CITY CLERK. Cost of Implementing the Ontario Pay Equity Act

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1 CITY CLERK Clause embodied in Report No. 12 of the, as adopted by the Council of the City of Toronto at its meeting held on November 6, 7 and 8, Cost of Implementing the Ontario Pay Equity Act (City Council on November 6, 7 and 8, 2001, amended this Clause by adding thereto the following: It is further recommended that: (a) the report dated October 29, 2001, from the Acting Commissioner of Community and Neighbourhood Services, embodying the following recommendations, be adopted: It is recommended that: (1) the City of Toronto request the Association of Municipalities of Ontario to seek intervenor status in the Charter Challenge lodged by the Equal Pay Coalition; (2) the City support, in principle, the Charter Challenge launched by the Pay Equity Coalition and request the City Solicitor to report on the City of Toronto s legal interest in this case; and (3) the appropriate City officials take the necessary action to give effect thereto. ; and (b) the report requested from the City Solicitor in Recommendation No. (2), above, be submitted to the for its meeting scheduled to be held on November 15, ) The recommends the adoption of Recommendation No. (2) contained in the communication dated October 10, 2001, from Councillor Olivia Chow, Children and Youth Advocate. The reports, for the information of Council, having referred Recommendation No. (1), contained in the communication from Councillor Olivia Chow, to the Acting Commissioner of Community Services with a request that he report thereon directly to Council for its meeting on November 6, 2001.

2 2 The submits the following communication (October 10, 2001) from Councillor Olivia Chow, Children and Youth Advocate: Recommendation: It is recommended that: (1) that the Acting Commissioner of Community Services report to the upcoming Council meeting regarding the merit of seeking intervenor status in the ongoing court case to force Provincial Government to pay its 80 percent cost of implementing the Ontario Pay Equity Act; and (2) the City of Toronto requests the Association of Municipalities of Ontario to seek intervenor status in the ongoing court case on this matter, in order to defend the municipal interest, namely adequate funding to maintain valuable community child care programs. Background: Under the Ontario law (Pay Equity Act), childcare centres across Ontario are legally obligated to pay their workers a salary amount that complies with the Pay Equity Act. The City of Toronto is contributing its 20 percent share of salary adjustments required by Ontario law while the Provincial Government is not contributing its 80 percent share. As a result, either the operation of the childcare centres in Toronto is being jeopardized or the City of Toronto has to pick up 100 percent of the cost of fulfilling the Pay Equity Act. The Council of Ottawa is seeking intervenor status in the ongoing court case to force the Provincial Government to pay its share of the Pay Equity cost. Ottawa is now asking other municipalities to join in this case. (City Council on November 6, 7 and 8, 2001, had before it, during consideration of the foregoing Clause, the following report (October 29, 2001) from the Acting Commissioner of Community and Neighbourhood Services: Purpose: This report provides background information concerning a charter challenge filed against the Ontario Government by the Equal Pay Coalition and provides comments from a service and funding perspective on the merits of the City seeking intervenor status in the case. Financial Implications and Impact Statement: There are no financial implications resulting from the adoption of this report.

3 3 Recommendations: It is recommended that: (1) the City of Toronto request the Association of Municipalities of Ontario to seek intervenor status in the Charter Challenge lodged by the Equal Pay Coalition; (2) the City support in principle the Charter Challenge launched by the Pay Equity Coalition and request the City Solicitor to report on the City s legal interest in this case; and (3) the appropriate City Officials take the necessary action to give effect thereto. Background: In response to an October 10, 2001 memorandum filed by a member of the Community Services Committee and considered at the Committee meeting on October 18, 2001, the Department has prepared this background report for Council. This report provides contextual information concerning the circumstances that led to the Charter Challenge being lodged by the Equal Pay Coalition against the Government of Ontario. This report highlights the unfunded pay equity liability being faced by the City s child care community and provides a preliminary analysis of the financial and policy implications for the City in light of its role as service system manager of child care. This report does not however include a discussion of the City s direct legal interest in the case but recommends that the City Solicitor be requested to report further on this matter. Comments: On April 17, 2001, four women and five unions (aka the Equal Pay Coalition) launched a Charter Challenge of the Provincial Government s decision to deny pay equity to women in predominantly female public sector workplaces. The unions are the Canadian Union of Public Employees, the Ontario Nurses Association, the Ontario Public Service Employees Union, the Service Employees International Union and the United Steelworkers of America. CUPE, ONA, OPSEU, SEIU, and USWA claim that the government is perpetuating wage-based gender discrimination by failing to fund on-going pay equity adjustments to workers in predominantly female workplaces who use the proxy method to identify the discriminatory wage gap between themselves and male job classes. The applicants claim approximately $144 million in retroactive pay equity adjustments for approximately 100,000 workers, and a commitment to ongoing funding. The unions represent over 44,000 of the 100,000 workers in these public sector workplaces which include nursing homes, child care centres, services for the disabled, shelters and home care agencies. The Equal Pay Coalition whose legal representation is provided by Mary Cornish of Cavalluzzo, Hayes, Shilton, McIntyre and Cornish, will argue that the Ontario Government is knowingly perpetuating sex discrimination and the undervaluation of women s work when it funds public services at discriminatory wages contrary to s.15 of the Charter. Madame Justice Swinton of the Ontario Superior Court of Justice has ordered 5 days (February 25 March 1, 2002) be set aside for the court hearings.

4 4 This court case has important implications for Toronto s childcare service system. While the City has met pay equity obligations for its own employees working within the municipally operated child care program, most of the childcare service available in Toronto is delivered by community-based agencies and operators who have relied on the proxy comparison method to determine their wage gap for pay equity purposes. The Province of Ontario has capped the level of its public sector pay equity contribution and has only recognized pay equity costs within the child care community up to December 31, This has created a significant unfunded pay equity liability within Toronto s child care community which is largely dependent upon public funding to finance the service it provides. Under the terms of the Province s Local Service Realignment Agreement, the City has cost shared the wage subsidy program through which these initial pay equity payments were made. While the pay equity obligations of childcare operators (including those providing licensed care, family resource programs and special needs resourcing) are required by law, the Government of Ontario says that it now considers pay equity as part of the cost of doing business and states that employers are responsible for meeting their current and future obligations Further, the Province insists that child care employers find funds for pay equity within their existing budgets. Since childcare programs in Toronto serve such a high proportion of subsidized clients, operators can not meet their annual pay equity obligations without an increase in the level of public funding available. While the City has embarked on a five-year plan to phase-in a return to the payment of actual costs for child care operators under service contract, adjustments made to per diem rates in 2000 and those planned but not yet approved for 2001 are not adequate to meet outstanding pay equity obligations in the childcare sector. Although the City does not have detailed information on the pay equity plans filed by child care programs with the Province of Ontario, the department estimates that the annualized unfunded pay equity liability for child care programs in Toronto is approximately $3 million and has been compounding since January 1, The department also estimates that it will take approximately 20 years for the child care community to incrementally achieve full pay equity. Should the current Charter Challenge be successful and the Province of Ontario resume the cost shared funding of proxy pay equity for childcare, there would also be a financial impact on the City, as its cost-sharing partner. The City would be expected to pay its 20 per cent share of the pay equity costs. Should the Charter Challenge not be successful, the City could potentially face an even larger funding pressure as desperate childcare operators would look to the City for 100 per cent funding of their pay equity costs or risk the collapse of the entire service sector. From a policy perspective, the Charter Challenge is also important. The City champions the value of child care programs and openly advocates expansion; the City acknowledges and celebrates the important early childhood education role played by the staff who provide the childcare service; and, the City requires adherence to pay equity principles and legislation as part of its service agreements with community operators who provide childcare services. From a policy perspective, it would be inconsistent for the City not to support the objectives underlying the Charter Challenge by the Equal Pay Coalition.

5 5 But the fact that there are implications for the City from a policy and financial perspective does not necessarily mean that the City has a direct interest in the case from a legal perspective. The merit of seeking intervenor status therefore requires a legal opinion from the City Solicitor. Conclusions: This report confirms the City s interest in the Pay Equity Charter Challenge given the City s role as service system manager of childcare. The outcome of this court case will have important financial and service implications for childcare within Toronto. The department therefore recommends that the City urge the Association of Municipalities of Ontario to protect the broad municipal interest by seeking intervenor status. It is also recommended that the opinion of the City Solicitor be sought with respect to the legal merits of this case before recommending that the City itself seek intervenor status before the Court. Contact: Marna Ramsden-Urbanski General Manager, Children s Services Tel: ramsden@csis.csis.csd.metrotor.on.ca)