Exploring Pay Inequities in the Legal Professions

It’s really not shocking for anyone who pays attention to the practice of law, but a powerful piece in The Globe recently highlighted the gender inequities in Canadian law firms. Lawyers in all practices and of all genders nodded their heads, knowingly.

The article describes the calls for change that have been in place since 1996, “when women started filling up more than half the seats in law schools across the country.” But all the partners’ horses, and and the partners’ consultants, couldn’t figure out why women weren’t making partner in comparable numbers, or were making almost 25% less at some firms, even as equity partners. (There aren’t enough racialized lawyers, of any gender, to make any comparisons meaningful in any way, but the little data there was suggested it was even worse for those demographics).

Gender parity on management committees, which make recommendations on pay, also hasn’t seem to do the trick, though some claim the gap is closing. The article suggests that those who are involved support collecting data and using a methodological approach,

The pay structure inside law firms is opaque, but two things are clear: Women tend to make less because they make it to the top in fewer numbers, and because the factors that go into compensation decisions generally favour men.

It’s not enough to work 60 to 80 hours a week and hit sky-high targets for billable hours. To succeed at a private law firm, lawyers must build a strong book of business. But women told The Globe they often face obstacles to getting good work and face time with important clients. What’s more, as men progress to senior ranks both in law firms and in corporate legal departments – a major source of business for most corporate law firms – they usually refer work to each other.

The problems appear to be worse in small or mid-size firms, where dedicated resources for tackling systemic barriers are more difficult to collect. The Law Society of Ontario has also been trying to tackle this issue, including a 2014 project to promote the retention and advancement of women in private practice, but is currently bogged down in internal governance disputes about whether the regulator should be involved in equity, diversity and inclusion issues at all.

Outside the legal professions, pay equity is generally regulated in a myriad of different ways across the country. Generally they principle is that women should receive equal pay for work of equal value, but how that is measured varies. Women in Canada are estimated to make 0.88 cents for every dollar earned by a man.

Pay equity has generally been protected under s. 11 of the Canadian Human Rights Act since 1977, but the first federal practice pay equity legislation was passed in 2018. In Quebec, the relevant statute is the Pay Equity Act, first introduced in 1996 to address systemic wage discrimination against women.

Unfortunately this legislation did not appear to be particularly effective, in part due to non-compliance by employers, leading to amendments in 2009. This new system changed the model from a model requiring ongoing monitoring of pay equity with one of mandatory audits every 5 years. The new model was successfully challenged in Quebec (Attorney General) v. Alliance du personnel professionnel et technique de la santé et des services sociaux, with the majority finding a violation of s. 15(1) of the Charter that could not be saved by s. 1,

[33] …there is a discriminatory impact because, assessed on their own and regardless of the prior legislative scheme, the impugned provisions perpetuate the pre-existing disadvantage of women. Section 76.5 stipulates that absent a showing of bad faith on the part of the employer pursuant to s. 76.9, adjustment payments are payable only from the date of the audit posting every five years. This has the effect of making the employer’s pay equity obligation an episodic, partial obligation. Any pay inequities emerging during the five year period between audits go uncorrected until the next audit. Even when an audit reveals the emergence of pay inequity during the previous five years, s. 76.5 stipulates that only adjustment payments going forward are payable. As the trial judge and Court of Appeal found, this effectively gives an amnesty to the employer for discrimination between audits. And that amnesty is cemented by the addition of s. 103.1 para. 2 barring the Pay Equity Commission from assessing adjustment payments prior to the date of the posting.

[34] Further exacerbating the disadvantage created by s. 76.5 is the addition of s. 76.3, which, as the trial judge found, denies employees and unions the information they need to challenge decisions employers make as a result of pay equity audits. Section 76.3 requires employers to post the results of the audit, but not the date on which pay inequity emerged, thus obscuring when adjustment payments ought to have been made and stripping the posting requirement of much of its meaning. Without information about when pay inequities emerge, employees are deprived of the evidentiary foundation for showing bad faith by the employer, which is the only route to obtaining retroactive compensation for inequities emerging between audits. And the absence of that information, in turn, puts the onus on employees or unions to make requests for information under s. 76.4, contradicting Quebec’s stated purpose of making the scheme more proactive and effective. It is not at all clear that that process would guarantee complete and timely disclosure of the necessary information. There is, in other words, not only no right to challenge inequities in the period between audits, there is also, through s. 76.3, a provision that makes challenging audit results an opaque and difficult to access process.

The dissent emphasized the lack of constitutional status for the legislative regime, which could entrench one mechanism without providing the legislature the opportunity to explore other avenues to achieve equity. If there was arguably greater compliance by employers under the new regime, the goals of pay equity may actually be better achieved under it rather than the previous system,

[105] There is no doubt that work is an important aspect of life and that, for many people, it is a large part of their identity: N.A.P.E., at paras. 49‑50. However, the fact that one is in a situation in which the compensation received for one’s job seems inadequate, and which offends one’s sense of personal dignity, does not mean that the law creates a discriminatory disadvantage. In enacting the Act and the 2009 amendments, the Quebec legislature has recognized the nature of pay equity and its importance for women. In short, although the interest in question is important in our society, the adopted measures have not constitutionally entrenched pay equity such that they would be impossible to modify.

The dissent distinguished a legislative approach that signals out a disadvantaged group for inferior treatment, as in the residency requirements in Corbiere v. Canada (Minister of Indian and Northern Affairs), from a law that provides a clear benefit in comparison to the absence of the legislation as a whole.

The Court in Granovsky v. Canada (Minister of Employment and Immigration) emphasized the importance of examining the context of the relationship between the discriminatory ground and the differential treatment, and the need for for targeted interventions through legislation that serve an ameliorative purpose. This can be distinguished from the approach in Vriend v. Alberta, where the impugned legislation failed to advance an ameliorative purpose by excluding sexual orientation from the human rights code. As the Court stated in Hodge v. Canada (Minister of Human Resources Development),

16 …the legislature is still free to target social programs to those who, as a matter of public policy, it wishes to benefit, provided such targeting is not done in a discriminatory manner…

The UofT Cup explored whether the amendments to Quebec’s pay equity act was constitutional on Feb. 13-14, 2021. Lauren Naniche and Neelesh Thakur of McGill University were successful in winning the competition, arguing in the finals in an appeal of the Supreme Court’s decision in Alliance.

In the companion case to Alliance, in Centrale des syndicats du Québec v. Quebec (Attorney General), the Court focused on a different aspect of the province’s pay equity legislation, the delays involved, to come to a finding of discrimination,

[31] The discriminatory impact of the delay is clear. The women targeted for the delay created by s. 38 (those in workplaces with no male comparators), suffer the effects of pay discrimination — without a remedy — for the period of the delay, in this case six years.

[32] The fact that the legislation did not create pay discrimination is irrelevant. In Vriend v. Alberta1998 CanLII 816 (SCC), [1998] 1 S.C.R. 493, this Court held that “[i]t is not necessary to find that the legislation creates the discrimination existing in society” to find a s. 15 breach (para. 84 (emphasis in original)). There, as here, the law perpetuated the disadvantage of a protected group through a legislated “denial of access to remedial procedures for discrimination”, remedial procedures that “they so urgently need because of the existence of discrimination against them in society” (Vriend, at paras. 97 and 84).

[33] The legislature chose to act to address pay discrimination against women, but denied access by delaying it for a group of women, leaving them, in comparison to male workers, paid less for longer. Whatever the motives behind the decision, this is “discrimination reinforced by law”, which this Court has denounced since Andrews (p. 172). The fact, then, that women in one type of workplace — with male comparators — received a remedy promptly is not an answer to the question of whether women in another type of workplace were also disadvantaged. It is no defence to a claim of discrimination by one group of women to suggest that another group has had its particular discrimination addressed.

The concurring decisions agreed that any discriminatory effect here was justified under s. 1, as the Pay Equity Commission needed time to develop a methodology to address pay equity. This was an admittedly complex process, and required extensive time for research and analysis. The Court stated,

[48] The fact that so many years elapsed between the adoption of the Act and the promulgation of the Regulation is, on its face, troubling. The trial judge reviewed in considerable detail the reasons for the delay and found that it was not caused by a lack of diligence on Quebec’s part. There was ample evidence to support that factual finding. In this case, a significant cause of the delay was that the Pay Equity Commission, the agency in charge of administering the Act, was itself only created in 1996 and was tasked with numerous new duties. The move in 1996 from a complaints-based regime under s. 19 of the Quebec Charter to a proactive pay equity scheme meant that the Commission had to develop new strategies for implementation on multiple fronts.

[53] In my respectful view, however, the ultimate advantages of Quebec’s expanded approach outweigh the harm. Women in workplaces with no male comparators saw the creation of an effective, coherent remedy for systemic economic discrimination where none had previously existed. The delay was serious and regrettable, but had the long-term benefit of resulting in the Act’s meaningful ability to address pay discrimination for a previously excluded group of female employees.

Whereas in Alliance, the majority found the amendments unconstitutional without contemplating the overall statutory scheme, the majority in Centrale found the delay as justifiable given the overall benefit of having this scheme in place. Although Justice Abella wrote the decision for the majority in both cases, the decisions of the Court was more divided in the latter, with Justice McLachlin finding that the breach could not be justified, as it gave employers the ability to ignore pay equity entirely during the delay and entrenched the same power imbalances that were there previously,

[157] … I agree that devising a satisfactory method of evaluating underpayment is a pressing and substantial objective capable of justifying a limit on the right to equal benefit of the law. It is more questionable whether the government’s objective of ensuring employer compliance by imposing a long delay that would be unmet with any retroactive correction, for example, could justify breaching employees’ rights. To agree would be to accept that obeying pay equity laws is an option that can be negotiated and that the very segment that perpetuates systemic pay inequities — the employers — should be able to perpetuate them as the price of accepting the law.

[158] …Minimal impairment cannot be established simply by saying that a lengthy delay was required full-stop or that a lengthy delay could not be accompanied by retroactive correction because this is problematic to the employers who were perpetrating the inequality. …the Attorney General has not established that the denial of benefits to the affected, already-marginalized women, is proportionate to the public interest in denying them a remedy.

Given the difficulties and delays that the private sector and the entire province experienced in grappling with pay equity in Quebec, the challenges faced by law firms might be considered more sympathetic. Even with a quantitative approach towards retention and promotion within firms and the profession at large, exploring the complex reasons behind inequities may still take many years to resolve.

The importance in doing so is highlighted by Fay Faraday in the Supreme Court Law Review, discussing the two companion cases,

Systemic discrimination claims target the impact of practices and systems that have been established and normalized over time within this unequal power relationship. They “necessarily involve an examination of the interrelationships between actions (or inaction), attitudes and established organizational structures”. Claims “alleging gender-based systemic discrimination cannot be understood or assessed through a compartmentalized view”; instead they must be “understood, considered, analyzed and decided in a complete, sophisticated and comprehensive way.”

…The majority reasons in both appeals accept that in reality there is a “deep and persistent gap between women’s and men’s pay” and that women have been and continue to be underpaid due to systemic discrimination which devalues women’s work socially and economically….

…in understanding systemic discrimination as an ongoing pattern of behavior, Abella J. recognized that denying access to the information underpinning pay equity audits was discriminatory because it undermines any air of reality to the promise of equality. Access to that information was a necessary operational precondition to verifying the audit and exercising any right to challenge its results.
[citations omitted]

The recent Globe article was only able to highlight the challenges across all large Canadian firms because confidential partnership information was anonymously leaked to them. The firms interviewed did not volunteer additional information, or shed light on the interrelationships between actions, attitudes, and established organizational structures within these firms.

The concerns about sharing such information appears to be that there would be considerably asymmetry with one or even a few firms doing so, without others complying with the same request. It could unfairly hamper recruitment efforts by those firms seeking to better understand ongoing patterns of behaviour, while rewarding those who maintain similar patterns but resist the same kind of transparency.

It is precisely these types of circumstances where the regulator should require and facilitate the disclosure of this type of information, so that it is imposed universally on firms of comparable sizes, and allows for a more meaningful analysis of the barriers that might be in place. Unlike the pay equity challenges targeted in the public sector, private practice gaps remain far more opaque specifically because of proprietary and competitive interests.

While the mechanisms and basis for providing these disclosures should be carefully considered, it’s equally important to remember that further delays, especially those that continue to question whether the regulator should be involved in this activity, have the effect of tolerating and even perpetuating existing inequities. That realization alone should hopefully be enough of a reminder to help expedite the process towards achieving better pay equity results in the legal professions.

2021 UofT Cup finals on Feb. 14, 2021, discussing an appeal of the SCC’s decision in Quebec (Attorney General) v. Alliance du personnel professionnel et technique de la santé et des services sociaux

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