The Employment Equity Act | An Overview
In 1984 the Royal Commission on Equality in Employment was undertaken by Judge Rosalie Abella. Judge Abella created the Canadian concept of Employment Equity (instead of Affirmative Action, the term used in the USA) which continues to be the basis for Canadian employment equity policy. The current Employment Equity Act (EEA) has limited impact on most employees as it only applies to federally regulated employers and certain contractors working with the federal government - this amounts to approximately 10% of the Canadian workforce.
What follows is an overview of the Act, and statutory requirements companies must comply with.
What was the reason for the creation of the EEA?
The “purpose” clause is clear, and the Act is designed to “achieve equality in the workplace” and to “correct the conditions of disadvantage in employment” experienced by hitherto disadvantaged groups. These defined groups are: women, Indigenous peoples, persons with disabilities, and members of visible minorities. Notably, 2SLGBTQI+ employees are not a defined group under the EEA; however, the Supreme Court of Canada ruled in 1995 that sexual orientation is constitutionally protected under the Equality Clause of the Canadian Charter of Rights and Freedoms.
The name of the Act, however, is not the Employment Equality Act, and the Act seeks to “[give] effect to the principle that employment equity means more than treating persons in the same way but also requires special measures and the accommodation of differences.” The requirement to actively apply the principle of equity sets a higher bar than an equality standard, which is fundamental to the creation of the Act.
To whom does the Employment Equity Act apply?
Application of the EEA varies according to the type of company or organization. There are two programs, the Legislated Employment Equity Program (LEEP) and the Federal Contractors Program (FCP).
LEEP applies to all employees of private sector companies in federally regulated industries with 100 or more employees. These include banks, insurance companies, railways, maritime transportation companies, inter-provincial transportation companies, airlines and other companies that operate in federally-regulated industries. Crown Corporations and federally regulated entities with more than 100 employees also fall under the LEEP. Members of the Canadian Military, the RCMP, and others may also fall under the Act. Still, this piece focuses on sector regulations and compliance for the private sector.
The FCP governs federal contractors, defined as provincially regulated employers with 100 or more employees that enter into a federal government contract for $1,000,000 or more, including applicable taxes. Contracts are conditional on compliance with FCP obligations throughout the life of the contract. The FCP, therefore, is not just a pre-contract qualification; it’s a program that requires management during the entire life of the contract.
What are the requirements of the Act for LEEP employers
The Act prescribes comprehensive actions summarized as follows. Companies must:
- Collect workforce data allowing employees to self-identify as members of designated groups;
- Analyze workforce data to determine if members of designated groups are under-represented in the workforce;
- Review employment systems, policies and practices to identify employment barriers for those in designated groups;
- Create an employment equity plan (EEP) to correct any under-representation by people from designated groups;
- Establish short and long-term numeric goals for their EEP;
- Implement and monitor the EEP;
- Carry out periodic reviews and revisions of their EEP;
- Provide information explaining the purpose of, measures to implement, and progress made in employment equity;
- Consult and collaborate with employee representatives;
- Keep employment equity records regarding changes in the workforce; and
- File an annual report according to established criteria. Private sector employers must file the previous year’s report by June 1st of each year.
Audits for LEEP employers
Audits may be random or prompted by data provided in the employer’s annual report. Compliance monitoring is carried out by the Canadian Human Rights Commission (CHRC), with audits of LEEP employers occurring every three to five years.
What are the requirements of the Act for FCP employers?
FCP employers face less stringent requirements than LEEP employers, and annual reporting is not mandated. There are four compliance obligations under the FCP. Companies must:
- complete a company-wide collection of workforce information;
- establish a reliable database and perform an analysis of the data;
- commit to short-term and long-term numeric goals; and
- make reasonable efforts to achieve the set goals and reasonable progress.
There is no annual reporting requirement for FCP employers; however, a compliance assessment is carried out after one year, again after four years and every three years after the fourth-year assessment. In advance of the assessment, contractors must submit a copy of the workforce survey questionnaire; the results of the workforce survey; an analysis of the workforce; and a completed progress report.
What are the consequences of failing to comply with the Act?
Private sector employers who fail to comply with their obligations under the EEA may face financial penalties of up to $10,000 for a first offence and up to $50,000 for subsequent offences. FCP Contractors who fail to comply with their obligations become ineligible to bid for lucrative government contracts, which gives a strong incentive to comply.
The key to understanding the effect of the EEA on a company’s operations is that subject companies have continuing obligations and that a systematic approach to employment equity is a must for federally regulated private-sector employers. Therefore, compliance for both LEEP and FCP employers cannot be attained with a one-and-done approach, and compliance requires continual monitoring. The exclusions in the EEA for companies with fewer than 100 employees allow smaller companies to operate without the administrative burden faced by larger companies. Nevertheless, companies with growth ambitions would be smart to initiate less demanding Inclusivity, Diversity, Equity, and Accessibility (IDEA) programs before they reach 100 employees. Bringing attention to employment equity increases employee morale and encourages a more cohesive and productive workforce.
 Egan v Canada,  2 SCR 513