Pay Equity Audit Checklist

Clearly establish which employee populations, job categories, and protected classes will be examined in the pay equity analysis.

Retain an employment attorney to direct the audit so findings may be protected under attorney-client privilege.

Bring together representatives from HR, legal, finance, and data analytics to collaboratively conduct the pay equity review.

Create a detailed project plan with specific deadlines for data collection, analysis, review, and remediation phases.

Research federal, state, and local pay equity laws that apply to your organization based on location and industry.

Pull complete pay records including base salary, bonuses, equity grants, and all other forms of compensation for every employee.

Collect relevant demographic data such as gender, race, ethnicity, and age for each employee in the audit population.

Assemble data on job title, level, department, location, tenure, education, and relevant experience for statistical analysis.

Audit the collected datasets for missing values, errors, and inconsistencies before proceeding with the statistical analysis.

Ensure all roles are consistently mapped to job families and levels so that meaningful comparisons can be made.

Define the peer groups of similarly situated employees who perform substantially similar work for valid pay comparisons.

Run multivariate regression models to identify statistically significant pay differences after controlling for legitimate pay factors.

Calculate and examine the raw and adjusted pay differences between male and female employees at each job level.

Evaluate compensation differences across racial and ethnic groups to identify potential disparities requiring further investigation.

Look at pay differences for employees who belong to multiple protected classes to uncover compounding equity issues.

Flag individual employees or groups whose pay deviates significantly from predicted values based on the regression model.

Record the non-discriminatory reasons such as performance, experience, or market premiums that explain identified pay differences.

Compile the analysis results into a clear report that highlights areas of concern, risk levels, and recommended actions.

Rank identified disparities by severity and legal risk to determine which adjustments should be addressed first.

Estimate the total financial investment required to close identified pay gaps through salary increases for affected employees.

Create a timeline for implementing pay adjustments that balances urgency with budget constraints over multiple pay cycles if needed.

Discuss the audit results and proposed remediation plan with your attorney to assess legal exposure and strategy.

Enter all approved salary corrections into the payroll and HRIS systems with the designated effective date for processing.

Notify employees receiving pay equity increases about their new compensation while framing it positively and professionally.

Revise hiring, promotion, and salary-setting policies to embed pay equity safeguards into ongoing compensation practices.

Educate managers on how unconscious bias affects pay decisions and provide tools for making equitable compensation recommendations.

Implement review steps during the offer approval process to ensure new hire salaries are consistent with internal equity.

Set a regular cadence for future audits, such as annually or semi-annually, to continuously monitor and address pay equity.

Deploy analytics dashboards that flag potential pay disparities as they emerge from ongoing compensation transactions.

Monitor legislative developments at federal, state, and local levels to ensure your practices remain compliant with new requirements.

Provide regular updates to executive leadership and the board on pay equity progress, risks, and remaining gaps.

Preserve all analysis, findings, and remediation records in a secure and organized manner for potential regulatory inquiries.