Commport Communications International Inc. v. Pay Equity Office, 2014 CanLII 13905

1247-12-PE Commport Communications International Inc., Applicant v. Pay Equity Office, Respondent.

BEFORE: Mary Anne McKellar, Acting Chair, Carla Zabek and Carol Phillips, Members.

APPEARANCES: Carolyn Kay, Stephanie Jeronimo, Ellen Zaunick, Ken Strom, Lindsay Regina and David Muir appearing for the applicant; no one appearing for the respondent.

DECISION OF THE TRIBUNAL: March 20, 2014

Introduction and Background

1This is an application under the Pay Equity Act, R.S.O. 1990, c. P.7, as amended (“the Act”).

2The applicant (“the Employer”) is a non-union employer. Its obligations to establish and maintain pay equity under the Act arose as of 2000.

3The Review Services branch of the Pay Equity Office first issued an order against the Employer in 2006 directing it to implement pay equity and the Tribunal confirmed it in 2007. Subsequently Review Services was further involved in assisting the Employer to comply with that direction. This process culminated in Senior Review Officer Tiziana Isgro issuing a further order dated February 6, 2012 (“the Order”). The Order directed the Employer to take a number of specific steps to achieve pay equity.

4In this application, the Employer seeks to have the Tribunal revoke the Order to the extent necessary to permit it to post and implement a pay equity plan that it has now developed, as a result of retaining counsel and a consultant after the Order was issued.

5Notice of this application and the desired remedy was provided to affected employees pursuant to a decision of the Tribunal (differently constituted) dated June 19, 2013. No individual filed a response to this application or sought to participate in the hearing that took place on January 9, 2014.

Facts

6The only party in attendance at the hearing was the Employer.

7The Employer had two witnesses in attendance, for each of whom a detailed will-say statement had been filed with the Tribunal.

8Ellen Zaunick is a founder, owner and the Vice-President of the Employer. She was affirmed as a witness and adopted the contents of her will-say statement. That statement sets out the lengthy history of the Employer’s involvement with Review Services. Ms. Zaunick was asked no follow-up questions by her counsel.

9Ken Strom was a Senior Principal Consultant with the Hay Group from June 2011 until February 2013. As set out in his will-say statement, the content of which he also adopted under affirmation, prior to his employment with the Hay Group, he had extensive experience as a compensation consultant. At the time he was retained by the Employer on February 24, 2012, Mr. Strom had been assisting clients for more than 12 ½ years in their efforts to comply with the requirements of the Act.

10Mr. Strom was retained to do two different, but related things: (1) review the Order and provide the Employer with advice respecting it; and (2) starting from December 31, 2011, develop a job evaluation methodology and compensation structures that the Employer could maintain on a going forward basis.

11Mr. Strom reviewed the Order and advised the Employer to file an application objecting to it with the Tribunal. He had several concerns with the Order and supporting documents, based on his review of those materials: (1) two Accounting Assistant positions scored at a similar level to Programmer and Network Support Analyst, although Mr. Strom would have expected the knowledge/skills and responsibility requirements of the latter two to have been higher; (2) it was not clear to him that the gender predominance of the job classes had been determined in accordance with the Act, and it appeared to him that certain jobs treated as separate job classes might have been better grouped into one job class; (3) the banding structure used by the Review Officer generally employed progressively wider bands (which is not unusual) for the higher scoring job classes, but included one anomalously narrow band that was not consistent with that approach, and was so narrow that a job class’s evaluation on one single factor could determine its placement within that band; (4) he had concerns that the male wage line did not accurately reflect the value/compensation ratio for male job classes in the organization both because it was calculated inconsistently from year to year, with male job classes appearing and disappearing from the calculation, and because a narrow sample (three or four) of the available male job classes (nine to twelve) was used to calculate it; and (5) the calculations of the adjustment for a part-time employee was incomplete for one year, and not consistent in other years with the hours that the employee worked.

12Mr. Strom’s testimony further explained some of his concerns noted above. He provided several examples of problems he discovered when he examined more closely the job ratings that had been used as the basis of the Order. He found that the Accounting positions in question, which he was advised were clerical in nature, had been rated in terms of responsibility as if they had responsibility for preparing the budget, although he was advised that that was not part of their job duties. He also discovered that two job classes that worked side by side (Programmer and Senior Programmer) had received different ratings for “physical effort” when he would have expected them to be identical. Further, both those job classes received identical ratings for “knowledge/education/experience”, and there he would have expected them to be different. From his discussions with the internal job evaluation committee, he suspected that they may have evaluated what they perceived as the strengths of incumbents rather than the requirements of the job class, and he also confirmed his suspicion that no “sore thumbing” exercise had been carried out. As a result of these discoveries, Mr. Strom testified that he was not confident that any of the job rating results offered a reliable measure of the value of the work performed by the job class.

13In terms of the job-to-job comparisons reflected in the Order, Mr. Strom reiterated his concern about the banding structure that he identified in his will-say. In addition, he noted that his review of the materials relating to the regression analysis undertaken by the Review Officer (discussed in more detail in the following paragraph) also highlighted another issue with the banding structure. One male job class (Senior Programmer) was initially evaluated at 567 points and then in subsequent years at 572 points. Apart from the fact that he did not understand why the evaluation changed, Mr. Strom was concerned that the effect of the five-point change was to move the job class into another pay band. In his experience, that was reflective of both a poor job band design and a failure of the sore-thumbing exercise.

14Mr. Strom’s testimony amplified considerably his concerns with respect to the proportional value analysis reflected in the Order. Mr. Strom was provided with a copy of the regression analysis undertaken by the Review Officer and provided to the Employer, however, it seemed to him to be incomplete and he had some difficulty in following it. As noted earlier, his will-say statement identified a principal concern with it as being that too small a sample of male jobs were used to generate the male wage line. As he explained, the goal of creating the male wage regression line exercise is to generate a model of the relationship between compensation and value in the organization when gender is not a factor. Using too small a sample size of male jobs increases the likelihood that the model will not reflect reality. Mr. Strom found it particularly problematic that some male jobs that were evaluated in a similar range to some unmatched female jobs were not included in the regression analysis used to create the male wage line. Further, there were some inconsistencies from year to year in terms of which male job classes were included in that analysis. As well, the point values (or ratings) for some male job classes did not remain the same from year to year, and it was not clear why they had changed. In some instances, the incorrect point scores were attributed to a male job class, and in some cases the incorrect salary was used.

15Mr. Strom’s conclusion was that there were significant errors at every stage of the analysis reflected in the Order. Most fundamentally, he had no confidence that the jobs had been consistently evaluated.

16The Employer filed this application for review of the Order, and Mr. Strom continued to carry out the following activities, as described in his will-say statement:

11. Commport commissioned Hay Group Limited (represented by me as Senior Consultant) to undertake a comprehensive Pay Equity plan for the organization for the period 2002 through 2010. There were no pre-conditions placed on Hay Group (i.e. that the results be more favourable to Commport); rather we would adhere to all of the requirements of the Act and follow the guidelines for interpreting the Act that were provided by the Pay Equity Office.

12. I proceeded with the development of pay equity plan for Commport. I requested and received organization structure (i.e. organization charts and information on each job within the organization) as well as salary/compensation data for all employees for each year under review (2002 through 2010). I held discussions with Commport to clarify roles and responsibilities for all jobs and all incumbents for each year – this was significant in that some roles changed over time (with or without a change in job title) due to the evolving business and growing staff, and some incumbents changed positions. Starting with 2002, and proceeding on a year by year basis, I completed the following steps:

13. Identify each distinct job class in the organization

14. Identify the gender predominance of each job class in accordance with the statutory criteria

15. Evaluate each job class using the Hay Group job evaluation tool, which measures the skills/knowledge required to complete job accountabilities, the responsibility inherent in the job, the effort expended in completion of accountabilities and the conditions under which work is performed. The Hay methodology complies with the requirements of the Pay Equity Act. All evaluations were completed by Hay Group consultants, who are trained and experienced in the application of the evaluation tool, based on job documentation provided by Commport and on discussions with Commport as required to clarify roles and responsibilities.

16. Identified a job grade structure, based on a consistent mathematical progression of points, to support identification of "equal or comparable value" (for job to job comparison).

17. For each female job class, determined whether there was a male job class of comparable value (i.e. in the same grade/band) and where available, compared the compensation of the male comparator job class to the female job class using the "job to job" methodology to calculate any gender wage gap. Job rates for female and male job classes, and selection of the male comparator job class where there is more than one male job class in the grade/band, were identified in accordance with the Act.

18. Used the proportional value methodology to establish a male comparator job rate for unmatched female job classes where the job to job methodology could not be applied. To develop the "male trend line", used all non-executive male jobs in the organization in order to reflect the pay practices of the organization. Calculated gender wage gaps for unmatched female job classes.

19. It is my belief that the wage gap analysis completed by Hay Group is more appropriate and reliable than the analysis that forms the basis for the Order of the Review Officer. The proposed Hay Group analysis is based on greater rigour in the evaluation of job classes (evaluation by consultants with significant experience and expertise in applying the job evaluation methodology resulting in more accurate and consistent job evaluation data), employs job grade/banding structure that is mathematically consistent (in support of job to job comparisons) and considers a broader group male job classes that are more representative of the organization's pay practices in the calculation of a male trend line (in support of proportional value methodology). In addition, there has been extensive interaction between the consultant completing the analysis (myself) and Commport to validate company data (evaluations, compensation data) during the process in order to clarify and improve the analysis.

17Finally, Mr. Strom advised the Tribunal as to what remains to be done in respect of his work for the Employer:

14. A gender wage gap analysis has been completed for each year from 2002 through 2010: Attached at Tab A. On approval of the Tribunal to proceed with this analysis, I will complete the following steps:

15. Identify every employee, current or former, that is entitled to a pay equity payment and calculate such payments in accordance with the Act.

16. Prepare Pay Equity Plan documentation for posting.

Analysis

18As noted, the Employer did not employ 10 or more employees on the effective date of the Act. By 2000, it did have 10 employees. Only at that point was it required to comply with the Act.

19The Act requires the Employer to establish pay equity as of 2000 and to maintain it, however, it does not require the Employer to prepare and post a pay equity plan. Nor did the Order require the Employer to prepare and post a pay equity plan.

20An employer that is not required to prepare and post a pay equity plan may nevertheless choose to do so. That is what the Employer proposes to do. It seeks to have the Tribunal revoke the Schedules to the Order so that the Employer does not need to perform the steps set out therein to achieve pay equity, but may instead post and implement a plan reflecting the results of the analysis undertaken by Mr. Strom. The nature of that remedial request is clearly set out in the application. The employees affected by the application have had notice of it. None has chosen to participate in this proceeding or has taken a position opposing the requested remedy.

21We accept Mr. Strom’s uncontradicted evidence that there are serious flaws in the job evaluations, the banding structure, and the male wage line determinations on which the Order is based. Some of these flaws may be due to errors on the part of the Review Officer, but many are the result of inaccurate information provided by the Employer and a lack of training/understanding on the part of the Employer’s internal committee. The Review Officer was undoubtedly frustrated dealing with this Employer, and that is reflected in some of the comments in her Order. Nevertheless, we share Mr. Strom’s view that we cannot have confidence in the data underlying the Order, and that the more expedient way of achieving compliance with the Act in this workplace is not to conduct a lengthy hearing to review and correct all those problems, but rather to relieve the Employer from following the steps directed in the Order and permit Mr. Strom to continue the process he has begun. The notice he intends to provide to affected employees and the posting of the plan offer an important assurance as to the transparency of the exercise and afford affected individuals a meaningful right to raise any concerns they may have.

Disposition and Directions

22For the above reasons, Schedules A and B to the Order are revoked. The Order is varied to direct the Employer to post and implement the pay equity analyses completed by Mr. Strom forthwith. We note the Employer has made certain undertakings in its application:

18. The Applicant undertakes to provide the Review Officer with a listing of all employees, past and present, who will be receiving a pay equity payment with a detailed calculation setting out each individuals’ entitlement.

19. The Applicant will be calculating interest on those monies owed in a manner consistent with the Pay Equity Hearings Tribunal jurisprudence which requires 50% of the total amount owing to an individual be multiplied by the Courts of Justice interest rate in effect at the time the first adjustment was owing, in this case 2000. The applicable interest rate, therefore, is 5%.

20. Proof of payment of the amounts identified to the Review Officer will be paid no later than 60 days following the decision of the Tribunal in this Application.