What Is Pay Equity & 6 Steps to Achieve It in Your Organization

Pay equity is on every HR agenda right now. Employees don't just want to know their own pay is fair anymore — they want proof that everyone's pay is. That shift is why the confusion tends to come down to the same few questions: what pay equity means, what drives it, and how to get there.

At Salary.com, we talk to hundreds of HR and compensation professionals every week, and pay equity comes up in nearly every conversation. Here's what we tell them.

What is Pay Equity?

Salary.com defines pay equity as equal pay for comparable work — pay that’s internally equitable, externally competitive, and communicated transparently.

That definition has shifted in one important way: employees don’t just want to know their own pay is fair. They want proof that everyone’s pay is fair. That’s a higher bar, and it means companies can’t rely on market salary data alone. Building a pay system that holds up long-term means looking at fairness across the organization, not just individual offers.

Doing that starts with reviewing comparable work: roles that require similar effort, skill, responsibility, and working conditions, regardless of title.

Salary.com's Pay Equity Suite handle the heavy lifting here — real-time market data and solutions to find wage gaps, test fixes, and keep checking pay fairness as the workforce changes.

Why is pay equity important?

Paying equitably pays off, and not just ethically. Equitable pay can strengthen productivity, engagement, and the conditions that support innovation. Employers who get this right also have an easier time attracting and keeping top talent, and employees who feel fairly paid create less conflict and confusion at work.

The data backs this up. Salary.com and The Josh Bersin Company studied 448 companies and 24 HR practices and found that 95% of organizations aren’t operating with real maturity on pay equity — most either ignore it until legal risk forces a response, or run a one-off audit and shelve the results instead of fixing what caused them. The 5% that do it well see the payoff: higher profitability, stronger customer satisfaction, and a real edge in recruiting. In the same research, covering 91 organizational well-being practices, fair and equitable pay came out as the single most impactful one measured.

Pay equity isn’t a one-time compliance project. It’s an ongoing part of staying competitive, both for the talent you’re trying to keep and the market you’re competing in.

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What Steps Can I Take to Help Achieve Pay Equity?

Salary.com’s Pay Equity Framework lays out a six-step methodology, backed by data analytics, for getting to pay equity and keeping it there.

Step 1: Secure a leadership mandate

Achieving pay equity needs real support from the CEO and board, not just a nod of approval. Leadership has to make fair pay a stated priority and back it with the people and budget needed to fix whatever disparities the analysis turns up.

Step 2: Group comparable jobs

No two jobs are exactly the same. Even jobs with the same (or similar) titles can vary significantly, so evaluate each role based on its core components: skills, effort, responsibility, and working conditions. Compare the actual work being done, not current pay levels. Existing pay structures may already carry bias you haven’t found yet.

Step 3: Model internal equity

This step uses multivariate regression analysis to compare pay and job information against employee data like gender, race, and age. It’s worth knowing the difference between a plain pay gap analysis and this kind of pay equity audit: a gap analysis compares average pay between groups and reports the raw difference, which tells you a gap exists but not why. A regression-based equity audit controls for legitimate factors first — experience, performance, location, level — then isolates whatever gap remains. That remaining number is the one that actually matters for compliance. From there, a cohort analysis checks whether that gap is explained by valid business reasons or whether it’s something you can’t defend.

Step 4: Benchmark external competitiveness

Once you’ve reviewed pay internally, compare it against the outside market too. Internal fairness doesn’t help you compete for talent if your pay is behind market — this step keeps you competitive for hiring and retention across industries and locations.

Step 5: Communicate employee compensation transparently

Share the results of your pay equity analysis with employees. Salary.com’s compensation solutions help you create Total Compensation Statements that give employees a clear view of their base pay, benefits, and total rewards. Then, use Salary.com’s Elevate to give employees and managers ongoing, HR-approved access to pay insights, job descriptions, and career paths. Train managers to talk about pay clearly and helpfully, and make these conversations regular—not something that happens only once a year.

Step 6: Update continuously

Pay equity isn’t a one-time project. It requires constant monitoring and adjusting — pay differences can open up whenever someone is hired, promoted, or leaves. Check pay equity at least every few months, and always after a merger or acquisition, since that’s where pay structures get tangled fastest.

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FAQs

Here are some common questions and answers on pay equity:

What is pay transparency?

Pay transparency means employees and candidates understand why they’re paid what they’re paid. It’s what makes pay equity visible and credible — a clear compensation philosophy is what lets an organization actually communicate that to people, instead of just claiming it.

What is pay discrimination?

Pay discrimination happens when people with comparable skills and experience, doing similar work, are paid differently due to factors like age, race, sex, religion, etc. It becomes a pay equity issue when that difference tracks a protected class — gender, ethnicity, age, and so on — rather than a legitimate factor like performance.

How do employees actually feel about pay fairness?

Salary.com's 2026 Trust and Pay Report found HR predicted only 45.4% of employees would rate their total compensation as fair; the real number came in higher, at 54.0%. That's not the whole picture, though — 16.6% of employees say their pay feels unfair, nearly double what employers expected going in. The stakes are concrete: employees who feel unfairly paid are more than five times as likely to say they trust their employer less than they did a year ago (36.4%, versus 6.6% among employees who feel fairly paid).

How big is the gender pay gap?

In the U.S., women earn about 83 cents for every dollar men earn, on average. The wealth gap is even wider: women own about 32 cents for every dollar of wealth owned by men. And when raises are calculated as a percentage of existing pay, an inequitable starting salary can perpetuate and compound the gap over time. At the rate of progress projected by AAUW, pay equality would not be reached until 2088.

What is the US Equal Pay Act?

Per the Equal Employment Opportunity Commission, the Equal Pay Act requires that men and women in the same workplace receive equal pay for equal work. The job titles don’t have to match exactly, but the work should be very similar. The law covers more than base salary: overtime pay, bonuses, stock options, profit sharing, life insurance, vacation and holiday pay, allowances, and other benefits all count.

Are there state laws demanding pay equity?

Many states now have some form of pay equity, pay transparency, or pay discrimination law. These laws generally stop employers from restricting employees from discussing or disclosing wages, and from discriminating against protected classes like gender or race. Many also include salary history bans — states like California, Delaware, Massachusetts, and Oregon prohibit asking candidates about past pay, which keeps prior underpayment from following someone into a new job. Check with your state’s Department of Labor to see what laws apply where you operate.

Pay equity isn't something you do once and check the box.

Pay equity shifts every time someone's hired, promoted, or the market moves. The Pay Equity Suite gives you the real-time data and analysis tools to catch gaps early and keep pay defensible as your workforce changes.

Learn how it works