Ontario’s New Pay Transparency Rules: What You Need to Know

Ontario is introducing significant changes to its employment laws, with new pay transparency rules set to come into effect on January 1, 2026. These changes, outlined in Bill 149 (Working for Workers Four Act, 2024) and Bill 190 (Working for Workers Five Act, 2024), are designed to promote fairness, transparency, and accountability in the hiring process. Here is what employers need to know about these upcoming changes and how they can prepare.

Understanding Pay Transparency Requirements

As of January 1, 2026, employers in Ontario will be required to include specific compensation information in their publicly advertised job postings. The goal of this new regulation is to provide job seekers with clarity about salary expectations and reduce inequities in hiring practices. Here are the key points:

• Mandatory Compensation Disclosure: Job postings must include the expected compensation for the position or a range of expected compensation. This requirement ensures transparency for applicants and aligns Ontario with global trends in pay equity.
• Compensation Cap Exclusions: Positions with expected compensation exceeding $200,000 annually or a range exceeding $200,000 annually are exempt from these rules. Additionally, the maximum allowable compensation range in postings is $50,000.
• Broad Definition of Wages: Under Ontario’s Employment Standards Act, 2000 (ESA), “wages” include all forms of monetary remuneration for work. This means employers must consider not only salaries but also bonuses and other non-discretionary compensation when determining compliance with the $200,000 threshold.

Additional Job Posting Requirements

Beyond pay transparency, the new rules introduce several other obligations for employers:

• Artificial Intelligence (AI) Disclosure: Employers must disclose whether AI is used to screen, assess, or select job applications. This step aims to increase trust in hiring practices and ensure applicants are informed about the use of technology in decision-making.
• Ban on Canadian Experience Requirements: Job postings and application forms must not include requirements related to Canadian experience, promoting inclusivity for internationally trained professionals.
• Vacancy Disclosure: Employers must state whether the job posting represents an existing vacancy.
• Interview Follow-Up: Employers must inform job applicants about hiring decisions within 45 days of their interview or final interview. This communication can be delivered in person, in writing, or through technology. Employers must retain copies of these communications for three years.

Exemptions and Record Retention Obligations

These requirements will not apply to:

• Employers with fewer than 25 employees on the date of the job posting.
• General recruitment campaigns or help-wanted signs that do not advertise specific positions.

Employers must retain records of publicly advertised job postings and associated application forms for three years after the posting is removed from public access. This includes maintaining documentation related to interview follow-ups.

Preparing for Compliance

Employers should begin preparing for these new regulations to ensure compliance by January 1, 2026. Here are practical steps to take:

1. Review Compensation Structures: Audit existing pay structures to identify potential discrepancies. Ensure job postings accurately reflect the required compensation details within the prescribed ranges.
2. Update Hiring Processes: Develop protocols for disclosing AI usage in hiring and ensure Canadian experience is not a required qualification.
3. Enhance Recordkeeping Practices: Implement systems to retain required documentation, including job postings, application forms, and interview follow-up communications.
4. Educate Hiring Teams: Train HR personnel and hiring managers on the new requirements, including the proper handling of pay transparency and follow-up obligations.

Additional Upcoming Changes: Information About Employment

Starting July 1, 2025, employers will also be required to provide new employees with specific employment information before their first day of work or as soon as practicable. This includes the employer’s legal and operating names, contact information, initial work location, pay details, and anticipated hours of work. Employers with fewer than 25 employees and temporary help agencies are exempt from this requirement.

Final Thoughts

The new pay transparency rules reflect Ontario’s commitment to creating a fair and equitable labour market. Employers should act now to ensure their hiring practices align with these new standards, protecting their organization from potential compliance issues and fostering trust with job seekers.?

Upcoming Webinar: Prepare for Pay Transparency and Pay Equity

Join us for a free webinar on January 22, 2025, where our legal professionals will discuss the upcoming pay transparency rules and their implications for employers. This webinar will provide practical insights and strategies to help your organization comply with the new regulations.

Register now to secure your spot: Webinar Registration

Contact Achkar Law for Assistance

Preparing for these legislative changes can be complex, but you don’t have to do it alone. The experienced lawyers at Achkar Law are here to assist you in addressing these new requirements, ensuring your organization is fully compliant and ready for the transition. Whether you need help auditing your current practices, updating job postings, or understanding the implications of these rules, our team is ready to provide tailored guidance.

Contact us today to schedule a consultation and take the first step toward compliance with confidence.