Small Businesses and Job Discrimination

Number of Employees

The federal Equal Employment Op­portunity Commission (EEOC) is re­sponsible lot enforcing the most widely applicable laws that prohibit dis­crimination in employment. The small­est of businesses are not subject to most of these statutes. Title I of the Ameri­cans with Disabilities Act (ADA) w hich prohibits employment discrimi­nation against qualified individuals withdisabilities, applies only to employers with 15 or more employees.

The same is true for Title VII of the Civil Rights Act or 1964 (Title VII). which prohibits job discrimination based on race, color, religion, sex. and national origin. The threshold for cov­erage under the Age Discrimination in Employment Act (ADEA) is 20 or more employees. The Equal Pay Act, which is intended to prevent wage dis­crimination between men and women in substantially equal jobs in the same establishment, applies to most em­ployers with at least one employee.

In calculating the number of em­ployees for purposes of coverage of these statutes, all employees are counted, including part-time anil tem­porary workers. Independent contrac­tors are not included, but the distinc­tion between such workers and em­ployees is often difficult to draw with­out the advice of legal counsel. Situ­ated between the businesses SO small as to be excluded from coverage and the Fortune 500 are thousands of small businesses to which the EEOC-en-forced laws apply.


Anyone believing that his or her em­ployment rights have been violated because of the types of discrimination cov­ered by the federal laws, or because of retaliation for opposing job discrimina­tion. filing a charge, or participating in proceedings under those laws, may file a charge of discrimination with the EEOC. In most states, the charge must be filed within 300 days of the date of the alleged discrimination. The EEOC will notify the employer within 10 days of receiving a charge.

If a charge is eligible, the EEOC will give the parties an opportunity to take part in voluntary, confidential mediation to reach mutually agreeable solutions. If all parties agree to partici­pate, neutral mediators will work with them to that end. In the event that me­diation is unsuccessful, the charge is referred for investigation by the EEOC.

An EEOC investigation may in­volve a responsive statement from the employer, the collection of documents by the EEOC, and visits and interviews by EEOC personnel. If the EEOC ulti­mately dismisses a charge, the charg­ing party is notified and has 90 days to file a lawsuit. A finding by the EEOC of reasonable cause to believe that dis­crimination has occurred will lead to an invitation to the parties to enter into conciliation discussions. If they fail, the EEOC and/or the charging party may bring suit.

Discriminatory Practices

The range of discriminatory prac­tices prohibited by EEOC-enforced laws is much broader than just hiring and firing. If a prohibited discriminatory motive is the root cause of the decision or action taken, an employer can be held liable in such areas as compensation, assignments, transfers, promotions, lay­offs and recalls, testing, and fringe bene­fits. The reach of these laws is also extended by catchall language prohibit­ing discrimination in all “terms and conditions” of employment

Some forms of discrimination are peculiar to a particular statute. For ex­ample, unless the requirement is nec­essary for conducting business, a rule requiring that employees speak only English at work may constitute na­tional origin discrimination in viola­tion of Title VII. An employer’s failure to reasonably accommodate an appli cant or employee is not pertinent to all of the discrimination laws, but it may create liability when the charge is dis­crimination based on religious beliefs or disability. Workplace harassment can be the subject of proceedings under any of the laws, but in practice it is most commonly asserted by women as a form of sex discrimination under Ti­tle VII.


An employer found to have dis­criminated against an individual could be ordered to eliminate its discrimina­tory practices. It could also be required to take certain positive actions to re­dress the discrimination, such as hir ing, increasing compensation, promot­ing, and reinstating an employee who was wrongfully terminated. Monetary remedies can take various forms, de­pending on the statute, including back pay and prejudgment interest, liqui­dated damages, and compensatory damages for noneconomic injuries such as emotional distress. In Title VII and ADA cases in which the employer has acted with reckless disregard for an individual’s federally protected rights, punitive damages may be awarded. The sum of punitive damages and compensatory damages (not including back pay), per person, may not exceed maximum amounts that increase with the employer’s number of employees.