Pay Equity Audit: How To Conduct One (Plus Free Checklist Template)
While 75% of organizations say they run pay equity audits, nearly half do so only every few years. This leaves a lot of room for gaps to go unnoticed. Regular audits, transparent pay practices, and targeted fixes are key to closing these gaps.
A pay equity audit is one of the most effective ways for organizations to understand and address pay disparities, such as gender-based wage gaps. It reveals whether groups such as women or minorities are consistently underpaid, even after accounting for factors like role, experience, and qualifications.
This article discusses pay equity audits, why your organization should care about them, and how to conduct one. It also provides a free, customizable pay equity audit checklist template to guide your audit process.
Contents
What is a pay equity audit?
Why should your organization care about pay equity audits?
Pay equity vs. pay equality
8 steps to effectively conduct a pay equity audit
The benefits of using a pay equity audit checklist template
7 key elements of a pay equity audit checklist template
Free pay equity audit checklist template
Tips for using AIHR’s pay equity checklist audit template
What is a pay equity audit?
A pay equity audit lets you find and fix pay gaps before they become legal or reputational problems. As an HR professional, ensuring fairness in your organization’s pay structure is a key priority. Conducting a pay equity audit is an important step toward an inclusive workplace.
A pay equity audit systematically reviews your company’s compensation to identify and correct unjustified pay gaps. These gaps may arise from biases related to gender, race, ethnicity, age, disability, or other protected characteristics. This audit ensures employees in similar roles with comparable skills and responsibilities receive fair compensation.
Why should your organization care about pay equity audits?
Here’s why your company should take pay equity audits seriously:
- Helps spot and fix pay gaps early: Unintentional pay differences can occur due to promotions, hiring practices, or salary decisions. A pay equity audit helps spot pay gaps, allowing you to address them early.
- Shows employees fairness is a priority: Employees want to be sure they’re paid fairly. Regular pay equity audits show that the company prioritizes fairness, which builds trust and improves engagement and retention.
- Protects brand reputation: Pay equity helps protect brand reputation. A solid pay equity strategy shows a commitment to ethics and transparency and supports ESG goals, which are common expectations among stakeholders.
- Strengthens DEIB efforts: Pay equity audits are key to diversity, equity, inclusion, and belonging (DEIB) initiatives. They provide actionable data to close gaps that affect underrepresented groups.
- Looks beyond pay to spot systemic issues: Pay equity audits can uncover larger hiring, promotions, or performance review issues. Understanding them enables you to improve policies and processes across the business, not just in pay.
Pay equity vs. pay equality
Definition
Fair pay for different jobs that require similar skill, effort, and responsibility.
Same pay for exactly the same job, designation, and responsibilities.
Focus
Ensure fairness across different roles that are comparable in terms of skill level, effort, and responsibility.
Ensures employees in identical roles receive identical pay.
Goal
Correct systemic gaps tied to immutable traits like gender, ethnicity, age, disability, or other protected characteristics.
Guarantee that people who do the same work receive the same pay.
Approach
Uses job evaluation and compensation analysis to compare roles of equal value and address unjustified pay gaps.
Ensures standard pay scales apply consistently to identical job titles and functions.
Example
A female nurse and a male technician doing jobs of equal value (based on skill and responsibility) should receive similar pay, even though their roles are different.
Two engineers in the same team with the same title and duties must receive the same salary.
Impact
Supports DEIB.
Ensures fairness in direct, like-for-like job comparisons and prevents discrimination in specific roles.
8 steps to effectively conduct a pay equity audit
To conduct an effective pay equity audit, observe the following steps:
Step 1: Plan the audit
Start by defining your goals. Are you checking for legal compliance, looking to support DEIB initiatives, or addressing employee concerns? Once you’ve clarified the audit’s purpose, get buy-in from leadership and legal to ensure it has the necessary support and resources.
Step 2: Collect clean, reliable data
Gather accurate data from your HRIS or payroll systems. This includes compensation details, job titles, performance ratings, tenure, and demographic information. Using a pay equity audit tool or software can streamline this step, reduce errors, and ensure consistency.
Step 3: Group employees by role
Use consistent criteria such as job level, function, location, or department to create employee groups based on comparable roles. This helps you evaluate “like for like” work and spot meaningful differences to inform the direction of your audit going forward.
Step 4: Analyze pay gaps
Use statistical analysis or straightforward averages to examine pay differences within the various employee groups. A more advanced pay equity audit software platform may include built-in analytics highlighting unexplained gaps more quickly and accurately.
Step 5: Identify root causes
Once you’ve found pay gaps, dig deeper to determine the reasons for them. Is experience, performance, or education level responsible for these gaps, or are they unexplained? Be sure to document these causes clearly so you can justify or correct pay differences.
Step 6: Take corrective action
Adjust compensation where necessary to address unjustified salary gaps. If immediate changes aren’t possible in certain scenarios, consider phased approaches or adjustments over time that you can work towards and implement whenever possible.
Step 7: Communicate your findings
Share the results with leadership and plan how to communicate them to employees. Be transparent but sensitive in your approach, especially if changes are still in progress. Focus on your commitment to the next steps and fairness to all employees.
Step 8: Monitor progress over time
Pay equity is a continuous process that requires constant monitoring and adjustment to ensure accuracy and fairness. Use your pay equity audit software to run regular checks, track improvements, and ensure ongoing compliance with legislation and internal policies.
Learn how to identify pay gaps and draft a pay equity action plan
Develop your skills in driving pay equity consistently across your organization’s workforce to ensure that every individual, team, and department is compensated fairly.
AIHR’s Compensation and Benefits Certificate Program teaches you how to interpret data to identify pay gaps and draft an action plan for pay equity, ensure legal compliance, and stay updated on the latest C&B practices to minimize your company’s risk exposure.
The benefits of using a pay equity audit checklist template
There are multiple benefits to using a pay equity audit checklist template to help conduct your pay equity audit, including the following:
- Saves time and adds structure: A template provides a ready-made structure for your audit, outlining key steps and data points. This allows your team to focus on analysis and action, instead of having to spend time starting from scratch.
- Considers all important factors: From job categories and performance ratings to demographic data and pay components, a template prompts you to collect and assess all relevant information, not just the obvious details.
- Reduces the risk of missing critical steps: The audit process involves planning, data collection, analyzing gaps, identifying causes, and taking corrective action. A template covers all details, improving accuracy and accountability.
- Clarifies responsibilities and improves collaboration: Templates assign roles to specific team members, making clear who handles each part of the process. This helps the audit run more smoothly and keeps everyone aligned.
- Makes progress easier to track: Templates include status checklists or timelines, allowing you to monitor progress and keep the audit on schedule. They also make it easier to revisit decisions and results at a later date.
- Reduces human error: A consistent structure to help gather and review data reduces the chances of mistakes or oversights, especially when multiple individuals are involved in the pay equity audit process.
- Strengthens compliance: In the event of legal scrutiny, a clearly documented audit process shows you prioritize pay equity and have acted in good faith. A template demonstrates due diligence, which can be critical in defending your practices.
- Creates a repeatable process for future audits: Once you’ve completed an audit using a template, you’ve established a repeatable model for future audits. This supports continuous improvement and makes it easier to track progress.
7 key elements of a pay equity audit checklist template
Below are seven essential elements of a pay equity audit checklist template to guide your entire audit process:
1. Audit initiation
Purpose: To define the audit’s scope, set expectations, and get organizational alignment.
Checklist items to include
- ✔ Define the scope of the audit (full company, departments, protected characteristics)
- ✔ Set objectives (identifying pay disparities or reviewing systemic issues)
- ✔ Identify the team involved (HR, finance, legal, external consultants)
- ✔ Set a timeline and allocate resources
- ✔ Secure leadership support
- ✔ Prepare for potential compensation adjustments.
2. Collection and cleaning of relevant data
Purpose: To gather complete and accurate data for analysis.
Checklist items to include
- ✔ Collect job descriptions and required qualifications for roles under review
- ✔ Extract employee data — job title, gender, race/ethnicity, hire date, pay, location, hours worked, and other compensation details (bonuses, overtime, benefits)
- ✔ Review and verify that job descriptions accurately reflect duties and required skills
- ✔ Confirm data integrity and consistency across systems (ideally using a pay equity audit tool or spreadsheet).
3. Audit conducting
Purpose: To compare employee pay within job groups and uncover potential disparities.
Checklist items to include
- ✔ Group together employees performing equal or substantially similar work
- ✔ Analyze average total pay by group and demographic
- ✔ Identify pay differences within those groups
- ✔ Investigate whether differences can be explained by legal factors (e.g., tenure, performance, location)
- ✔ Flag unexplained or non-compliant discrepancies for correction.
4. Pay differences cause analysis
Purpose: To separate justified and unjustified pay variances.
Checklist items to include
- ✔ Review organizational pay policies and any documented justification for differentials
- ✔ Evaluate if current policies are being applied consistently
- ✔ Identify any informal or subjective practices that could be contributing to bias.
5. Action plan development
Purpose: To address issues uncovered in the audit.
Checklist items to include
- ✔ Create a plan to correct unjustified pay gaps, including salary adjustments
- ✔ Set priorities based on severity or risk
- ✔ Review and revise hiring, promotion, and compensation practices to prevent recurrence
- ✔ Consider implementing salary bands to ensure greater consistency.
6. Communication of findings
Purpose: To maintain transparency and trust.
Checklist items to include
- ✔ Share key findings with senior leadership
- ✔ Decide on messaging for employees (if appropriate)
- ✔ Emphasize the company’s commitment to fairness
- ✔ Detail the next steps.
7. Monitoring and follow-up
Purpose: To ensure the audit leads to ongoing improvement.
Checklist items to include
- ✔ Schedule regular audits (annually or biannually)
- ✔ Use a pay equity audit template and, where possible, pay equity audit software to track changes over time
- ✔ Monitor compensation practices
- ✔ Ensure continued compliance with laws and internal policies.
Free pay equity audit checklist template
AIHR has designed a customizable pay equity audit checklist template to enable HR teams to carry out a structured, thorough, and repeatable audit, from planning and data collection to analysis and corrective action. Download the template for free below.
Tips for using AIHR’s pay equity checklist audit template
Here are some useful tips to help you make the most out of AIHR’s pay equity audit checklist template:
Customize it to reflect your organization’s structure
Adapt the checklist to match your company’s job levels, departments, locations, and reporting lines. If your audit covers global regions with different laws, add extra sections, and include additional demographic categories if you’re tracking specific DEIB goals.
Assign clear ownership for each checklist item
Add a column or comment field for each item on the checklist and assign an owner (HR, finance, DEIB lead, etc.) to it. Ensure every task has a designated team or individual responsible for delivery and encourage cross-functional input, especially from the legal and payroll teams.
Set realistic due dates and timelines
Turn the checklist into a working project plan by adding start and end dates for each task, building in review points to assess progress, and prioritizing time-sensitive actions like data collection or legal compliance checks.
Track your progress
Use the checklist as a live document, update it as tasks are completed, add notes or status updates to highlight blockers or changes, and keep a record of what you’ve completed and when. This helps with repeat audits and compliance reviews.
Build in space for audit insights and findings
Extend the template to capture what you learn. You can add rows or sections for recording key findings (e.g., unexplained gaps or outdated job descriptions), or create a space to note policy changes, salary adjustments, or areas for follow-up. Use these insights to refine future audits and inform leadership reports.
Use the checklist as a communication tool
The checklist can double as a briefing tool for stakeholders. Share the completed version with leadership to show progress and findings, and use it in team meetings to keep the audit on track. You can also attach it to formal reports or presentations as part of your pay equity documentation.
To sum up
Pay equity reflects your organization’s integrity and long-term strategy. Addressing pay gaps improves employee morale, strengthens your employer brand, and demonstrates a genuine commitment to fairness. When people feel valued, they are more likely to stay, perform better, and advocate for the company.
The goal is not simply to fix gaps as they appear, but to prevent them. This means building pay equity into everyday decisions, from defining roles to setting starting salaries. It also means revisiting pay data regularly and being transparent with your workforce. A pay equity audit is a good start, but your organization must make pay equity an ongoing process.
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