Compliance Checklist For Compensation Administration

This page provides Compensation Administrators with a checklist to help ensure you plan out your organization's comp plan effectively.

Let's start with some common areas that affect your organization's compensation philosophy. These include:

• Market Competitiveness
• Job Analysis and Evaluation
• Market Analysis
• Salary Structure Design
• Budget Constraints
• Legal Compliance
• Internal Equity
• Employee Expectations
• Benefits Management
• Talent Retention

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Compensation Checklist

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Compensation Strategy & Structure
Formal compensation philosophy documented
Pay structures (salary bands, ranges) established
Roles mapped to grades/levels consistently
Market benchmarking conducted regularly

Wage & Hour Compliance
Ensure compliance with the Fair Labor Standards Act (FLSA)
Maks sure employees correctly classified as Exempt vs. Non-Exempt
Overtime calculated and paid correctly
Minimum wage requirements met (federal/state/local)
Timekeeping practices accurate and complete

Pay Equity & Non-Discrimination
Compensation practices comply with the Equal Pay Act of 1963 and the Title VII of the Civil Rights Act of 1964
Regular pay equity analysis conducted
No disparities based on gender race, or protected characteristics
Pay decisions documented and justified

Salary Administration
Starting salaries determined consistently
Pay increases (merit, promotion) documented
Salary adjustments follow defined guidelines
Compression and inversion monitored

Incentive & Bonus Programs
Bonus plans documented in writing
Eligibility criteria clearly defined
Payout formulas consistent and transparent
Discretionary vs. non-discretionary bonuses identified
Bonus payments included in overtime calculations when required

Commission Plans
Written commission agreements in place
Payment terms clearly defined
Timing of payments consistent
Compliance with state-specific laws (where applicable)

Payroll Integration & Accuracy
Compensation data accurately transmitted to payroll
Pay changes implemented timely
Earnings and deductions validated
Payroll audits conducted regularly

Pay Transparency & Communication
Compensation ranges documented internally
Pay practices communicated to employees
Compliance with pay transparency laws (where applicable)
Employees can access pay information

Job Descriptions & Pay Alignment
Job descriptions current and accurate
Compensation aligned with duties and responsibilities
Essential functions clearly defined

Recordkeeping & Documentation
Maintain records of:

• Pay rates
• Pay changes
• Bonus/commission plans

Retain records per legal requirements
Documentation supports pay decisions

Deductions & Adjustments
Wage deductions comply with laws
Employee authorization obtained when required
No improper deductions for exempt employees
Overpayments handled correctly

Multi-State Compliance (If Applicable)
Track state/local wage laws
Apply correct minimum wage rates
Follow state-specific pay frequency rules
Monitor local pay ordinances

Technology & Systems Controls
Compensation systems secure and accurate
Access controls in place
Audit trails maintained
Integration with HRIS/payroll validated

Training & Governance
Managers trained on Pay decisions and pay equity
HR trained on compliance requirements
Compensation decisions reviewed/approved
Governance structure defined

Audits & Compliance Monitoring
Regular compensation audits conducted
Pay equity reviews scheduled
Compliance gaps identified and corrected
Legal updates monitored

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