In November 2023, a lawsuit was filed against Amazon based on equal pay in which women are paid less than men performing the same or comparable work.  The lawsuit also alleges discrimination in promotions and retaliation against anyone who complains. 

The pay discrimination charge alleges that the tech giant regularly assigns women to lower bands for the same functions as their male peers, ultimately “resulting in the performance of similar work as men in higher job codes for less compensation,” according to the filing.

According to the lawsuit, the pay bias typically begins at the hiring stage, as Amazon uses “common compensation-setting policies across its organization” that assigns workers to various “job codes” based on job function. It also alleges that Amazon considers a worker’s past compensation history in determining their job code, and it “regularly assigns women to lower job codes for the same job functions as comparable male employees.”

Assigning lower job codes based on gender or race is called steering.

They also claimed that they repeatedly raised concerns about discrimination, but Amazon took no action, and instead, retaliated against them.  They were demoted within weeks of engaging in protected activity, the complaint said.  They also stated that they were reassigned to work for those males that had less experience than they did.

Maria Colacurcio, chief executive officer of Syndio, a tech company that helps workplaces identify pay gaps, says there can be “a lot of gerrymandering” when it comes to job levels. For example, at the hiring stage, if two people with similar backgrounds, qualifications, and experience are tapped but only one negotiates for an elevated ranking linked to higher compensation, that can create a disparity that can snowball.

“When you start lower because you’re systematically under-leveled or for some other reason, you’re just put in a lower pay range that is going to compound over time, and it’s going to take you a ton more effort and energy to catch up than if you would’ve started at the more appropriate salary range,” she said.

This all assumes that their performance was good throughout the time or that something happened that impacted their performance because of their complaints.  In a recent survey by Syndio of 1,000 workers, one in four said they believed their performance reviews were negatively affected by their manager’s personal biases.

Amazon denied all claims of any discrimination.

Best practice for employers is to use single listing postings as opposed to hierarchical postings (a posting of multiple levels of a single job).  Second, market pricing is established by the current pay of the workers in those positions plus any impact by market conditions.  In other words, pay should not be set by previous pay or past pay, but of the current range of those in those positions plus or minus 20% from the midpoint.  Try to match to the closest comparable and have a policy that if a manager wants to pay someone more or less than the range, to put it in writing with their first level having to approve it.

In today’s world, not like that of 10 to 20 years ago, applicants and employees are requiring pay transparency from their employers, and laws allow them to ask about pay and what people are getting paid in many states.  Michigan is likely to pass pay transparency in 2024.  So be ahead of the game and work with legal counsel to review how hires are brought into the organization and establish policies and means of communicating pay information.

Source:  Law.com 11/21/23, Bloomberg 11/30/23, 11/20/23