Updates to Canada’s ESA include provisions around artificial intelligence

Organizations around the world are increasingly adopting pay transparency practices while at the same time considering the role that AI will have as a tool for compensation and HR professionals. In Ontario, new amendments to the Employment Standards Act, 2000 (ESA), effective Jan. 1, 2026, aim to promote fair pay practices by establishing clearer compensation frameworks.

Key provisions of the new regulation

• Employers must disclose the range of expected pay for publicly advertised jobs in Ontario
• These rules apply to positions with expected pay less than $200,000, including bonuses and other likely earnings
• The maximum range of expected pay cannot exceed $50,000
• The regulations apply to organizations with more than 25 employees
• Employers must disclose an existing job vacancy rather than broadly collecting candidates
• Candidates must be informed of hiring decisions within 45 days of their last interview
• Employers cannot require Canadian work experience
• Employers must keep records of job advertisements, application forms and hiring decision information for 3 years
• Employers must disclose if they use AI to screen, assess or select applicants

AI in hiring practices

The Ontario regulations underscore the importance of AI in modern hiring and require employers to disclose its use. Employers should consider the following as they look to AI to streamline their hiring process.

• Bias mitigation: AI systems, often based on models like large language models (LLMs), can have biases that influence hiring processes. Companies need to use AI cautiously to avoid perpetuating biases and to maintain fair hiring standards.
• Transparency and trust: Disclosing AI use makes the hiring process more transparent. It helps candidates understand how their applications are evaluated, building trust between employers and potential employees.
• Regulatory compliance: AI-use disclosure aligns with efforts to enforce ethical AI practices, safeguarding data privacy and compliance.
• Strategic use of AI: Organizations can leverage AI thoughtfully by incorporating bias assessment and adjustment measures to identify, evaluate and mitigate systematic errors that could distort findings. AI-driven insights can provide valuable views on candidates' suitability but need balance with human oversight.

The race to pay fairness and transparency

Ontario's new pay transparency regulations are a vital step toward fair compensation practices. By mandating clearer communication of pay expectations and AI disclosures, these amendments promote fairness and transparency in hiring. Employers should embrace these changes to be seen as inclusive and trustworthy as well as adapt to an employment landscape focused on transparency and ethical AI use.

Author

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Narinder Varaich

Director, Work & Rewards

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