PAY EQUITY HEARINGS TRIBUNAL
PE 0491-94 The Law Society of Upper Canada, Applicant v. Unknown Respondents, Respondent
Before: Heather MacNaughton, Vice-Chair, and Members Bruce Budd and Margaret Kvetan
Counsel: Carolyn L. Kay-Aggio for The Law Society of Upper Canada
Cite As: Law Society (No. 2) (February 18, 1999) 0491-94
DECISION OF THE TRIBUNAL, FEBRUARY 18, 1999
The Applicant, the Law Society of Upper Canada (“Law Society”) applied to the Tribunal for an order revoking the Review Officer’s Order in respect of their Pay Equity Plan, and for an order that their Pay Equity Plan is in compliance with the Pay Equity Act, R.S.O. 1990, c. P.7 as amended (the “Act”).
As a result of a direction from the Tribunal, the Law Society posted its application in the various establishments at which it carries on business. In response to the posting, individual respondents filed responses to the Law Society Application. The Law Society achieved a settlement with all but one of those respondents, Karen Pawlowski. Pawlowski did not appear at a scheduled hearing date before the Tribunal. We were advised that the Law Society has been unable to locate Pawlowski, despite repeated attempts to do so. The Tribunals’ Office staff have had similar difficulties. We were further advised that Pawlowski was not a member of any of the job classes which would be affected by the outcome of this Application. On that basis, we were prepared to proceed in the absence of Pawlowski.
After hearing oral submissions, the panel directed the Law Society to proceed with its Application by way of written submissions. We have since received and reviewed their written submissions. Those submissions included:
an affidavit from Mary Farrell who, from September 15, 1988 until at least July 21, 1993, held various human resources positions within the Law Society, and penultimately, the position of Director of Human Resources; and
an affidavit from Richard Tinsley who, since December 1988, has held the position of Secretary to the Law Society.
The Issues
- The Law Society objects to five separate aspects of the Review Officer’s Order. First, they submit that the Review Officer was wrong when she determined that the “job rate” for each of the lawyer job classes should be the highest rate available to be paid to the job class. This, they submit, ignored the existence of valid salary ranges, and a merit based bonus system which was attainable only after achieving certain clearly published and applied criteria. Second, they submit that the Review Officer was in error in finding that the position of Director, Continuing Legal Education was a female job class. Third, they object to the Review Officer’s finding that the first individual hired into the position of Faculty Instructor was a member of a separate faculty instructor job class. Fourth, they object to the Review Officer’s Order that the Law Society breached section 13 of the Act by widening the pay gap after January 1, 1988 and prior to the posting of the pay equity plan. Finally, they object to the Review Officer’s award of interest. We deal with each of the first four issues in turn. As a result of our findings, it is not necessary for us to deal with the issue of interest.
The History
The findings of fact which follow are based on the affidavits that were filed, with their attached documents. Because of the absence of a respondent, the affiants were not subjected to cross-examination. We have, therefore, accepted the evidence contained in the affidavits.
The Law Society is the governing body for lawyers in the Province of Ontario. It is a private sector employer with 100 - 499 employees and, as such, was required to post a pay equity plan by January 1, 1991, with pay equity adjustments, if required, to begin on January 1, 1992.
In 1984 and 1985, a salary administration plan was introduced by the Law Society which, on the basis of job descriptions and a system of relative evaluation, resulted in three groupings of employees below the level of senior management. Group III consisted of 4 levels, including professional and management positions. Each level had its own salary range which was adjusted annually by the cost of living. Movement within the salary range was achieved by merit increases awarded to individual incumbents.
Over time, the Law Society found that its salary administration plan bore little relationship to salaries being paid by comparable employers in Toronto and that distortions had developed which overvalued length of service and undervalued the quality of the work being performed. For that and other reasons, in 1988 the Law Society introduced the Hay System of job evaluation, and new salary bands were established after a survey had been conducted of comparable salaries being paid in the City of Toronto by general business and law offices.
Two job evaluation committees were created to complete the job evaluations: one for Management and Professional Staff, and one for Support and Administration Staff. The Management and Professional job evaluation committee dealt with the ratings for lawyer positions within the Law Society. When a rating had been tentatively agreed upon by the committees, each voting member voted whether s/he agreed with the rating. Final ratings were determined on the basis of majority decision.
Once all the management and professional jobs were evaluated, spreadsheets were developed, and positions grouped into appropriate bands with the assistance of the Hay consultant. The new salary administration plan was introduced in March 1989 and provided 5 pay bands for lawyers which were brought into effect as of January 1, 1989, and subsequently increased by 6% on July 1, 1989. Those bands were as follows:
BAND
HAY POINTS
SALARY RANGE
Solicitor 1
350 - 475
January 1/89 $40,000-50,000
July 1/89 $42,400-53,000
Solicitor 2
476 - 575
January 1/89 $46,400-58,000
July 1/89 $49,184-61,480
Solicitor 3
576 - 650
January 1/89 $52,000-65,000
July 1/89 $55,120-68,900
Solicitor 4
651 - 750
January 1/89 $56,000-70,000
July 1/89 $59,360-74,200
Solicitor 5
751 - 850
January 1/89 $64,000-80,000
July 1/89 $67,840-84,800
While there was some confusion as a result of the terminology used in the affidavit of Ms Farrell, it appeared that, for the Law Society purposes, the highest salary in the range indicated for each band represented the “job rate”, the rate that everyone in the band could expect to achieve at some point. All employees were placed in the new bands at a level which ensured that no one suffered a decrease in compensation. Placement was determined having regard to a number of factors including: prior experience; relevance of that experience; year of call; and previous salary. We were advised that gender played no role in that determination.
Movement through the range was based on merit. It was expected that a person performing in a fully satisfactory manner would move through the salary range at 5% a year and would reach the top of the range or job rate in four years. Movement through the range could occur more or less quickly, depending on an individual’s performance. In addition to the salary ranges, the Law Society implemented a paid bonus system which was available to individual employees in all job classes who performed at an exceptional level. A Staff Performance Appraisal System explained the progression through the salary range (based on merit) and outlined the criteria for awarding bonuses beyond the job rate. All employees were made aware that their performance rating, during the performance appraisal process, determined their salary increase in accordance with the policy. In addition, the bonus structure and entitlement was explained. The maximum bonus, as a percentage of the job rate, was 15%.
In August 1989, the Ontario Ministry of the Attorney General announced a new compensation plan for lawyers which substantially increased the salaries paid to lawyers employed by them. The Law Society reacted to this government initiative and, in order to remain competitive, adjusted its pay bands, combining Solicitor Levels 1 and 2 into one band, thereby creating a large spread from the minimum salary to job rate. Although it would now take 7 years based on satisfactory performance to move from the bottom of the range to the job rate, the new banding created a higher job rate for all positions in the combined band, and larger annual increases to compensation. Placement of employees into the new bands was once again based on the same list of factors earlier applied, i.e.: prior experience; relevance of that experience; year of call; and previous salary. Once again we were advised that gender played no role in that placement.
The new salary bands were effective on July 1, 1990 and were as follows:
BAND
HAY POINTS
SALARY RANGE
Solicitor 1
350 - 575
$45,000-70,000
Solicitor 2
576 - 650
$60,000-80,000
Solicitor 3
651 - 750
$67,500-90,000
Solicitor 4
751 - 850
$75,000-100,000
The highest number indicated in the salary range was, once again, the “job rate”. Compensation above the job rate was available where performance ratings frequently or consistently exceeded the job requirements and was payable by way of a bonus.
- The Law Society did not consider gender predominance of the various job classes when instituting its salary administration process, but subsequently determined which job classes were male and female dominated. The Law Society then prepared and posted a pay equity plan on July 22, 1991. The Law Society commenced adjustments to those entitled on July 1, 1991, in advance of the mandatory date for payment of those adjustments.
The Job Rate Issue
Job rate is defined in Section 1 of the Act as the “highest rate of compensation for a job class”. The job rate is the highest rate actually paid, or available to be paid, to a job class regardless of whether that rate exceeds the maximum amount set out in the salary range. Based on this definition, the Review Officer concluded that when deciding the job rate for the male comparator job classes, she should consider the highest actual rate paid to incumbents in the job class. Thus, while the Law Society had achieved pay equity between the top of the salary range for the female job classes consistent with their male comparator, they had not achieved pay equity with the higher rates of pay earned by some incumbents in the male comparator job classes. The Review Officer ordered that adjustments be made to the female job classes to the higher rates of pay. The Law Society argues that, in so doing, the Review Officer failed to take into account that the higher rates paid to the male comparator job classes included a “bonus” portion which, it now says, qualifies for a section 8 exception.
The Act recognizes that certain circumstances might exist which would explain differences in the actual rates paid to a female incumbent and her male comparator, and sets out circumstances which give rise to permissible differences in section 8. The effect of a section 8 exception is not to alter the job rate for the male comparator, but to justify not redressing the entirety of the discrepancy between it and the job rate of any comparably valued female job classes. (Welland County General Hospital (1994), 5 P.E.R.12) The applicable exception in this case is as follows:
8(1) Exceptions. This Act does not apply so as to prevent differences in compensation between a female job class and a male job class if the employer is able to show that the difference is the result of,
(c) a merit compensation plan that is based on formal performance ratings and that has been brought to the attention of the employees and that does not discriminate on the basis of gender;
To qualify under the exception, the Law Society must be able to show that there was in existence a compensation plan, based on a formal performance appraisal system that was known to the employees. Based on the evidence filed before us, we have concluded that such an appraisal system existed and was explained in detail to the employees. They were provided with an explanation of progression through the salary range based on performance and details about the level of performance required to obtain a merit award (bonus). Because such a merit system is an exception to the requirement to achieve pay equity otherwise contained in the Act, which is itself remedial legislation, the Tribunal will narrowly construe it. Hence, employers who seek to rely on it can expect their practices to be scrutinized carefully to ensure that they are consistently applied. Further, we must be satisfied that gender bias, which might not be apparent on the face of a merit system, does not creep in in its application. There was nothing in the evidence filed before us, nor apparently submitted to the Review Officer, which would lead us to conclude that gender bias existed in the application of the performance appraisal system.
We note, however, that the Law Society, failed to indicate in its posted pay equity plan that it was relying on an exception in section 8 as is required by Section 13(2)(c) of the Act. Had they done so the Review Officer’s Order might have been different. We, therefore, revoke the Review Officer’s Order with respect to the job rate issue but direct the Law Society to post an amended pay equity plan in the various establishments in which it carries on business noting their reliance on the section 8(1)(c) exception. We further order that a copy of this decision be posted alongside the amended pay equity plan.
Gender Predominance of the Director of Continuing Legal Education
The Act requires an employer, in a non-union work environment, to determine the gender dominance of a job class. The definitions of female and male job classes in Section 1(1), and the factors to be considered in Section 1(5), assist in that determination. The factors to be considered are: historical incumbency, which includes incumbency at the time of assessing the job, and gender stereotypes of fields of work.
The Law Society was candid in acknowledging that they had, throughout the pay equity process, treated the Director of Continuing Legal Education as a female job class. The Review Officer found that, as a female job class, it was entitled to an adjustment. In the process of responding to the complaint at Review Services, the Law Society said that it had made an error with respect to determining the gender dominance of the position. It advised the Review Officer that, based on historical incumbency, the position was male and that it would repost the Pay Equity Plan showing that change.
The Review Officer did not accept the position of the Law Society on the basis that it was “inappropriate for her to accept this argument at this stage”, and because the Law Society had failed to provide sufficient reason that a change was justified. She further found that in terms of both present incumbency and the gender stereotype of lawyers’ jobs in the area of education, the Director of Continuing Legal Education was a female job class.
A similar change in position with respect to the gender dominance of a position was argued before the Tribunal in Dufferin-Peel Roman Catholic Separate School Board Applicant v. Several Employees and A Group of Employees, Respondent. In an unreported, interim ruling, the panel did not allow the Applicant to, for the first time during the hearing, change its position with respect to the gender predominance of a job class when it had consistently taken the position that the job class was female in its pay equity plan, its pleadings, and its pre-hearing memorandum of agreement.
We find that the situation in this case is distinguishable, and that by raising the gender dominance of the position of Director of Continuing Legal Education at Review Services, and then consistently maintaining its position thereafter, the Law Society has raised this as a legitimate issue for our determination. We are of the view that no prejudice to any party results because the broad posting of both the Review Officer’s Order and the notice that was required by the Tribunal of the Law Society Application in this matter, gave all present and former employees, who might have been affected by this change in position, notice and the opportunity to object to it.
Based on the information before us, including a detailed history of continuing legal education at the Law Society prepared by Alan Treleaven, it is apparent that, based on the incumbency at the time of the assessment, the Director of Continuing Legal Education was a female job class but that, historically, it had been male. This does not appear to have been disputed by the Review Officer. She determined, however, based on the gender stereotype of the position, that it was female.
It was not apparent to us how the Review Officer was able to reach this conclusion. We take note of the fact that for most of the history of the Law Society the profession of “lawyer” was male. Hence, in all likelihood, its governing body, in all of its Director positions, would have had the same gender predominance. Further, it is difficult, if not impossible to stereotype a single-incumbent job in an organization of which there are few others of its kind across Canada. In addition, it is not at all certain that other Law Societies would have a similar job class. We have, therefore, concluded that such a small sample is not capable of statistically significant data and, hence, gender stereotyping of the position would not be helpful to us. It was not, therefore, surprising that no evidence was filed before us in this regard.
In the result we find that the position of Director of Continuing Education is not a female job class, and as such is not entitled to a pay equity adjustment. We revoke the Review Officer’s Order in this regard.
Job Class - Faculty Instructor
The Review Officer found that an individual was hired by the Law Society into the position of Faculty Instructor in May of 1989. As a result of interviewing the Faculty Instructor, the Review Officer concluded that the position held by her was sufficiently dissimilar to that of her colleagues such that it was inappropriate to consider her position, and salary rate, in the same job class as other Faculty Instructors, this despite acknowledging that the job duties which made the position dissimilar were of a temporary nature.
In her affidavit, Mary Farrell, states that the position of Faculty Instructor was first filled in September of 1989, although a formal offer of employment was not made until November 27, 1989. It was acknowledged by the Law Society that in the creation of the position there were some additional duties and responsibilities undertaken by the first incumbent. The Law Society submits that those duties ceased in February or March of 1990 and did not form part of the job responsibilities of the position thereafter.
The Act sets out four criteria for determining which positions comprise a job class in the definition in Section 1(1). They include positions which have: similar duties and responsibilities; similar qualifications; similar recruiting procedures; and the same compensation schedule, salary grade or range of salary rates. Having reviewed the facts detailed in the affidavit, and the attached exhibits, we have concluded that the Law Society appropriately included the Faculty Instructor position of its first incumbent within the same job class as the other instructors. The Review Officer appears to have been in error with respect to the start date. The short time period during which additional duties are assumed, in a start-up phase for a position, does not create a separate job class. Had those duties continued for a longer period of time, a separate job class might well have been established.
The Widening of the Pay Gap
While this issue appeared to have been resolved amongst some of the original respondents to the Law Society Application, in their submissions, the Law Society has asked us to address it. In light of our finding set out above that the Review Officer was wrong in finding that the job rate was the highest actual amount paid to the job class, we are of the view that the calculations set out in the Order with respect to the amount of adjusted pay are in error regardless of our finding below.
That being said, we still have the interpretation issue before us of whether the Law Society, by widening the pay gap between the effective date of the Act, (January 1,1988) and the implementation date for a private sector employer of their size, (January 1, 1992), is in breach of Section 13(11) of the Act.
We adopt the reasoning of the Tribunal in Regional Municipality of Peel (1992), 3 P.E.R. 191 as follows:
Subsection 13(11) of the Act provides:
Every employer who prepares and implements a pay equity plan under this Part shall be deemed not to be in contravention of subsection 7(1) with respect to those employees covered by the plan or plans that apply to the employees but only with respect to those compensation practices that existed immediately before the effective date.
Essentially, this provision provides that a wage gap between female and male comparator job classes that arose as a result of compensation practices that existed prior to January 1, 1988 the effective date of the Act, is not a contravention of the requirement to establish pay equity pursuant to subsection 7(1) of the Act. The Review Officer held that any change in compensation practices that occurs after January 1, 1988 which has the effect of increasing the size of the wage gap is a contravention of the Act which must be corrected.
The panel went on to hold that any compensation adjustments that were required to adjust for the widening of the pay gap to regain compliance with sections 13(11) and 7(1) were not part of the calculation of the one per cent of payroll or the amount required to achieve pay equity.
We acknowledge that a wage gap, identified as of January 1, 1988 may widen for a number of reasons. These could include compensation increases tied to anniversary dates, percentage increases across the board which differentially impact the higher paid job classes or, as in this case, the implementation of a new salary structure to react to market forces outside the control of the Law Society and to remain competitive. Ultimately, when the Pay Equity Plan is posted and the adjustments are made, that increased wage gap will be addressed. However, such widening is a breach of Section 13(11).
Any adjustments required to redress the widening of the gap are immediately payable and are not subject to the 1% payroll cap on funding for adjustment. Because the Law Society paid its adjustments in advance of the required payment date, and because they paid adjustments earlier than the time frames required under the Act, any readjustment for payout with respect to the widening of the gap may not be necessary.
We therefore revoke the Review Officer’s Order in this regard but direct the Law Society to review its compensation adjustments between 1988 and 1992 (or in this case the earlier date on which adjustments were paid out) and to make payments to those employees entitled, if required.
Order
- The provisions of the Review Officer’s Order as referred to above are revoked.
Dated at Toronto this 18th day of February, 1999.
Heather MacNaughton, Chair
Bruce Budd, Member
Margaret Kvetan, Member