A factor comparison system is typically used for legislated pay equity purposes.

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Factor comparison systems are often used for assessing formal pay equity in industries or organizations, as well as for determining comparable worth or equal pay for equal work issues. It involves comparing jobs on a range of compensable factors of varying degrees of importance, such as skill, effort, responsibility, and working conditions, and then assigning point values or dollar amounts to each factor. This helps to establish a quantitative basis for setting pay rates that correspond to the relative value of the jobs within a specific pay structure. Legislative pay equity, which is aimed at addressing systemic discrimination in pay and benefits that affect certain groups of workers based on gender or other characteristics, may require the use of a factor comparison system as part of compliance with legal standards or negotiated settlements.

A Factor Comparison System Is Typically Used for Legislated Pay