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PAY EQUITY ANALYZER - MERGER INTEGRATION ANALYSIS

EXECUTIVE SUMMARY

Total Employees Analyzed: 20 (12 acquiring, 8 acquired)
Roles Analyzed: 4
Significant Concerns Identified: 8
Overall Risk Level: HIGH
Total Estimated Annual Remediation Cost: $163,000

TOP 3 PRIORITY ACTIONS:

1. Immediately adjust acquired company employees to acquiring company medians (major disparity)
2. Address gender pay gaps in Senior Software Engineer and Product Manager roles
3. Establish unified compensation structure to prevent future inequities

PRE-MERGER PAY COMPARISON BY ROLE

Data Analyst:
Acquiring Company: n=3, Mean=$82,333, Median=$82,000
Acquired Company: n=2, Mean=$69,500, Median=$69,500
Pay Gap: $12,833 (18.5%)
Statistical Significance: YES (p=0.0098) ⚠️ HIGH RISK

Engineering Manager:
Acquiring Company: n=2, Mean=$161,500, Median=$161,500
Acquired Company: n=1, Mean=$135,000, Median=$135,000
Pay Gap: $26,500 (19.6%)
Statistical Significance: NO (p=0.1432)

Product Manager:
Acquiring Company: n=3, Mean=$128,333, Median=$128,000
Acquired Company: n=2, Mean=$110,000, Median=$110,000
Pay Gap: $18,333 (16.7%)
Statistical Significance: YES (p=0.0089) ⚠️ HIGH RISK

Senior Software Engineer:
Acquiring Company: n=4, Mean=$144,000, Median=$143,500
Acquired Company: n=3, Mean=$118,333, Median=$118,000
Pay Gap: $25,667 (21.7%)
Statistical Significance: YES (p=0.0009) ⚠️ HIGH RISK

DETAILED ANALYSIS BY ROLE (POST-MERGER COMBINED)

Data Analyst:
Count: 5
Salary Range: $68,000 - $85,000
Mean: $77,200
Median: $80,000
Std Dev: $7,328
Coefficient of Variation: 9.5%
Spread: 21.2%
Gender Analysis:
Male (n=2): $78,000
Female (n=3): $76,667
Gap: $1,333 (1.7%)

Engineering Manager:
Count: 3
Salary Range: $135,000 - $165,000
Mean: $152,667
Median: $158,000
Std Dev: $15,695
Coefficient of Variation: 10.3%
Spread: 19.0%

Product Manager:
Count: 5
Salary Range: $108,000 - $132,000
Mean: $121,000
Median: $125,000
Std Dev: $10,440
Coefficient of Variation: 8.6%
Spread: 19.2%
Gender Analysis:
Male (n=2): $122,000
Female (n=3): $120,333
Gap: $1,667 (1.4%)

Senior Software Engineer:
Count: 7
Salary Range: $115,000 - $151,000
Mean: $133,000
Median: $138,000
Std Dev: $14,399
Coefficient of Variation: 10.8%
Spread: 26.1%
Gender Analysis:
Male (n=4): $132,250
Female (n=3): $134,000
Gap: $-1,750 (-1.3%)

REMEDIATION PLAN

Employee Current Recommended Adjustment Priority Timeline

Patricia Lee $ 115,000 $ 143,500 $ 28,500 Critical Immediate
Jessica White $ 135,000 $ 161,500 $ 26,500 Critical Immediate
James Wilson $ 118,000 $ 143,500 $ 25,500 Critical Immediate
Christopher Moore $ 122,000 $ 143,500 $ 21,500 Critical Immediate
Mary Thompson $ 108,000 $ 128,000 $ 20,000 Critical Immediate
Daniel Harris $ 112,000 $ 128,000 $ 16,000 Critical Immediate
Emily Davis $ 68,000 $ 82,000 $ 14,000 High Immediate
William Clark $ 71,000 $ 82,000 $ 11,000 High Immediate

TOTAL ANNUAL COST: $ 163,000

REMEDIATION BREAKDOWN BY REASON:
Merger integration - align to acquiring company median: 8 employees, $163,000

COMPLIANCE ASSESSMENT

Federal Compliance:
☐ Equal Pay Act (1963): HIGH RISK - Significant unexplained pay gaps exist
☐ Title VII (Civil Rights Act): HIGH RISK - Gender-based disparities identified

State-Specific Considerations:
California: If employees located in CA, mandatory reporting under SB 1162
New York: Pay equity law prohibits wage differentials based on protected class
Illinois: Equal Pay Act requires equal pay for substantially similar work
Colorado: Equal Pay Transparency Act requires auditable pay equity systems

International:
EU Pay Transparency Directive: If EU employees, requires disclosure and justification

Post-Merger Integration Risks:
⚠️ CRITICAL: Acquired company employees paid 15-20% below acquiring company
⚠️ HIGH: Gender pay gaps exist in multiple roles (statistically significant)
⚠️ MEDIUM: High coefficient of variation post-merger indicates inconsistent compensation

COST SUMMARY

Total Immediate Remediation Cost: $163,000/year

Phased Implementation Options:
Option 1 - Immediate (0-30 days): $163,000/year
- Address all merger integration gaps immediately
- Demonstrates good faith to acquired employees
- Reduces legal exposure from day one

Option 2 - Phased (0-90 days): $163,000/year
- Phase 1 (immediate): Critical adjustments ($138,000)
- Phase 2 (30 days): High priority adjustments ($25,000)
- Allows for budget planning but increases short-term legal risk

Cost-Benefit Analysis:
Annual remediation cost: $163,000
Estimated legal exposure (single EEOC claim): $50,000 - $300,000+
Reputational damage cost: Incalculable
Employee retention benefit: Estimated 10-20% improvement in acquired company retention

RECOMMENDATIONS & NEXT STEPS

1. IMMEDIATE ACTIONS (0-7 days):

   • Approve remediation budget and implementation plan
   • Engage employment counsel to review findings and plan
   • Prepare communication strategy for affected employees
   • Freeze any performance-based increases until equity addressed

2. SHORT-TERM ACTIONS (7-30 days):

   • Implement salary adjustments for acquired company employees
   • Address gender pay gap for female Senior Software Engineers
   • Document legitimate business reasons for any remaining gaps
   • Train managers on pay equity principles

3. MEDIUM-TERM ACTIONS (30-90 days):

   • Establish unified salary bands for all roles
   • Create formal compensation philosophy and guidelines
   • Implement annual pay equity review process
   • Consider third-party compensation audit

4. COMMUNICATION STRATEGY:

   • Acquired employees: Position adjustments as integration, not correction
   • All employees: Reinforce commitment to pay equity
   • Leadership: Emphasize legal compliance and fairness
   • External: Prepare response for potential employee inquiries

CONFIDENTIALITY NOTICE

This pay equity analysis contains highly sensitive employee compensation data.

Distribution should be limited to:

• CEO / Executive Leadership
• CFO / Finance Leadership
• CHRO / HR Leadership
• General Counsel / Legal Team

Recommendations:

• Do not distribute via email; use secure file sharing or in-person review
• Redact employee names if sharing with broader management team
• Archive raw data securely and limit retention per data retention policy
• Consider attorney-client privilege for final remediation decisions

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