pay equity legislation for women-dominated workplaces like nursing homes, as well as the application of the reasonableness standard of review in the administrative law world, post-Vavilov.  

Legislative History of the Proxy Method

The Pay Equity Act, RSO 1990 c P7 (“Act”) was passed in 1987 as a result of the Green Paper on Pay Equity that evidenced a wage gap of 38% between women and men due to factors such as working hours, experience, education, level and rate of unionization, occupational segregated, and wage discrimination (Ontario Nurses’ Association v Participating Nursing Homes, 2016 CanLII 2675 (ON PEHT) [Tribunal Decision], para 18) While the factors were understood to stem from discriminatory histories of inequitable division of labour in households and undervaluation of what is deemed ‘women’s work,’ addressing the underlying sociological reasons were deemed outside the scope of pay equity policy (Tribunal Decision, para 18). Ultimately, the Pay Equity Act was intended only to address one factor which contributed to the wage gap: of wage discrimination by employers who do not pay women the same as men for equal or similar work. As such, the Act imposed a positive obligation on individual employers to ensure pay equity between what was traditionally known as ‘men’s work’ and ‘women’s work’ in public sector workplaces or workplaces of 10 or more employees. The gendered work was delineated by assessing job classes—defined as work that was similar in duties, qualifications, recruitment, and compensation—and that were 60% or more women within the class as ‘female job classes’ (Pay Equity Act, s 1(1)).

In 1987, the Act’s main methodology was for employers to compare job-to-job between male and female job classes in their workplace and ensure pay equity between them. However, this did not address pay equity issues for workplaces that were a majority of women workers (Tribunal Decision, para 25). Then in 1993, the Act was amended by the New Democratic Party government by adding two more methods as recommended by the Pay Equity Commission Report: the proportional method for when there are a small number of male job classes and the proxy method for when there are minimal or few male job classes (Tribunal Decision, para 35). The proxy method required an employer to look to a proxy employer that employed the same female job classes but had enough male job class comparators to achieve employment equity through the other two methods. The ability to compare female job classes with male job classes hence is key to enforcing pay equity.

The decades long issue since the Act, underlying ONA v PNH, is that Ontario is responsible for funding the pay equity adjustments for public-sector employers, however Ontario has not consistently met this obligation when the proxy method is applicable. To avoid its pay equity obligations, the Progressive Conservative government under Premier Mike Harris repealed the proxy provisions of the Act—this was soon struck down as violating section 15 of the Charter of Rights and Freedoms against women workers in proxy workplaces, and hence unconstitutional (Tribunal Decision, para 42). Accordingly, the Ontario government retroactively paid the $140 million proxy-pay on a one-time basis, but then refused to continue paying proxy pay equity adjustments until another Charter challenge was launched by five public-sector unions including ONA and SEIU resulting in a settlement of proxy-pay of $414 million by 2005 (History of Pay Equity Advocacy in Ontario, Ontario Equal Pay Coalition). This early history demonstrates the pattern of the Ontario government either refusing to fund proxy-pay for women-dominated workplaces or paying it intermittently to achieve pay equity on a one-time basis. Therefore, it has been Charter litigation brought by public-sector unions that results in Ontario actually having to comply with the Pay Equity Act and an increase in pay for women and ‘women’s work.’ It is within this political and legal battlefield that ONA v PNH figures.

ONA v PNH: Procedural History

ONA and SEIU applied to the Pay Equity Hearings Tribunal to argue that 143 for-profit homes entitled Participating Nursing Homes had the obligation not just to use to proxy method to achieve pay equity for its exclusively women-dominated workforce, but also use the proxy method to maintain pay equity. ONA and SEIU argued that despite the increasing value of the work done by Nursing Home employees—including registered nurses, registered practical nurses, and personal support workers—the Nursing Homes, and hence the Ontario government that funds them, had failed to maintain pay equity for their workers since 2005. They used the Municipal Homes for the Aged as the proxy workplace to compare for pay equity gaps because they employ similar female job classes like nursing as well as male job classes. ONA and SEIU argued that Charter values envisioning substantive equality are necessary for interpreting the Pay Equity Act. ONA and SEIU additionally argued that if the Tribunal found that Nursing Homes were not required to maintain pay equity by proxy, then the Pay Equity Act itself violated the Charter section 15 on the basis that it denied pay equity to workers in women-dominated workplaces that have no method to gain pay equity other than proxy.

The Tribunal ruled against ONA and SEIU and rejected their Charter argument by concluding that the Nursing Homes still had an obligation to meet its pay equity requirements but was not required to maintain them through the proxy method. On judicial review, the Divisional Court found that the Tribunal erred when it refused to consider Charter values when interpreting the Act’s objective to prevent wage discrimination. The Divisional Court asserted that “the touchstone of pay equity analysis is the comparison to male work, as men enjoy the benefit of compensation tied to the value of their work as opposed to their gender” (ONA v PNH, para 35). On appeal, the ONCA upheld the Divisional Court’s decision, ruling that the Tribunal was indeed unreasonable in its ruling against requiring the proxy method to maintain pay equity. However, the ONCA’s reasoning was different from the Divisional Court. The Attorney General of Ontario and Equal Pay Coalition were both intervenors at the ONCA.

ONA v PNH: A Post-Vavilov Reasonableness Analysis  

The ONCA decision was heard by a panel of five judges and the decision was split 3-2. Justice Benotto wrote for the majority while Justice Huscroft wrote the dissent. The two decisions diverged on the way in which the standard of review of reasonableness was applied to the Tribunal decision and the outcome of whether the Tribunal was reasonable or not in its decision—hence the ONCA was evaluating the Tribunal’s reasoning for its decision. This debate on how to apply the reasonableness standard of review makes ONA v PNH one of the significant appellate cases deliberating on the application of Canada (Ministry of Citizenship and Immigration) v Vavilov, 2019 SCC 65 [Vavilov].

The Majority: Giving Teeth to Enforcement of Pay Equity Legislation

The majority ruled that the Tribunal’s decision was unreasonable mainly because the Tribunal ignored the Pay Equity Act’s purpose, scheme, and plain wording when interpreting it in face of requiring proxy employers. The Act at section 4(1) outlines its purpose as “redress[ing] systemic gender discrimination in compensation for work performed by employees in female job classes” and at section 7(1) establishes the employer’s duty to “establish and maintain compensation practices that provide for equity” (ONA v PNH, para 1). At section 21.13, the Act specifically outlines the need to use the proxy method of comparing female job classes with a deemed male comparator to identify systemic gender discrimination—ensuring equal pay for equal work based on gender. Justice Benotto notes that the Tribunal ignored this legislative scheme, particularly section 21.13. Given that Vavilov describes an unreasonable decision to be one that did not consider a “key element of a statutory provision’s text, context or purpose” which would have lead it to arrive at a “different result,” the majority concludes that the Tribunal’s ignorance was indeed unreasonable and if it considered the legislative scheme requiring the proxy to fulfill Act’s purpose, the Tribunal would have steered it to a different result (ONA v PNH, para 55). Justice Benotto’s legal analysis supports the 1993 amendment which added the proxy method to the Act in the first place since women-dominated workplaces were unable to gain pay equity without it. Additionally, the majority decision addresses the issue of pay equity only being enforced when public-sector unions bring a challenge to the courts by ruling that employers have an ongoing obligation to maintain pay equity with the proxy method for women-dominated workplaces.

The Dissent: An Employer-Biased View of the Employment Relationship

Justice Huscroft in his dissent argues that the Tribunal’s decision was reasonable because the Tribunal did indeed consider all the necessary steps to arrive at its decision, including the purpose, scheme and plain wording of the Act and determined that pay equity could be maintained without the proxy method. In fact, Justice Huscroft claims that because there is a lack of plain wording direction on how the Act is to be maintained, that the Act does not intend for the proxy method to be used to maintain pay equity. The ONCA dissenting opinion and Tribunal decision both focused on the additional issue of practicality: they argued that requiring pay equity maintenance with the proxy method would be an “onerous task for the proxy employer” and a “substantial practical impediment” [ONA v PNH, para 82, 116]. The deference his dissent is providing to the Tribunal’s expertise is passively endorsing a position that favours the employer’s perspective and burden, instead of their legislated responsibility to create and maintain pay equity for workers.

Additionally, the dissent recalls that the Pay Equity Act is meant to be establishment-specific and not meant to create industry or sectoral wage standards—such as for nurses across nursing homes and seniors’ homes—and that discrepancies in their wages can be due to other factors like bargaining strength. Justice Huscroft writes “the Pay Equity Act is not intended to redress differences in the pay across employers per se; it is indented to address only those differences that are the result of systemic discrimination” (ONA v PNH, para 120). In doing so, the dissent is further establishing an individualistic and limited view of employment equity that focuses on the single employer and employee relationship. Additionally, the dissent implies that bargaining power is divorced from issues of gender discrimination, when rather, when in reality gender is one factor which affects the bargaining power of workers and unions. Within a classically liberal framing of the employment relationship that is grounded in the freedom to contract, protective legislation and unionization are methods which recognize and counteract the inherent power that the employer has over the worker. Seen in the context of other protective employment and labour legislation like the Employment Standards Act, Labour Relations Act, and the Occupational Health and Safety Act, the Pay Equity Act’s contribution to addressing gender discrimination should be seen in conjunction with, and not distinct from, addressing unequal bargaining power between employers and employees.

Limits of the Pay Equity Act: A Case for Sectoral Pay Equity and Beyond

The tricky situation that the ONCA dissent presents is as follows: the dissent’s reasoning clearly is based on a normative foundation that is sympathetic to employers and the Ontario government that funds pay equity—this falls flat in the face of the proactive and protective purpose of the Act to address systemic discrimination. However, the dissent is also accurate in describing the Pay Equity Act’s limits: it is not purposed to imagine pay equity across sectors like women-dominated sectors—but perhaps it should be. Why should feminized public-sector employees like nurses and personal support workers continue to be underpaid due to systemic discrimination—based on gender and additional intersecting factors of race, migrant status, and disability—just because they have different employers or unions? In this context, privileging the individual employer seeks to only advantage the employers at the expense of workers not paid equitably. The ONCA majority decision is of course a step towards recognizing pay equity for feminized workplaces via proxy method and thereby transcends the understanding of power dynamics within the individual employment relationships. Particularly, it highlights the benefit of unionizing as workers are able to have trade unions put resources towards worker-sided litigation that result in monetary and material benefit to undervalued workers.

As the Equal Pay Coalition has noted, many workers continue not to be paid equitably despite the Pay Equity Act coming into effect over 30 years ago. Significantly, non-unionized women workers do not experience the benefit of the Act since the enforcement by the employer is triggered by complaints to the Pay Equity Hearings Tribunal. Further, workers disadvantaged by intersecting grounds of race and disability continue to not receive equal pay for equal work despite the knowledge that racialized, feminized, and disabled workers are constantly underpaid and exploited within the current employment and labour law regimes.  In face of this, political will is needed to enact legislation that is beyond limited issues such as wage discrimination in the Pay Equity Act. The creation of the Act after all acknowledged but did not include in its scope the foundational reasons of why ‘women’s work’ is undervalued: of the historical division and social reproduction of labour, global migration of labour, unprotected job tenure, lack of protections, and increased vulnerability for those who are not able to access the minimum standards complaints mechanism. In this context, addressing wage discrimination is a band-aid solution and only a first step towards addressing inequity of work.

Lastly, it warrants noting that the Nursing Homes in ONA v PNH are for-profit. In times of pandemic, we simultaneously cheer front-line health workers like nurses and personal support workers while leaving them without holistic employment protections including pay equity, paid sick days, childcare, and workplace health and safety. COVID-19 highlights that for-profit employers in the long-term care industry have some of the most dangerous and deadly conditions for workers and residents. Further,  for-profit model of care highlights that disabled and senior residents are often commodified similar to workers’ labour to meet the employer’s bottom-line. This commodification inherently affects feminized, racialized, and disabled workers and residents the most. In addition to advances on pay equity protections in the courts and legislation, there is a need to begin to re-imagine the ways in which we address deep societal inequities through a disability-justice lens; to understand how cisheteropatriarchy, ableism, racism, and colonialism may be better addressed by systems of mutual aid and collective care than systems of capital accumulation and band-aid legislation.