Recent case law continues to underscore the importance of carefully structuring pay equity and compensation studies to preserve attorney-client privilege and work product protections. While the legal landscape remains consistent in its treatment of privilege where legal and business purposes intersect, a recent decision—Spears—offers a cautionary tale for employers conducting internal pay analyses.
Below are practical recommendations for in-house counsel and HR professionals seeking to safeguard the privileged nature of compensation studies:
Initiating the Study Through Legal Channels
To maximize privilege protections, compensation studies should be initiated and directed by legal counsel—preferably an employment law specialist. The attorney should clearly define the study’s purpose as legal risk assessment, such as evaluating potential liability under pay equity laws or preparing for possible litigation.
Retention letters should explicitly state that the study is conducted to provide legal advice and assess legal exposure. Avoid language that suggests business or operational motivations. If multiple studies are conducted simultaneously, consider separating them by purpose and team to prevent privilege erosion across projects.
Maintaining Confidentiality Throughout the Process
All participants in the study should be instructed to:
- Route communications through legal counsel.
- Treat all materials as confidential and privileged.
- Avoid discussing the study outside the designated team.
- Label all documents—including drafts—as “Confidential – Attorney-Client Privileged / Work Product.”
Additionally, access to study materials should be tightly controlled. Limiting distribution and securing files can help reinforce the privileged nature of the work.
Carefully Managing Disclosures and Reporting
Public disclosures—such as ESG reports or internal communications—can inadvertently waive privilege if they reveal the study’s methodology, scope, or results. Statements that frame the study as serving business goals (e.g., promoting fairness or equity) may also undermine claims of legal purpose.
In Spears, the employer’s ESG report described its pay equity study as part of a broader commitment to equitable compensation. The court found this language, along with the disclosure of specific findings, sufficient to conclude the study was primarily for business purposes, thus not protected by attorney-client privilege. Additionally, even if the privilege was attached to the study, the employer waived the ability to assert that privilege because information about the study was disclosed in the ESG report.
To avoid similar outcomes, review all reporting practices to ensure they:
- Reference the legal purpose of the study.
- Avoid disclosing detailed analysis or results.
- Are vetted by legal counsel before publication.
Pay equity studies are a vital tool for employers—but without careful legal oversight, they can expose sensitive information to discovery. By structuring studies with privilege in mind, in-house counsel and HR leaders can better protect their organizations while still advancing equity goals.