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HCMWorks Insights

Diversity and Compliance Guidelines in the Workplace

Posted by HCM Works on 5 Aug 2021

Regulations and best practices regarding diversity in the workplace continue to develop in the business landscape. Previously, we covered the different types of diversity in the modern workplace. These forms of diversity contribute to diversity in opinions, skills, and experiences. When incorporated into work culture, differences can inspire innovation and creativity.

Both Canada and the U.S. feature an extensive history of regulation oriented towards diversity and inclusion in the workplace history spanning from the 70s to the present day. This article provides a historical context of workplace diversity and informs present-day standards regarding HR compliance and hiring practices. 

Diversity Legislation in Canada

1975: Canada Business Corporations Act (CBCA)

The CBCA was signed into effect on December 15, 1975, to provide a basic framework for governing small, medium, and large corporations. The act includes protections for four types of individuals: women, people with disabilities, aboriginal people (Indian, Inuit, or Métis), and visible minorities as defined by the Canadian government.

1985: Canadian Human Rights Act (CHRA)

The CHRA addresses and prohibits discrimination, which it defines as the denial of goods, services, facilities, or accommodations on the basis of, “race, national or ethnic origin, colour, religion, age, sex, sexual orientation, gender identity or expression, marital status, family status, genetic characteristics, disability or [pardoned] conviction.” Businesses have a duty to hire and promote based on merit and must uphold it so long as it does not incur “undue hardship” on the entity.

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1995: Employment Equity Act (EEA)

The EEA was created with the purpose of ensuring equal representation and treatment in the workplace. The current legislation applies to three parts: the private sector, portions of the federal public administration, and other portions of the public sector employing 100 or more individuals. 

In short, the EEA aims to eliminate systemic, policy-based, and practice-based employment barriers and secure a degree of equal representation in each of the four aforementioned diversity groups. Entities are required to hire based on merit and provide reasonable accommodations so long as said accommodation does not cause undue hardship on the employer. 

2018: Bill C-25

Bill C-25 is identified as an Act to amend the CBCA, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act. Proposed in 2016, the Bill passed both houses of Parliament and received royal assent in 2018. 

The Bill made two key changes. First, it required that federally incorporated businesses disclose information regarding the diversity of their board of directors to management. Second, it required directors to provide justification to shareholders if they neglected to provide said disclosure. These diversity disclosures went into effect on January 1, 2020.

Present Day Compliance Guidelines

Diversity and inclusion efforts continue in the present day. Amidst social movements and political change, there is a greater emphasis on diversity in hiring and procurement in both Canada and the U.S. than before. New legislation and consumer standards have created diversity and reporting requirements in many business sectors. In some cases, diversity standards may even apply to suppliers, contract workers, contingent workers, and more. 

In the US, California adopted SB826 and AB979, which mandate public companies headquartered in the state to adhere to new diversity guidelines. SB826 required that the defined companies have at least one female on their board of directors prior to the end of 2019. This was furthered by AB979, which expanded the requirement to include at least one member on the board of directors by 2021. Beginning 2022, these same companies will be required to include a predetermined number of members from underrepresented communities proportional to the total number of members.

The CBCA has been amended to mandate the communication of this information. As of last year, all publicly traded companies regulated by the CBCA were required to provide shareholders with “details regarding the companies’ corporate policies on diversity among the board of directors and among senior management.” Federally incorporated companies were held to higher standards, providing shareholders with information regarding their current practices, including reporting diversity metrics of senior management.

Some companies, especially federal and state government contractors, also have diversity requirements built into their contracts, which can extend to their sub-contractors. These contracts include Diversity, Equity, and Inclusion (DI&E) initiatives mandated by the federal government. In the US, Federally contracted companies that meet certain requisites must implement a written Affirmative Action plan for analyzing barriers to the recruitment and mobility of women and minorities.  

Working with an MSP

As diversity compliance guidelines grow increasingly complex, there are consequences and penalties for getting it wrong. Companies that fail to meet the changing requirements for HR hiring practices risk damaging both their business and reputation. Accurately navigating the legal landscape can be a time-consuming task for your in-house HR and procurement professionals without the assistance of a compliance expert.

Hiring a third-party Managed Service Provider (MSP) is easier and more secure than assuming the risk of managing diversity compliance internally. At HCMWorks, our experts specialize in compliance, ensuring its integration throughout every stage of the employment lifecycle. To learn more about how we manage employers manage compliance risks, contact our team of experts.

Tags: Workforce Management, Procurement

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