Violating Equal Employment Opportunity (EEO) laws can subject small businesses to expensive penalties.
Here’s how to maintain EEO compliance.
What Is Equal Employment Opportunity?
EEO laws are federal regulations prohibiting discrimination in the workplace.
They are administered and enforced by the U.S. Equal Employment Opportunity Commission (EEOC), a federal agency that emerged from a series of executive orders dating back to the Harry S. Truman administration, as summarized on the EEOC’s website.
The EEOC was formally created under Title VII of the Civil Rights Act of 1964. Because of this, disputes alleging violations of equal opportunity laws are sometimes referred to using terms such as Title VII discrimination and Title VII lawsuits.
Types of Workplace Discrimination EEO Laws Cover
EEO laws and regulations encompass a number of different types of discrimination, according to the EEOC.
Equal opportunity laws in the workplace cover discrimination related to:
- Equal pay and compensation
- Genetic information
- National Origin
- Race or color
- Sexual Harassment
To discourage discrimination in recruitment and hiring, the EEOC requires employers above a certain size to submit an annual form called an EEO-1 Form (also known as a Standard Form 100) providing information about the racial and gender composition of their workforce.
The EEOC is empowered to investigate employee complaints, settle disputes out of court, represent employees in court and judge cases involving claims against federal agencies.
Discrimination Involving Federal Contractors
For disputes involving claims about employers who do business with the federal government, a division of the Department of Labor called the Office of Federal Contract Compliance Programs (OFCCP) can become involved.
The mission of the OFCCP is similar to that of the EEOC but with a focus on government contractors. The OFCCP handles the same types of discrimination cases as the EEOC with an additional emphasis on preventing discrimination against veterans.
What Does It Mean to Be EEO Compliant?
Being a fully compliant EEO employer means both that:
- You don’t discriminate in the workplace
- You follow legal requirements mandated by the EEOC and other relevant agencies
Each of these general compliance areas requires meeting specific criteria stipulated by the EEOC, other relevant agencies and applicable legislation.
Following Nondiscriminatory Policies
As the EEOC summarizes, employers in general must avoid discrimination in several key areas:
- Unfair treatment because of race, color, genetic information, national origin, religion, sex (including pregnancy, gender identity and sexual orientation), age (40 or older) or disability
- Harassment by managers, co-workers or others because of the above categories
- Denial of a reasonable workplace accommodation needed by an employee because of religious beliefs or disability
- Retaliation because an employee complained about discrimination or assisted with a discrimination investigation or lawsuit
Which of these laws apply to a business varies with the size of the business, the EEOC stipulates:
- Businesses with at least 1 employee are covered by laws that require equal pay for equal work for male and female employees
- Businesses with 15 to 19 employees are covered by the same equal pay laws as smaller businesses as well as laws that prohibit discrimination based on race, color, genetic information (including family medical history), national origin, religion, sex (including pregnancy, sexual orientation and gender identity) and disability
- Businesses with 20 or more employees are covered by the same laws as smaller businesses as well as laws against discriminating based on age for employees 40 and over
To build a company culture of compliance, documenting your policies in these areas in your employee handbook. For some employers, programs to train management and staff can help foster compliance.
To help you promote policies that avoid discrimination against disabled workers, the EEOC advises that you may need to provide reasonable accommodations, which are adjustments to the workplace that permit qualified applicants and workers who have disabilities to perform their jobs or enjoy benefits in the same way as other workers. For example, this may entail installing a graded ramp with handrails.
Complying With Federal Legal Requirements
To comply with EEO guidelines, employers must follow some key legal requirements summarized by the EEOC:
- Post notices describing federal laws against discrimination
- Maintain certain records
- File annual equal employment opportunity compliance reports
Some of these requirements vary based on whether the employer is a federal contractor, the size of the employer and whether the employer has been charged with discrimination.
Employers must post notices advising workers of federal laws excluding discrimination based on race, color, genetic information, national origin, religion, sex, age, equal pay or disability. These notices must be placed physically in a prominent location where applicants and employees would normally see other types of notifications.
Electronic notices are encouraged, but don’t normally fulfill employer posting obligations, although they may be required in some instances. Notices should be provided in a format accessible to workers with disabilities. The EEOC provides posters with the required information in English, Spanish, Chinese and Arabic, in both printed and electronic formats.
Certain recordkeeping requirements imposed by the EEOC and federal legislation must be met for EEO compliance:
- The EEOC requires employers to keep all personnel or employment records for 1 year and to keep records of involuntarily terminated employees for 1 year after termination
- The Age Discrimination in Employment Act (ADEA) requires employers to maintain all payroll records for 3 years and to keep plans for benefits, seniority and merit systems for the full time the plan is in effect plus 1 year after it is terminated
- The Fair Labor Standards Act (FLSA), administered by the Department of Labor, requires employers to keep payroll records for 3 years and to keep all records that explain the basis for wage differences between employees of opposite sexes (including wage rates, performance evaluations, merit and seniority systems and collective bargaining agreements) for at least 2 years
These recordkeeping requirements apply to all employers covered by federal anti-discrimination laws. If an employer has received a formal notification of alleged discrimination charges from the EEOC, the notification will contain additional recordkeeping requirements.
In this case, the employer will be required to maintain personnel and employment records related to the alleged violation, including records related to the party making the charge, others allegedly discriminated against and other employees holding positions similar to that held or sought by the employee making the charge. Records must be kept until the final disposition of the charge or related lawsuits.
If an investigation fails to resolve the charge, and if the party bringing the charge receives a formal notice of a right to sue, they have a 90-day statutory window to bring suit. Records must be kept until the end of this 90-day period or, if a suit is brought, until the end of litigation, including appeals.
Annual Filing Requirements
EEO provisions require certain employers to file annual equal opportunity compliance reports by submitting an EEO-1 Form. An EEO-1 Form must be filed by all employers with 100 or more employees and by all federal contractors with 15 or more employees. The form must be submitted once a year to the EEOC and the Department of Labor.
What Are the Penalties for Violating EEO Laws?
The EEOC can impose stiff fines for violations of EEO laws. Effective in March 2020, as published in the Federal Register, failing to post required notices can result in maximum penalties per violation of $569.
If you are found guilty of intentional discrimination, you may be subject to compensatory and punitive damages with limits set by the EEOC. Compensatory damages repay victims for out-of-pocket expenses stemming from discrimination, while punitive damages are awarded to punish instances of malicious or reckless discrimination. The cap for compensatory and punitive damages per person is currently set at:
- $50,000 for employers with 15 to 100 employees
- $100,000 for employers with 101 to 200 employees
- $200,000 for employers with 201 to 500 employees
- $300,000 for employers with over 500 employees
To illustrate how expensive this can get, in March 2021, the EEOC announced that a Texas medical practice would pay $375,000 and provide other relief after a federal court found it had refused to excuse an employee from religious meetings. It’s in the best interest of employers to avoid being charged with EEOC violations.
How to Maintain EEO Compliance
To comply with EEO laws and avoid fines, follow these general guidelines as they apply to you:
- Determine your EEOC requirements
- Implement nondiscriminatory policies
- Post required notices
- Maintain necessary records
- File annual forms
Some of these steps may apply to you differently or may not apply to you depending on whether you are a federal contractor as well as the size of your business. An EEOC small business liaison, a labor lawyer or a human resources consulting firm can assist you with determining your specific compliance requirements.
1. Determine Your EEOC Requirements
A starting point is determining which EEOC requirements apply to you. If you are a private employer with 1 to 14 employees, you must follow equal pay laws for male and female employees.
If you have 15 to 19 employees, you must follow equal pay laws as well as nondiscriminatory policies applicable to race, color, genetic information, national origin, religion, sex and disability.
If you have 20 or more employees, you must follow all these laws as well as those prohibiting discrimination based on age for employees 40 and older. If you’re a government agency, staffing agency or labor union, follow the requirements the EEOC applies to you.
2. Implement Nondiscriminatory Policies
Once you know which laws apply to you, you should develop policies to implement compliance with applicable rules. Document these in your employee handbook. Depending on your situation, you may need to train your staff or invest in accessibility for disabled workers.
3. Post Required Notices
Post notification of federal antidiscrimination laws in a place where employees will see it. You can use the EEOC’s posters or obtain your notices from companies that provide them.
4. Maintain Necessary Records
As described above, maintain all records the EEOC requires for personnel, employment, payroll and documents related to wage decisions for employees of opposite sexes. If you have been charged with a violation, maintain any additional records that are relevant. Preserve all records for the required duration.
5. File Required Forms
Your EEO-1 filing requirements will vary based on your status as a federal contractor as well as the size of your business. If you have 100 or more employees or you’re a federal contractor with 15 or more employees, you must file annual EEO-1 forms. You can automate the process of collecting and filing EEO-1 Forms by using human resources software with EEOC compliance features, such as Workable.
Avoid Legal and Financial Hassles
EEO violations can be expensive, but you can avoid them by following compliance guidelines. Implement nondiscriminatory policies specified for your business type and size, post required notices, maintain relevant records and file annual EEO-1 Forms if applicable.
If you have questions about EEO laws or how compliance applies in specific situations, the EEOC maintains a directory of small business liaisons you can contact for assistance.