With the new US administration comes a winding back of federal diversity, equity, and inclusion (DEI) programs, which aim to foster diverse workplaces and promote fair treatment, particularly for groups that have historically been underrepresented or discriminated against. As a result, US companies, including Meta and Amazon, are moving away from their DEI programs. And many companies are shifting to merit, excellence, and intelligence (MEI) programs.

MEI operates under the assumption of an equal playing field. However, this view overlooks the foundational systemic barriers that persist for marginalized groups, which can significantly limit their future career opportunities — and therefore impact areas such as earning potential.

How will multinational US companies navigate shifting DEI attitudes in the US, while managing stricter global DEI regulations?

Despite this shift in DEI acceptance and policies, pay transparency regulations — key levers of DEI that aim to close gender pay gaps — remain in place in the United States. DEI, and pay transparency, also continue to be important topics on global government agendas. Australia, Canada, Japan, Switzerland, and the United Kingdom have all established laws that require companies to calculate and publish reports on their gender pay gaps.

In the European Union, the EU Pay Transparency Directive, effective June 2026, sets out an even more stringent set of requirements that will require all companies with employees in an EU country to comply with both gender pay transparency and gender pay gap reporting requirements. Reports must be published publicly alongside an action plan to correct gender pay gaps over 5% that cannot be explained by non-gendered objective reasons, with penalties and fines enforced on companies not in compliance.

In contrast to US pay transparency requirements, the EU Pay Transparency Directive also takes a more holistic view on the definition of “pay” — referring to a broader definition of total rewards encompassing compensation and benefits, such as company cars, health insurance, perks, and pensions. Employers will need to be prepared to place a value on these benefits and include this value when disclosing pay and in pay gap reporting.

All EU countries must transpose (interpret) the EU Directive into national law by June 2026. We’ve already started to see draft guidance issued by Belgium, Ireland, Poland, and Sweden and expect to see a lot more traction across the EU this year. All companies with employees in the EU, must comply with these regulations and should start taking action now to prepare for these stringent requirements.

With conflicting global DEI agendas, it will be interesting to see how changing DEI policies in the US may impact the global total rewards strategies of multinational US-headquartered companies, for which we’ve seen a general trend toward greater inclusivity and equitable policies over the past few years. Will multinational employers need to adopt a bifurcated approach for their US and non-US employees? Or will they continue to build toward a more unified and equitable strategy for all employees?

Global Pay Transparency Legislation
Global Pay Transparency Legislation. Source is Sequoia.
Source: Sequoia

EU Pay Transparency Directive at a Glance:

Starting June 7, 2026, all companies with employees in an EU country must:

  • Disclose pay ranges to new hires
  • Disclose average pay levels by category of worker to current employees
  • Provide information about the criteria used to determine pay and pay progression
  • Ensure methods used to assess and compare the value of work are based on objective, non-gendered, criteria

Companies with more than 100 employees in a single EU country will be required to calculate and publish their pay gap report and take remedial action where pay gaps of over 5% are identified, and cannot be justified based on objective, non-gendered criteria

How Can You Prepare for EU Pay Transparency Reporting?

Here are some ways companies can prepare for EU pay reporting requirements.

  1. Data collection:
    • Decide how you are going to collect the data on compensation and benefits to support pay your gap analysis.
    • • Review your tools and resources to determine what data is available, including HRIS , payroll, benefit admin systems, benefit vendors, insurers, brokers, and consultants.
  2. Assessment:
    • Review your pay structures and total rewards programs for gender neutrality
    • Define the methodology you’ll use to assess pay and benefit costs
    • Calculate pay gaps
  3. Action Plan:
    • Explain any pay gaps you’ve identified. Gaps justified by objective reasons will need to be explained to employees on request.
    • Build a strategy to address pay gaps that can’t be explained based on objective reasons
    • Create a roadmap to address issues and gaps
  4. Reporting:
    • Understand legal reporting requirements
    • Develop reporting processes
    • Implement technology to support reporting
    • Follow an ongoing framework for reviewing and updating your total rewards practices to maintain compliance

Reach out to a Sequoia Global Advisor for help getting prepared for EU Pay Transparency requirements.

Elouise Rolo — Elouise is a Global Consulting Director with Sequoia Global Services and is based in the UK. She has over 15 years of global benefits consulting experience and is a Fellow of the Institute and Faculty of Actuaries. Elouise has worked with clients at all stages of their journey from initial and rapid growth to fully global, having experience from working in both the US and Europe. She focuses on servicing multinational clients on global benefits management, strategic benefits design and development. Elouise is passionate about enhancing employee experience through the deployment of global employee benefits. Legislation like the EU Pay Transparency Directive puts gender pay discrimination in the spotlight and Elouise is excited to be a part of a movement towards real progress in this area.