Pay Equity Shortcuts Create Risks for Employers

Due to the evolving challenges in getting pay equity right across the country and globally, employers are being tempted by vendors claiming that their software and/or services can conduct a reliable pay equity study literally overnight. But buyer beware: There are no simple solutions to such a complex task.

This article alerts readers to the dangers of conducting a pay equity analysis without due diligence and attention to best practices. Specifically, the article identifies: (1) the legal risks of utilizing simplistic pay equity solutions; (2) how failing to accurately model an organization’s compensation structure and pay groupings may yield incorrect results; and (3) how failing to conduct an appropriate analysis can undermine an employer’s entire pay system and potentially create future unintended risks.

Finally, the article provides critical best practices to reduce both legal and practical risk.

Simply put, taking the easy way out when it comes to pay equity is reckless for employers and creates risks that can be avoided.

Legal Risks

A quick and simple analysis of employee compensation can result in greater legal risk than not doing an analysis at all. Most critically, overnight solutions are generally not done under the direction and supervision of counsel. It is critical that any statistical study...