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How the EEOC Impacts Small Businesses

Skye Schooley
Skye Schooley

Learn what the EEOC protects so your small business can maintain compliance.

As a small business owner, it is your responsibility to ensure that your organization does not violate any anti-discrimination laws when hiring, training, managing, promoting or firing employees. There are federal and state organizations that monitor and enforce employment laws to protect employees from discrimination, for example, the Equal Employment Opportunity Commission (EEOC). To maintain compliance, learn what laws and regulations the EEOC enforces and how they impact your business.

What is the Equal Employment Opportunity Commission?

The U.S. Equal Employment Opportunity Commission is a federal agency responsible for enforcing laws that make it illegal to discriminate against job applicants and employees based on a protected class. This can include discriminatory conduct based on race, color, religion, sex (including transgender status, sexual orientation and pregnancy), national origin, age (40 or older), disability, or genetic information. Businesses with at least 15 employees (20 employees for age discrimination), labor unions, and employment agencies are typically regulated by the EEOC.

Although the EEOC enforces anti-discrimination laws at a federal level, Kathryn (Kamil) Canale, partner at Bradley & Gmelich, said it is important to note that many states have equivalent or stricter state laws as well.

"In California, for example, there are additional classes of discrimination, and employees can choose to bring a claim under the EEOC and/or the California Fair Employment and Housing Act (FEHA)," Canale told business.com.

What is an EEO form?

The EEO-1 Report is a compliance survey that employers with 100 or more employees, contractors with the federal government and first-tier subcontractors (with 50 or more employees and at least $50,000 in contracts) are required to file each year. In the report, employers and contractors disclose employment information regarding the racial, ethnic, and gender composition of their staff based on the job category.

"The report is used by the EEOC to collect data from employers and government contractors about women and minorities in their workforce," said Canale. "The data is also used to support civil rights enforcement and to analyze employment patterns."

How does the EEOC work?

The Equal Employment Opportunity Commission serves to protect job applicants and employees from unlawful discrimination, retaliation, and harassment based on a protected class. If a prospective, current, or former employee files a complaint against your business with the EEOC, a formal process will occur.

According to Vanessa Matsis-McCready, associate general counsel and director of human resources at Engage PEO, a complainant (employee/former employee) must exhaust the EEOC administrative process first before they can file a lawsuit against the respondent (employer) in the appropriate federal district court. Matters can typically be resolved in the EEOC phase, which is a free process (aside from attorney fees).

After speaking with Canale and Matsis-McCready, we compiled their expert insight into a seven-step breakdown of how the EEOC handles discrimination complaints. Keep in mind that federal employees and job applicants have a different complaint process.

1. The employee files a "charge."

The EEOC Administrative Process begins when an employee files a Charge of Discrimination with their local EEOC agency. In the charge, the employee explains the details about the discrimination, harassment or retaliation that occurred. It must be filed with the EEOC within 180 days from the day the discrimination occurred.

"In some states, the filing of a charge is extended to 300 calendar days if a state or local agency enforces a law that prohibits employment discrimination on the same basis," said Matsis-McCready.

Deadlines for age discrimination complaints may differ. It's important to note that an employee may be prohibited from seeking claim resolution (even in another forum) if they fail to file their EEOC charge before the allotted deadline.

2. The EEOC evaluates the charge.

After a formal charge is filed with the EEOC, the agency evaluates it to determine whether it should be dismissed or investigated. If a charge is dismissed, the agency will explain its reasoning for the dismissal and provide evidence to support its decision. Matsis-McCready noted that the employee may file suit if the EEOC elects not to investigate the charge.

3. The EEOC notifies the employer.

Canale said that if the charge is not immediately dismissed, the EEOC will notify the employer within 10 days that a charge has been filed against them. The employer should reach out to their legal counsel or professional employer organization to respond on their behalf.

4. The EEOC launches an investigation.

The EEOC launches a formal investigation, which they have up to 180 days to complete. During the administrative process, the EEOC may offer both parties the option to undergo mediation instead of an investigation. If either party doesn't want to seek mediation, or if both parties agree to mediation and it is unsuccessful, the charge is moved to the assigned investigator, who then moves forward with the investigation.

5. The employer submits a Position Statement.

The employer usually has 30 days to provide their case (Position Statement) and supply supporting documents. 

"The employer will also likely need to respond to requests for information, which may involve answering written questions, providing additional documents, giving interviews and making the worksite available for inspection," said Canale.

6. The EEOC makes a determination.

After reviewing the EEOC charge, the Position Statement, and other evidence, the EEOC makes a determination on the charge.

7. The EEOC issues the corresponding notices.

Based on the EEOC's decision, it will send corresponding notices to both parties (the employee and employer). For example, if the EEOC is unable to determine that there is reasonable cause to believe that discrimination occurred, both parties will receive a copy of a Dismissal and Notice of Rights, which informs the employee that they have 90 days to file a lawsuit, if that is something they wish to pursue.

If the EEOC concludes that there is reasonable cause to believe that discrimination occurred, both parties will receive a copy of a Letter of Determination that invites them to seek resolution through conciliation. If conciliation doesn't work, the EEOC can pursue litigation or send both parties a Notice of Right to Sue (which gives them the option to file a lawsuit within 90 days).

What laws and regulations does the EEOC handle?

The EEOC provides regulations and enforces federal employment and discrimination laws that protect job applicants and employees against job discrimination and harassment. There are currently seven of these federal laws that the EEOC is responsible for, including:

  • Title VII of the Civil Rights Act of 1964 (Title VII) makes it illegal for an employer to discriminate against an applicant or employee based on their color, race, religion, sex or national origin.

  • The Pregnancy Discrimination Act of 1978 amended Title VII, making it illegal for an employer to discriminate against a job applicant or employee because of pregnancy, childbirth, or a medical condition related to pregnancy or childbirth.

  • The Equal Pay Act of 1963 makes it illegal for an employer to pay different wages to men and women if they perform equal tasks in the same workplace.

  • Title I of the Americans with Disabilities Act of 1990 (ADA) protects disabled individuals from discrimination in private companies and state and local governments. The ADA makes it illegal for an employer to discriminate against a job applicant or employee based on a medical condition or disability.

  • Sections 501 and 505 of the Rehabilitations Act of 1973 is similar to the ADA, but for federal government employees. It makes it illegal for an employer to discriminate against a job applicant or employee of the federal government based on a disability.

  • The Age Discrimination Employment Act of 1967 (ADEA) protects individuals who are 40 years or older. The ADEA makes it illegal for an employer to discriminate against a job applicant or employee based on their age (40 years and older).

  • The Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits an employer from discriminating against a job applicant or employee based on their genetic information (e.g., genetic diseases, disorders or conditions).

"All of the above-referenced [acts] also carry a retaliation clause, which means that employers are prohibited from retaliating against an individual opposing such treatment or participating in a proceeding opposing such treatment," said Matsis-McCready.

What happens if a business violates an EEO law?

If a business violates an Equal Employment Opportunity law by discriminating, harassing, or retaliating against an employee, the employee can file a charge with the EEOC. The EEOC will then go through the Administrative Process to determine whether the business has, in fact, violated an EEO law. The steps to resolution may include conciliation, mediation or litigation.

"If the EEOC concludes that a business violated an EEO law, the EEOC will first attempt conciliation to remedy the issues," said Canale. "This is essentially an opportunity to mediate how the employer should change its policies and procedures, and provide compensation to those affected by the violations."

If the EEOC determines that the employer is responsible for violating an EEO law, it is often in the business's best interest to settle the matter before it reaches litigation. Lawsuits tend to be more expensive and take longer to resolve.

"If the matter travels through the federal court system – with a showing from the EEOC that a business has violated the law – and the matter gets before a jury, the employer could be facing a substantial detriment to company's public image, a continued investment of business time and resources, a constant uptick of attorney's fees, and having to compensate the complainant damages in an amount fully and solely determined by a jury," said Matsis-McCready.

Tips on complying with the EEOC

The best way to avoid going through the EEOC process is to comply with the employment laws they enforce. These laws are meant to protect employees, but they are also beneficial to you as a business. Having a discrimination- and harassment-free workplace creates a happier workforce and a better company culture.

One way to maintain compliance is to be mindful of hiring, promoting and firing based on objective criteria. Canale said this can include having well-thought-out job descriptions and job performance measures to vet prospective and current employees. Additionally, your company should have an employee handbook and an open-door policy.

"Having an employee handbook with strong anti-discrimination policies and an open-door policy with human resources, where employees can voice their concerns regarding alleged discriminatory practices without fear of retaliation, is important to avoiding claims," said Canale.

To learn more about compliance, consult the EEOC's small business resource center or seek guidance through a specified EEOC training program (e.g., the federal training and outreach program).

Image Credit: fizkes / Getty Images
Skye Schooley
Skye Schooley,
business.com Writer
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Skye Schooley is an Arizona native, based in New York City. She received a business communication degree from Arizona State University and spent a few years traveling internationally, before finally settling down in the greater New York City area. She currently writes for business.com and Business News Daily, primarily contributing articles about business technology and the workplace, and reviewing categories such as remote PC access software, collection agencies, background check services, web hosting, reputation management services, cloud storage, and website design software and services.