Three women have filed a class action lawsuit against Amazon, alleging systematic gender pay discrimination. The plaintiffs allege that Amazon gender pay disparity arose from its compensation system, resulting in

“the disproportionate underpayment of women as compared to their similarly-situated male counterparts.” 

Attorneys acting for the plaintiffs note that the equal pay lawsuit is the first of its kind against Amazon. The tech giant strongly denies the claims. Company data suggests that American-based female employees earned 99.6 cents for every dollar that men earned in the same jobs in 2022. 

Job Codes and Pay Equity

Allegations of Amazon gender pay disparity center on the classification of its job codes. The plaintiffs state that Amazon’s compensation structure disproportionately impacts female employees when placing them in job levels and codes: 

  • Job codes categorize employees by job function, such as manager, or researcher. 
  • Job levels are assigned on a scale from 4 to 12, which determines salary level and pay range. 

Together they are used to determine individual base salary, stock awards, bonuses, and other compensation. The plaintiffs allege that Amazon systematically assigns women to lower job codes for performing the same roles as their male colleagues. As a result, women receive less pay for carrying out similar work to men. 

After highlighting concerns, all three women claim they were demoted, and their responsibilities and leadership roles removed. 

Gender wage gap in tech industry

Pay inequities in the tech sector have persisted for some time. Data shows that women in cybersecurity typically earn less than three-quarters of their male counterparts. Women with one to three years of experience reportedly earn around $19,950 less than men with equivalent experience. 

The gender wage gap in tech industry widens for Latina and Black women. They are typically paid $52,000 per annum, compared to $85,000 for men, according to WomenTech.  

Unless steps are taken to promote pay equality, nothing will change. But the tech sector faces deeply entrenched cultural “norms.” Web Summit’s State of Gender Equity in Tech report found that:

  • Almost half of women feel their employer isn’t taking action to combat gender inequality. That number has almost doubled in the past year. 
  • 53.6% of women have experienced sexism at work in the past year. 
  • Over three-quarters (77.2%) believe they need to work harder to prove themselves, due to their gender. 

A study by the UK-based Fawcett Society supports these findings, and reveals that 72% of women experience at least one form of sexism at work. That includes being paid less than their male colleagues and regular questioning of their skills and abilities.  

Wider impacts of workplace bias and compensation

Outside of tech the Amazon lawsuit raises broader concerns about the impact of job classifications and performance reviews on pay. Harvard Business Review research reveals three types of gender bias. All three adversely impact women:

Experience bias: Tasks that are easier to define are overvalued in performance reviews. Men are typically more involved in these tasks, and men who review men also rate them 12% higher than women.  

Proximity bias: Proximity bias is the belief that people we physically work alongside carry out the most important tasks. Even if women come into the office as often as men, studies still show their performance reviews are less favorable.

In-group/out-group bias: This involves giving preferential treatment to people who belong to a group the reviewer personally identifies with. Performance review scores in the out-group are shown to be lower by an average of 20%. 

Additional research found that:

  • Over half of managers give employees feedback based on personality rather than behavior.
  • Women are seven times more likely than men to be described as opinionated and receive 22% more feedback about their personality. 
  • White men under the age of 40 are described as “brilliant” in performance reviews nine times more than women over 40 years old.

Measures to eliminate bias and close the gender pay gap, such as pay transparency laws, have gained momentum in 2023. Yet progress is slow and the cost is high in every sense. Since 1967, the total of lost wages accrued by all working women is estimated at an astonishing $61 trillion

Promoting pay equality

Tech is not the only sector facing allegations of pay discrimination. Investment bank Goldman Sachs agreed a $215 million payout in class action lawsuit earlier in 2023. Plaintiffs alleged systematic gender discrimination including intentional pay discrimination and bias in performance reviews. Global sportswear brand Nike also faces allegations of systematic pay inequality. 

Amazon gender pay disparity claims have been filed alleging violation of both state and federal laws, including Washington’s Equal Pay and Opportunities Act (EPOA). Washington-based employers have faced a rise in class action lawsuits since the state’s EPOA came into force in January 2023. 

Employers can take action to ensure compliance and begin promoting pay equality with the following steps.

Conduct regular pay equity analyses: Analyzing pay disparities enables employers to identify potential bias in compensation. Carry out regular reviews of similar roles, while accounting for factors including individual experience and qualifications. Auditing performance reviews can also ensure that compensation decisions are not affected by bias. 

Be consistent in pay: Set up guidelines to ensure equal pay practices for all compensation decisions. Include new hires, internal transfers, promotions, or compensation adjustments for employees who achieve more skills and experience. Trusaic Salary Finder™ allows employers to make fair and consistent pay decisions across your organization. Integrated with PayParity, it analyzes employee details against labor market rates and internal ranges to calculate real-time pay recommendations. 

Commit to pay transparency: Adopting pay transparency promotes pay equality and minimizes bias. Employers can take gradual steps towards pay transparency by including wage information in job listings and sharing salary information with employees. All employers should ensure compliance with local and state-wide laws. 

Learn how pay equity software can help your organization navigate pay transparency laws and stay compliant.

Download: Pay Equity Definitive Guide

Conducting a pay equity audit is a key component to ensuring equitable compensation within your organization. Just as important as the analysis is how you communicate findings and progress with various stakeholders. Download The Pay Equity Communications Planner to learn best practices for discussing compensation, both internally and externally.