Pay Equity Audit Template
A pay equity audit is the highest-stakes analysis a DEI practitioner touches, because what it finds can be discoverable. The structure below is about doing it in the right order, with legal involved from the start, so a genuine finding leads to a remedy rather than to a problem nobody can now unsee and nobody has planned for.
See the coursesEverything on this page is yours to copy and adapt. The courses cover the decisions behind it: what to commit to, how to measure it, and what to put in writing.
What yours needs to cover
- ✓ A scoping section defining which roles are comparable and why
- ✓ The factors you will control for, agreed and written down before the analysis runs
- ✓ A note on legal privilege and who commissions the work, decided at the start
- ✓ The analysis itself, run by someone competent with the data
- ✓ A remediation plan with a budget and a timeline
- ✓ A communications plan for what will be said, to whom, and when
How to use it
- Involve legal counsel before any analysis begins, not after a gap is found.
- Agree the comparable-role groupings in advance, because they decide the result.
- Write down the legitimate factors you are controlling for before you see the output.
- Budget for remediation before you run the analysis, so a finding is not stranded.
- Plan what you will say if the answer is uncomfortable, and say it.
Why the order of work matters more than the method
The statistics in a pay equity audit are rarely the hard part. The hard part is that the findings may be disclosable in a dispute, and a gap found without a plan to address it is a liability rather than an insight. That is why this template starts with who commissions the work and ends with how it is funded and communicated.
Involve legal counsel before any data is pulled. In some jurisdictions and circumstances an analysis commissioned through counsel is treated differently from one run by HR on its own, and the rules on what must be reported vary widely. This guide is not legal advice, and the right structure is a question for your own lawyers.
Grouping comparable roles and choosing controls
The comparison groups decide the result. Group roles by the work performed and its level of responsibility, not simply by job title, because titles drift. Write down the grouping rules and have them agreed by HR, reward and counsel before any pay figure is seen.
Then list the factors you will treat as legitimate reasons for pay differences, such as level, location and time in role, and the ones you will not. Be cautious with any factor that may carry the pattern you are looking for. A starting salary negotiated from prior pay, for example, can import an old gap into a new employer, and some places restrict asking about pay history at all.
From a finding to a funded remedy
Reserve a remediation budget before the analysis runs, even as an estimate. When a gap appears that the agreed factors do not explain, the organization can then act within the same cycle rather than debating whether to act at all. A phased plan with dates is acceptable where the cost is large.
Fix the process that produced the gap as well as the individual salaries, or the gap will reappear. Common causes include inconsistent starting offers, discretionary bonuses without criteria, and promotion increases that vary by manager. Unit 5 of the course walks through running a pay review you can defend and what the raw gap does and does not say.
Talking about it afterward
Decide in advance what will be said, to whom, and when. Employees whose pay is adjusted need a clear, private explanation. The wider workforce usually needs to know that a review happened and what was done, without figures that could identify individuals. Anything public should be reviewed by counsel and communications first.
A filled-in example
| Commissioned by | General counsel, with the analysis carried out by an external specialist |
|---|---|
| Comparable groups | Roles grouped by job family and level, agreed before any pay data was pulled |
| Legitimate factors | Level, location, time in role and documented performance rating |
| Factors excluded | Starting salary, because it was negotiated from prior pay for most hires |
| Remediation reserve | An estimated amount held in the reward budget until the analysis is complete |
| Process fix | Starting offers set from a published range for each level |
| Communication owner | Chief People Officer, with counsel reviewing all written communication |
Mistakes to avoid
- Running the numbers before calling counsel. Once a finding exists, it cannot be unfound. Involve counsel at the scoping stage and let them advise on how the work is commissioned.
- Choosing controls after seeing the output. Adding factors until the gap disappears is not analysis. Agree the controls in writing before any pay figure is seen.
- Controlling for the cause of the gap. A factor that carries the pattern, such as pay negotiated from prior salary, can hide a real problem. Question each control before accepting it.
- Having no remediation budget. A finding with no money to address it stalls, and a stalled finding is a risk. Reserve a remedy budget before the work begins.
Pay Equity Audit Template FAQs
What is a pay equity audit?
A structured comparison of pay for comparable work, controlling for factors you have agreed are legitimate, to find differences those factors do not explain. It is a different exercise from a published pay gap figure, which compares averages across a whole workforce.
Do we need legal involved?
Yes, and from the beginning. Rules on what may be analyzed, what must be reported and what is privileged vary widely by jurisdiction, and this page is not legal advice. Unit 5 covers how to work with counsel on it.
What if we find a gap we cannot afford to fix at once?
Plan a phased remediation with dates and a budget rather than doing nothing. A documented plan being followed is a very different position from a finding that was filed away.
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