Pay Equity & Compliance
Proactive pay equity analyses and compliance frameworks that hold up under audit, pay transparency mandates, and regulatory scrutiny.
Pay Equity Risk Accumulates Quietly
Pay equity risk does not announce itself. It accumulates quietly through years of hiring decisions, merit increases, promotions, and organizational changes until someone runs the numbers and discovers patterns that are difficult to explain.
The Barksdale Group conducts proactive pay equity analyses that identify statistically significant pay disparities before they become legal, regulatory, or reputational problems. We use regression-based statistical modeling — not simple averages — to separate legitimate pay differences from those that require remediation.
Why Pay Equity Analysis Matters Now
Three forces make proactive pay equity analysis increasingly important for mid-market companies:
State regulatory expansion. Pay equity and pay transparency laws continue to expand across states. Requirements vary by jurisdiction and evolve frequently. Some states mandate salary range disclosure on job postings, others require pay data reporting to state agencies, and several strengthen employees' ability to pursue pay discrimination claims. Organizations operating in multiple states need a compliance strategy that adapts as requirements change rather than chasing each new requirement reactively.
Litigation risk. Class action pay equity lawsuits are increasing. A company that has never analyzed its own data is at a significant disadvantage when plaintiff's counsel does the analysis for them — because the plaintiff's methodology is designed to find the largest possible disparity. Proactive analysis lets you find and fix problems on your own terms.
Investor and stakeholder expectations. PE firms, board members, and sophisticated acquirers increasingly expect organizations to demonstrate proactive pay equity management. For PE portfolio companies, pay equity exposure is a due diligence finding that can affect deal valuation and integration planning.
What Pay Equity Consulting Involves
Statistical Pay Equity Analysis. We build multiple regression models that control for legitimate pay factors (job level, tenure, performance, education, location, prior experience) to isolate whether protected class membership (gender, race/ethnicity) is a statistically significant predictor of pay. This is the standard methodology courts apply and that regulators have historically used.
Our models produce:
- Regression coefficients for each protected class variable
- Statistical significance testing (p-values) at the 0.05 threshold
- Practical significance assessment (what is the dollar impact?)
- Cohort-level analysis when regression is not appropriate (small groups, single-job analysis)
- Intersectionality testing where sample sizes permit
For a mid-size PE-backed services company preparing for a recapitalization, we ran regression analysis across 8 similarly situated employee groups. The analysis identified statistically significant gender-based disparities in two job families. We modeled three remediation scenarios, and the client implemented a blended approach that resolved the majority of the exposure within the next merit cycle.
What clients receive: A pay equity analysis report documenting the full methodology (SSEG definitions, model specification, variable selection rationale), findings with statistical and practical significance assessment, a remediation model in Excel with scenario analysis and cost projections (formulas preserved, not hardcoded), and a monitoring framework for ongoing use.
State Pay Transparency and Pay Data Compliance. We help organizations build a compliance framework that addresses the core requirements: salary range development for job postings, pay data reporting infrastructure, and the internal equity analysis that underpins both. We work with your legal counsel to ensure your approach satisfies applicable requirements in the jurisdictions where you operate.
Pay Data Reporting. Several states now require employers to submit detailed pay data by job category and demographic group. We build the reporting infrastructure, validate data quality, and prepare submissions that are accurate and defensible.
Our Pay Equity Methodology
We do not run a simple report and hand you the output. Our methodology follows a structured process designed to produce actionable, defensible results:
Data Collection and Cleaning
Pay equity analysis is only as good as the data it runs on. We audit your HRIS data for completeness, consistency, and accuracy. Common issues we catch before modeling: missing demographic data, inconsistent job coding, tenure calculation errors, and misclassified employees.
Similarly Situated Employee Group (SSEG) Definition
We define the groups of employees who should be compared to each other. This is where most amateur analyses fail. Comparing all employees in one regression ignores the reality that a VP of Engineering and a junior HR coordinator should not be in the same model. We build SSEGs based on job family, level, function, and location as the data supports.
Model Specification and Testing
We specify the regression model with legitimate pay factors as independent variables and base salary (or total cash) as the dependent variable. We test multiple model specifications to ensure results are robust, not artifacts of a particular specification choice. We use Python-based statistical tools for reproducibility and transparency.
Results Interpretation and Remediation Modeling
We identify where statistically significant disparities exist, quantify the dollar exposure, and model remediation scenarios. Remediation is not always a simple raise. Sometimes the fix is reclassification, sometimes it is adjusting a cohort over two merit cycles, sometimes it is addressing the root cause in the hiring or promotion process.
Documentation and Privilege Considerations
We document methodology, findings, and remediation recommendations. We work with your legal counsel to determine whether the analysis should be conducted under attorney-client privilege, which provides additional legal protection for the findings.
Government Contractor Considerations
For government contractors, compensation compliance extends beyond pay equity into FAR-specific requirements:
- FAR 31.205-6: Compensation must be "reasonable" for the work performed. DCAA evaluates compensation against benchmarks and may disallow costs that exceed their reasonableness thresholds.
- SCLS (SCA): Covered employees must receive the prevailing wage and fringe benefit rates specified in the applicable wage determination. We ensure SCLS compliance is integrated into your salary structure.
- Current federal contractor nondiscrimination landscape: Executive Order 14173 (January 2025) revoked EO 11246, which had been the basis for OFCCP's race- and sex-based compensation audit program. OFCCP retains enforcement authority under Section 503 (disability) and VEVRAA (veterans). Title VII, the Equal Pay Act, and state laws continue to apply. Proactive pay equity analysis remains a recommended practice.
We bring direct experience managing these requirements. Our founder served as Interim Compensation Director for a 1,700-employee Veritas Capital-backed defense contractor. For comprehensive GovCon compliance, see our GovCon compensation practice.
Who This Is For
- Organizations that have never conducted a formal pay equity analysis and want to understand their risk exposure
- Companies operating in states with pay transparency or pay data reporting requirements
- PE portfolio companies conducting pre-acquisition compensation due diligence
- Organizations that have experienced complaints, litigation, or media scrutiny related to pay practices
- Government contractors seeking proactive compliance documentation
- Companies preparing for board or investor review of compensation practices
What You Get
- Pay equity analysis report with regression methodology, findings, and risk assessment
- Remediation model in Excel with scenario analysis and cost projections (formulas preserved, not hardcoded)
- State compliance assessment for applicable pay transparency and pay data reporting requirements
- Ongoing monitoring framework so your team can repeat the analysis quarterly or annually
- Documentation package suitable for legal review and board-level reporting
Frequently Asked Questions
A pay equity analysis is a statistical examination of whether employees performing similar work are paid differently based on protected characteristics like gender, race, or ethnicity after controlling for legitimate factors such as experience, education, performance, and job level. The standard methodology uses multiple regression analysis to isolate the effect of demographic variables on pay outcomes.
Best practice is annually, ideally timed before your merit cycle so identified disparities can be addressed as part of the annual increase process. Some organizations run quarterly monitoring between full annual analyses. Annual analysis also builds a longitudinal record that demonstrates ongoing good-faith effort.
Multiple legal frameworks apply. The Equal Pay Act (federal) prohibits sex-based pay discrimination for substantially equal work. Title VII prohibits compensation discrimination on the basis of race, sex, national origin, and other protected characteristics. State laws in many jurisdictions add pay transparency requirements, salary history bans, and expanded pay equity protections. The specific requirements that apply to your organization depend on where you operate and your federal contractor status. Consult legal counsel for guidance on your specific obligations.
Standalone pay equity analyses typically range from $10,000 to $25,000 depending on population size, number of similarly situated employee groups, and the depth of remediation modeling required. For organizations that need pay equity as part of a broader compensation infrastructure build, our CompForge program includes pay equity screening as one of the integrated components.
This is a decision to make with your legal counsel. Privilege protects the findings from discovery in litigation, which gives you time to remediate without the analysis becoming evidence. The trade-off is that privilege limits who can see and act on the results and prevents using the analysis publicly as evidence of good-faith compliance. We can structure the engagement either way.
Ready to get started?
Every engagement begins with a conversation. Tell us about your organization and we will tell you exactly how we can help.