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3 Steps to Compensation Compliance

3 Steps to Employee Compensation Compliance

Equal pay for equal work: It’s the principal at the core of pay legislation in the United States, and one that should be at the core of your organization’s compensation policy. But how can you ensure that you’re in compliance?

1. Know the Laws

Decisions about employee compensation are governed in part by the Equal Pay Act, which aims to stop gender discrimination. This act measures four compensable factors, enforced by The Equal Opportunity Commission, that determine the nature of a job:

  • Skill
  • Effort
  • Responsibility
  • Working conditions

In addition to the Equal Pay Act, employers need to comply with The Lilly Ledbetter Fair Pay Act, (2009) which extended a statute of limitations for compensation complaints. This act goes beyond the Equal Pay Act by adding protected classes, such as race and national origin.

2. Document Your Pay Decisions

Protect Yourself With A Proactive Approach

As with many aspects of Human Resources, Employers ensure compliance by thoroughly documenting pay decisions. A formalized, fully-documented approach encourages legal, balanced behavior; it also arms an organization in the event of a legal dispute.

Effective pay documentation should include:

  • Details of what an employer chose to pay an employee
  • The performance rating an employer gave an employee that led to a particular pay decision
  • Other factors that affect income, such as the sales territory given to an employee. For instance, did it have a lower value than the territory given to another employee?

3. Take No Chances – Get Help From A Consultant

There are typically three reasons an organization may take a third step towards compensation compliance, and seek a professional compensation analysis from a consultant:

1. As part of human resources best practice, an employer wants to know whether internal pay is equal for men and women, and for different races.
2. The compensation analysis is included in the purchase of an Affirmative Action Plan human resource consulting service.
3. The compensation analysis is part of a Compensation Plan Design human resource consulting service.

In all three cases, a compensation analysis begins with a market analysis, giving the consultant a benchmark to assess the employers pay structure. The consultant examines:

  • All aspects of internal pay equity
  • External pay among competitors, for workers in the equal roles, using national benchmarks

An HR consultant will then use a point factoring system, awarded points for certain skills. The totaled amount establishes a hierarchy of jobs within an organization.

Ultimately, an HR consultant produces a valuable, objective report for an employer that highlights areas of their compensation system that risk non-compliance or require attention.

An HR consultant can provide a level of security against non-compliance within an organization that cannot be attained with the first two steps alone, while ensuring your employees are getting the fair treatment and compensation they are owed. Don’t hesitate – make compensation a top priority for your organization by emailing This email address is being protected from spambots. You need JavaScript enabled to view it. or calling (814) 266-3818 today!

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Human Resources Report

Our very own Jonna Contacos-Sawyer was recently featured in the Human Resources Report TM. Read the article which explores the role technology will play in HR's future.

*Reproduced with permission from Human Resources Report, 32 HRR 453 (May 5, 2014). Copyright 2014 by The Bureau of National Affairs, Inc. (800-372-1033)

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