Pay Equity Office The Service Industry Monitoring Program

Transcription

1 The Service Industry Monitoring Program

2 The Service Industry Monitoring Program May 2014 ISBN ISBN ISBN Contact: [Print] [HTML] [PDF] Pay Equity Commission Pay Equity Office 180 Dundas Street West Suite 300 Toronto, ON M7A 2S6 Telephone: Toll-free: TTY: TTY Toll Free: Facsimile: Website: Ce document est disponible en français

3 Contents 1: Executive Summary : Introduction : Background Service Industry Monitoring Program Description of the Industry : Process : Results File Overview File Disposition Adjustments Closure Rates : Conclusions : Appendix... 17

4 1: Executive Summary In February 2007, the Pay Equity Office (PEO or the Office) launched the Service Industry Monitoring Program. Monitoring programs allow the Office to assess the current state of pay equity knowledge and compliance in a targeted manner, and to proactively promote awareness of the Pay Equity Act (PEA or the Act). The Service Industry Monitoring Program targeted the retail/wholesale and hospitality sectors. The program objective was to increase point of contact with as many employers in those sectors as possible, and assist employers where necessary to ensure compensation practices were in compliance with the Act. Over the course of the program, 4,000 employers were contacted and files were opened for each one. The information received from employers was assessed by the PEO using an internal set of criteria. If the employer s compensation practices did not appear to reflect pay equity, and it was likely that adjustments would be required, the Office launched an investigation by assigning a review officer to the file. Review officers were also assigned to investigate files if the employer did not report, or if the reply was inadequate. Files were opened in annual batches, and the last file was opened on September 15, Only 42 Service Industry Monitoring Program files (1%) remained open as of March 31 st, The Office closed 93% of files within the first five years of the program. The majority of files were opened in the second fiscal year and the third fiscal year of the program (2,436 files). The results of the Service Industry Monitoring Program demonstrate that review officers were able to assist 1,045 employers to bring their compensation practices into compliance with the Act without issuing an order. Over 300 female job classes received adjustments, benefitting at minimum 12,000 employees. In total, the program resulted in at least $2 million in pay equity adjustments. The proactive approach of the program helped to raise awareness and understanding of the objectives of the Act by providing information to 4,000 employers who may not have previously been aware of pay equity. 4

5 2: Introduction The purpose of the Pay Equity Act (PEA or the Act) is to redress systemic gender discrimination in compensation for work performed by employees in female job classes. Ontario s Pay Equity legislation requires private sector employers with 10 or more employees (and all public sector employers) to identify and correct the gender discrimination that may be present in their pay practices; and to adjust the wages of employees in female job classes so that they are at least equal to the wages of employees in male job classes found to be comparable in value based on skill, effort, responsibility and working conditions. According to the Act, all employees both men and women in undervalued female job classes would receive pay equity wage adjustments. 1 As part of its mandate, the Pay Equity Office (PEO or the Office) conducts proactive monitoring programs to educate employers about pay equity requirements and to help them ensure their compensation practices comply with the Act. Monitoring programs target areas where female job classes may be undervalued and underpaid compared to male job classes. This report summarizes and outlines findings from the Service Industry Monitoring Program. The report will outline the background of the program, and provide an overview of the industry. It will describe both the process and results of the program. The report will also summarize how information obtained from this program was used in conclusions. 3: Background 3.1 Service Industry Monitoring Program In 2006, the Office undertook a review of its past proactive activities. After conducting an environmental scan, the Office launched the retail/wholesale and motel/hotel monitoring program. The program was later modified to include employers in the food and beverage sector. It ran from February 2007 to September Now called the Service Industry Monitoring Program, the program objective was to increase the Office s point of contact with as many employers as possible, and also to assess the current state of pay equity knowledge and compliance in a targeted manner. The program was intended to target sectors that were likely to have a high percentage of vulnerable workers. This aligned with a strategy implemented by the Ministry of Labour in to increase outreach to vulnerable workers. 2 The Ministry of Labour considers vulnerable workers to be those who work in sectors where there is a greater risk of having their rights violated, and who may lack the ability or 1 Pay Equity Office. A Guide to Interpreting Ontario s Pay Equity Act. May, Ministry of Labour. Results Based Plan

6 resources to understand their rights and to have them respected. 3 A number of factors may contribute to an employee s vulnerability at any given time such as hours of work, stability, and wage/earnings. 4 Additionally, the program concentrated on non-unionized employees as they do not benefit from representation at the bargaining table with respect to compensation matters. Lack of union coverage contributes to a worker s vulnerability. 5 Not only do workers covered by unions generally earn more, the female-to-male earnings ratio is significantly better (95% for those covered by a union and 83% for those not covered according to 2012 Statistics Canada data) Description of the Industry The service industry includes the retail/wholesale and hospitality sectors. According to Statistics Canada data from 2007 (the beginning of this monitoring program) 58% of employees in the accommodation and food services industry in Ontario were female and 42% were male. 7 Wages in the industry hovered around $11.00 per hour, and the average hourly gender wage gap was $1.26. More broadly, when the services-producing sector (which includes accommodation and food services) was examined, the average hourly gender wage gap was $3.09 in When these Ontario industries are examined by related occupation classifications as of 2007, male employees made approximately $15.60 per hour on average, while female employees made approximately $13.00 per hour on average. This produced an average hourly gender wage gap of $2.60. In other words, female employees earned approximately $0.83 for every $1.00 made by a male employee.9 In 2006, approximately 40.4% of all workers in Ontario were categorized as low-wage service workers and approximately 64% of all low-wage service workers were female. Though this figure includes some occupation classifications not monitored by this program, such as childcare and home support workers, it also includes travel and accommodation, food and beverage, retail salespersons and cooks. In addition, between 40-60% of workers across service industry occupations were immigrants or visible minorities. As well, low-wage service workers were found 3 Ministry of Labour. Blitz Results: Vulnerable Workers. January, Ministry of Labour. Healthy and Safe Ontario Workplaces. December, Ontario Women s Justice Network. Protecting Vulnerable Workers in Ontario. July, Statistics Canada. Labour Force Survey, CANSIM table Statistics Canada. Labour Force Survey, CANSIM table Statistics Canada. Labour Force Survey, CANSIM table Statistics Canada. Labour Force Survey, CANSIM table

7 to have lower rates of unionization in 2006, by approximately three to ten percentage points, when compared to non-service industries and high-wage service workers. 10 These numbers demonstrate that a gender wage gap persisted in the service industry, affecting vulnerable workers. Pay equity addresses the portion of the gender wage gap that is due to systemic gender discrimination in compensation practices. 4: Process The PEO obtained sector-specific employer contact information from Dun and Bradstreet, selfdescribed as one of the world's leading sources of commercial information and insight on businesses for over 150 years. In total, all 4,000 employers named in the data were contacted, and files were opened for each one. All employers were asked to provide: The year the company was established The total number of employees they employ in Ontario The number of female employees The number of male employees Job titles The current job rate or range of job rates If any employees are represented by a Union; and The number of male/female employees in a particular job title The information gathered from the employers was assessed by the PEO using an internal set of criteria. By assessing files, the Office was able to target employers where the pay equity process would benefit the highest number of female job classes. If the employer s compensation practices did not appear to reflect pay equity, and it was likely that adjustments would be required, the Office launched an investigation by assigning a review officer to the file. Review officers were also assigned to investigate files if the employer did not report, or if the reply was inadequate. As part of the investigations, review officers analyzed items such as payroll records, salary grids, job descriptions, and job evaluation systems as they deemed appropriate. The review officers ensured that employers made the necessary pay equity comparisons Information in this paragraph from: Anil Verma. Low Wage Service Workers: A Profile. Martin Prosperity Institute: March, For more information on comparisons please see: Pay Equity Office. A Guide to Interpreting Ontario s Pay Equity Act. May,

8 If the employer was not selected for further monitoring/investigation, a form letter was sent to them, and the file was closed. Please see section 5.2 File Disposition for more information on why some files were not investigated further. 5: Results The statistics in this report are current as of end of day March 31 st, The statistics provide a general overview of the Service Industry Monitoring Program and its impacts. It should be noted that the sample size of 4,000 employers is not considered representative of the entire service industry in Ontario as the employers were obtained from third-party data that may or may not capture all of the employers within the sector. Care should therefore be taken in drawing conclusions or generalizing the findings to an entire sector or industry. In addition, many employers, although individually listed, belong to a corporate family and thus their organizations were investigated as a group to ensure a consistent approach. This further skewed the sampling for statistical reporting purposes. 5.1 File Overview The 4,000 files opened over the course of the Service Industry Monitoring Program, were opened in annual batches in order to ensure files were assessed and managed in a timely manner. The first year of the program (February March 31 st, 2008) files were opened on 866 employers. The following fiscal year (April 1 st, March 31 st, 2009) 1260 files were opened. April 1 st, March 31 st, 2010 saw 1176 files opened, and from March 31 st, 2010 until September 2010 an additional 698 files were opened (Table 1). The hospitality sector data was broken down into the hotel/motel sector (222 files) and food/beverage sector (1,370 files). The retail/wholesale sector (2,408 files) included establishments such as: liquor and grocery stores, bookstores, retail bakeries, and computer and car dealerships (Table 1). Please refer to the Appendix for a detailed listing of the types of businesses included in each sector. 8

9 Table 1 : Total number of files by sector and year opened Date Retail/Wholesale Hospitality (Food/Beverage) Hospitality (Hotel/Motel) Total February 2007 March 31, 2008 April 1, 2008 March 31, 2009 April 1, 2009 March 31, 2010 April 1, 2010 September , , Total: 2,408 1, , File Disposition Files opened under the Service Industry Monitoring Program had a case disposition assigned either by the PEO, or a review officer assigned to further investigate the file. Case dispositions, for the purposes of this report, are described as follows: 1) Reviewed by PEO further monitoring/investigation not undertaken These files were reviewed by the PEO and were recommended for closure using the following criteria: o no or minimal female job classes o no or minimal possible job comparators o no or minimal possibility of proportional value o evidence that the employer understood their ongoing obligation This disposition also included abandoned files (where the employer was no longer in business or had moved) and administrative closure files (where the file was found to be a duplicate). It is important to note that employers who provided sufficient information regarding compensation practices, and appeared to be in compliance with the Act upon review also fell under this disposition. 9

10 2) Compliant without an order These files were closed by a review officer after further investigation. Many files under this category involved review officers assisting employers to ensure they had taken the necessary steps to comply with the Act. They may have directed employers to undertake pay equity comparisons without an order being required. The employers were deemed to be in compliance with the Act because they did a pay equity analysis and made any necessary pay equity adjustments. 3) Ordered These files relate to employers found to be in contravention of the Act who were not willing to voluntarily comply, necessitating that an order be issued. 4) No jurisdiction These files were either federally regulated, or the employer had fewer than 10 employees. These businesses are not covered by the Act. 5) Under Review These are files that were open and were under review by a review officer as of March 31 st,

11 Figure 1: All files by disposition Figure 1 gives an overview of the 4,000 files by disposition. Two thousand four hundred and eighty-four files (62%) were reviewed by PEO further monitoring/investigation not undertaken, which includes those employers whose compensation practices complied with the Act. One thousand and forty-five files (26%) were compliant without an order, 22 files (1%) were ordered to comply, 417 files (10%) were not within the jurisdiction of the Act, and 33 files (1%) were under review as of March 31 st, An examination of disposition by sector shows some of the similarities and differences across the three sectors examined. It also shows how each sector compares to the broader overview shown in Figure 1: All files by disposition. 11

12 Of the 2,408 files in the retail/wholesale category, 1,358 files (56%) were reviewed by PEO further monitoring/investigation not undertaken, 723 files (30%) were compliant without an order, 10 files (0.4%) were ordered to comply, 299 files (13%) were not within the jurisdiction of the Act, and 18 files (1%) were under review as of March 31 st, 2014 (Figure 2). This sector generally followed a similar pattern to all files by disposition, which is not unexpected given this sector represents the largest number of files (Figure 1). Figure 2: The retail/wholesale sector by disposition 12

13 Of the 1,370 files classified as the hospitality (food/beverage) sector, 1,070 files (78%) were reviewed by PEO further monitoring/investigation not undertaken. One likely explanation for this number is the prevalence of minimum wage in this sector. To illustrate, approximately 32.4% of workers in occupations related to the food/beverage sector earned general minimum wage or less according to 2012 Statistics Canada data. 12 Minimum wage rates have no impact on pay equity. One hundred and ninety-three files (14%) were compliant without an order, two files (0.1%) were ordered to comply, 102 files (8%) were not within the jurisdiction of the Act, and three files (0.2%) were under review as of March 31 st, 2014 (Figure 3). This sector somewhat follows the pattern of all files by disposition (Figure 1). In this sector, however, the disposition reviewed by PEO further monitoring/investigation not undertaken was largest by percentage when compared with the other sectors and all files by disposition. Figure 3: The hospitality (food/beverage) sector by disposition 12 Statistics Canada. Labour Force Survey,

14 Of the 222 files in the hospitality (hotel/motel) sector, 56 files (25%) were reviewed by PEO further monitoring/investigation not undertaken, and 129 files (58%) were compliant without an order. A higher percentage of employers in this sector, compared to other sectors, were assisted by a review officer to ensure their compensation practices complied with the Act, and that pay equity comparisons were conducted. It appears that many employers required assistance in understanding their pay equity requirements, and in undertaking pay equity comparisons. Nine files were ordered (4%), 16 files (7%) were not within the jurisdiction of the Act, and 12 files (6%) were under review as of March 31 st, 2014, indicating complex files (Figure 4). Compared to other sectors and all files by disposition, ordered and under review dispositions are larger by percentage in the hospitality (hotel/motel) sector, and the disposition no jurisdiction is smaller by percentage. Notably, the disposition reviewed by PEO further monitoring/investigation not undertaken is not the largest disposition by percentage, as it is in the other sectors. Figure 4: The hospitality (hotel/motel) sector by disposition 14

15 5.3 Adjustments Over 300 female job classes received adjustments, benefitting at minimum 12,000 employees. In total, PEO records indicated that the Service Industry Monitoring Program resulted in at least $2 million in adjustments. This is an estimate as adjustments are difficult to quantify. It is useful to note that even where compliance with the Act was achieved as a result of the program, adjustments were not necessarily owed. 5.4 Closure Rates In total, 42 Service Industry Monitoring Program files (1%) were open as of March 31 st, Fiftyseven percent of the total monitoring files were closed in the first three years of the program, and an additional 36% were closed in the following two years; meaning 93% of files were closed within the first five years of the program (Table 2). The majority of files in the Service industry Monitoring Program were opened in the second and third fiscal years of the program (2,436 files). As of March 31 st, 2014, 99% of files were closed. Table 2: Total annual closure rates Year Closed Number of files closed % of files closed February 2007 March 31, 2008 April 1, 2008 March 31, 2009 April 1, 2009 March 31, 2010 April 1, 2010 March 31, 2011 April 1, 2011 March 31, 2012 April 1, 2012 March 31, 2013 April 1, 2013 March 31, , , % 30% 16% 30% 6% 4% 2% 6: Conclusions This report provided an overview of the Service Industry Monitoring Program. The Office has used, and will continue to use, the information obtained from this program to refine its future monitoring efforts and to make further improvements such as: A) Better data reporting/consistency Changes have been made to the electronic case management system to record data in a more consistent manner. This will help with the assessment of future monitoring program outcomes. 15

16 B) Broader access to training Webinars have been developed and offered in order to increase employers awareness and understanding of the Act. Training sessions are also available by request and help to increase contact with a variety of sectors, including those in the service industry. Many employers are still not aware of their pay equity obligations under the Act. C) Development of self-serve tools Through contact with employers, it was determined that a simple tool was needed. As a result, the Step-by-Step to Pay Equity Mini-Kit was created for private sector employers with fewer than 100 employees. As well, E-learning modules for small private sector businesses were updated to better assist these employers in determining their pay equity requirements. Please click the links below for more information: E-learning modules in English E-learning modules in French Step-by-Step to Pay Equity (Mini-Kit) in English Step-by-Step to Pay Equity (Mini-Kit) in French The Service Industry Monitoring Program resulted in at least $2 million in pay equity adjustments, benefitting at minimum 12,000 employees in female job classes. It raised awareness and understanding of the objectives of the Act. As many employers appeared to be unaware of their pay equity requirements before contact, monitoring addressed a need in the service industry. 16

17 7: Appendix Hospitality (Food/Beverage) Types of businesses included in each sector Catering restaurants Restaurants Pubs Nightclubs Eating Places (includes fast food restaurants) Taverns Hospitality (Hotel/Motel): Hotels and Motels Inns Resorts Tourist Courts Travelling Lodges Retail/Wholesale: Amusement and Recreation stores Apparel and Accessory Stores, Miscellaneous Automotive Repair Shops Book Stores Building Maintenance Services Business Consulting Camera and Photographic Supply Stores Candy, Nut, and Confectionary Stores Carwashes Catalogue and Mail-Order Houses Children and Infants Clothing Stores Computer and Software Stores 17

18 Types of businesses included in each sector Dairy Products Stores Department Stores Direct Selling Establishments Drapery and Upholstery Stores Drug and Propriety Stores Equipment Rental and Leasing Family Clothing Stores Floor Covering Stores Florists Food Stores, Miscellaneous Food/Beverage/Tobacco Fruit and Vegetable Markets Funeral Service and Crematories Furniture Stores General Merchandising Stores, Miscellaneous Gift, Novelty, and Souvenir Stores Grocery Stores Hardware Stores Hobby, Toy, and Game Stores Home Furnishings Stores, Miscellaneous Household Appliance Stores Jewellery Stores Laundry and Garment Services Lawn and Garden Supply Stores Liquor Stores Local and Interurban Transit Luggage and Leather Goods Stores Lumber and Other Building Materials Dealers Management Consulting Services Manufacturing 18

19 Types of businesses included in each sector Meat and Fish Markets Men s and Boy s Clothing and Accessories Stores Miscellaneous Apparel and Accessories Stores Miscellaneous Food Stores Miscellaneous General Merchandising Stores Miscellaneous Home Furnishings Stores Miscellaneous Retail Stores Museums and Art Galleries Musical Instrument Stores Optical Goods Stores Paint, Glass, and Wallpaper Stores Pet Shops Pharmacy Public Golf Courses Radio, Television, and Consumer Electronic Stores Radio, Television, and Electronic Stores Radiotelephone Communication Railroad Transportation Retail Bakeries Retail Nurseries and Garden Stores Security Systems Services Shoe Stores Sewing, Needlework, and Piece Goods Software Sporting Goods and Bicycle Stores Stationary Stores Used Merchandise Stores Women s Accessory and Specialty Stores Women s Clothing Stores 19