How to Conduct a Pay Equity Audit (Without the Headache)

Each year, Equal Pay Day reminds us that fair compensation remains an urgent and unfinished priority. For employers, ensuring pay equity isn’t just about meeting legal requirements – it’s about building trust, improving retention, and reinforcing a company’s values.

And one of the most effective tools for doing this is a pay equity audit.

But let’s be honest: audits can feel overwhelming. The data, the systems, the legal concerns…it’s a lot to navigate. Fortunately, with the right approach, a pay equity audit can be clear, actionable, and surprisingly pain-free. Here’s how to get it done without the headache:

1. Plan with Purpose and Support – start by defining your ‘why’. Is your goal compliance with local laws, a DEI strategy checkpoint, or responding to employee concerns? Gaining leadership and legal buy-in early will smooth the path ahead and ensure the audit’s insights lead to real change.

2. Collect Clean, Inclusive Data – you will need reliable data from your HRIS and payroll systems (think base salary, bonuses, job titles, tenure, education, and demographics like gender and race, if available). Anonymize this where needed to protect employee identities. Using audit platforms and tools can help streamline this process and improve accuracy.

3. Group Roles Thoughtfully – analyze comparable roles by grouping employees with similar job responsibilities, levels, and locations. You are aiming to compare apples to apples, not an intern and a senior manager. Clear grouping sets the foundation for a fair analysis.

4. Analyze for Gaps – now it’s time to run the numbers. Use statistical analysis or simple averages to identify disparities between demographic groups. If women in a specific band earn 93% of what their male colleagues make, and there’s no clear justification, that’s a red flag.

5. Investigate Root Causes – for each gap, ask: Is this difference justified by experience, education, or performance? If not, document it. Some gaps may be the result of historic practices or negotiation discrepancies, but that doesn’t make them acceptable.

6. Take Action – once you have identified unjustified gaps, create a compensation adjustment plan. This might be immediate or phased, depending on budget constraints. But even small, intentional steps show employees that fairness matters.

7. Communicate Transparently – after the audit, communicate your findings and actions carefully. Be honest about what you discovered and what you are doing to fix it – without breaching confidentiality. Employees value openness, even when solutions are still in progress.

8. Make It Ongoing – audits shouldn’t be one-off events. Schedule regular reviews (annually or biannually) and integrate pay equity checks into your compensation strategy. In addition, be sure to use audit tools that allow easy follow-ups and progress tracking.

You might be finding yourself asking if this really is still a pressing issue in modern society, but sadly the numbers tell us it is. In 2025, women in the US earn approximately 83 cents for every dollar earned by men, with Black women earning closer to 66 cents. Even when controlling for similar roles, unexplained gaps persist. Without intentional efforts, the World Economic Forum estimates it will take over 130 years to close the global gender pay gap.

Pay equity audits may seem complex, but they are one of the most impactful actions a company can take. With clarity, collaboration, and commitment, you can turn data into fairness, and fairness into a better workplace for everyone. If you would like to discuss how we can help assist you conduct a pay equity audit and identify actionable steps from its results, please get in touch with us today.