Discrimination in the workplace is still an important issue to understand and be informed about, even in 2017. Specifically, it’s important to know the laws, recognize what kinds of discrimination are out there, become aware in general of how to prevent discrimination, and learn what to do if it happens. It’s noteworthy that, in general, most discriminatory situations at small businesses happen by accident or by an unrealized habit.

As we’ll discuss later, the best way to avoid discrimination is by standardizing your hiring and performance management practices. Gusto HR software makes this easy by providing one place to store all this information, from an employee handbook to individual personnel files. Click here for a free 30 day trial.

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Overview of Workplace Discrimination Laws

There are 3 important federal laws regarding discrimination in the workplace. They are all enforced by the U.S. Equal Employment Opportunity Commission (EEOC). Your state or city may also have additional laws around sexual orientation, gender identity and other identifications people may have.

Before we get into the specifics of each law, our best advice and rule of thumb is that:

Anything that is personal in nature, appearance related, socially related, or otherwise NOT related to the job at hand— leave those topics out of your hiring, promotion, job duties, and firing practices, regardless of the number of employees you have.

The 3 Main Federal Workplace Discrimination Laws

Let’s start by looking at these laws in brief summary and what they mean for you as a business owner. Also, in general, only employers of 15 or more full time employees are required to comply with these laws; however, we advise that every employer do so voluntarily.

Law 1: Title VII of 1964

Title VII is the big, all-encompassing anti-discrimination act that changed the employment law landscape of America. Title VII requires that employers do not discriminate based on the federal protected classes of race, color, religion, age, sex, pregnancy, familial status, disability status, veteran status, and genetic information.

Laws like the Americans with Disabilities Act (ADA) of 1990, the Age Discrimination in Employment Act (ADEA) of 1967, and the Genetic Information Nondiscrimination Act (GINA) of 2008 fall under this law and those classes were added in as those laws passed.

Law 2: Equal Pay Act of 1963 & Lilly Ledbetter Fair Pay Act of 2009

Yes, I’m listing 2 laws as one because they are interconnected for employers. First, the Equal Pay Act requires that, when a man and woman do the same job, regardless of job title, they must be paid the same amount. Then, the Lilly Ledbetter Act compliments this law by amending the original statute of limitations on equal pay lawsuits to be 180 days after the most recent paycheck (meaning, the statute resets each paycheck that is discriminatory). Thus, if you find that you have some large salary discrepancies on staff between a man and a woman doing a similar job and with similar qualifications— you could be in hot water.

While you may be asking yourself, “how people would ever find out?” or maybe you’ve even made your team sign something that says they will not talk about salaries (I saw that at one company I worked in-house with). The reality is that people talk. Happy hours happen. By asking this question you’re also missing the point. Your reaction should be to rectify the situation (if there is one) as soon as possible.

Law 3: Civil Rights Act of 1991

This law is related to the damages if an employer is found in the wrong of a discrimination lawsuit. This 1991 law details provisions of monetary damages in cases of intentional employment discrimination, expanding the previous laws that only accounted for attorney’s fees, and includes emotional distress damages.

We talk in more detail about federal labor laws in this additional article, or this is an excellent resource from SHRM to check out for more details.

What is Considered Workplace Discrimination by Law

In the eyes of the law, it is illegal to discriminate in any aspect of employment at your business. The two main areas are:

1. Anything to do with the actual employment from hire to fire, including:

• Hiring and firing;
• Compensation or pay rate, job assignment, or classification of employees (i.e. exempt versus non-exempt);
• Job transfers, promotions, or layoffs;
• Job postings;
• Recruitment practices;
• Job or promotion testing or assessments;
• Use of company facilities (i.e. bathrooms or conference rooms);
• Training and apprenticeship programs;
• Employee benefit eligibility;
• Vacation, sick, and other paid and unpaid leave arrangements.

2. Forms of discriminatory behavior, like harassment or retaliation, including:

• Harassment on the basis of any protected class like national origin or race (including sexual harassment);
• Retaliation against an individual for filing a charge of discrimination, participating in an investigation, or opposing discriminatory practices;
• Employment decisions based on stereotypes or assumptions about the abilities, traits, or performance of individuals of protected classes; and
• Denying employment opportunities to a person because of marriage to, or association with, an individual of a protected class, like being married to someone who is disabled.

EEOC 2015 Discrimination Charges by Percentage

Below is a chart that shows the top 10 discrimination charge types in the USA in 2015.

Let’s look at some common workplace discrimination examples that might get easily overlooked.

Common Small Business Workplace Discrimination Examples

While many small businesses support diversity in name, like we said earlier, a lot of workplace discrimination issues happen by accident. Let’s look at a few examples of how discrimination can accidentally occur.

Example 1: The Clothing Store

John owns a small clothing store in the middle of a strip mall in Chicago. John has about 25 employees, most of them part time and hourly and most of them are college students who work 3-4 shifts per week. They are a diverse group in many senses except age and gender; they are all around 20-24 years old and female. John comes into work one day to find out that one of his employees has reported him to authorities for gender discrimination. The government person who comes by says the accusation is that John will hire only women and the government authority would like his hiring and interviewing records. As this all happens, Diana is working and she starts to blush intensely. John asks her if she is the person who reported him; Diana starts to cry and says yes. John fires her on the spot.

Is this Discrimination?: Absolutely. Diana has a strong case against John for retaliation. This could have been prevented by providing training on how to avoid sexual harassment.

Example 2: The Restaurant

Carol runs a bustling cafe in downtown Dallas. Her worker base of 25 employees is diverse on every level, from race to age to education level. Carol prides herself in this and feels she runs a diversity-friendly business. One week, her General Manager quits and leaves her high & dry. After 2 days, she is overworked, overstressed, and working 16 hour days trying to be both the owner and GM. Her employee, Bob, who is a Caucasian male in his 60s, walks into her office. Bob is there to ask about a day off, but Carol launches into a loud tirade that the employees his age don’t have the computer skills she needs and move too slow at the cash register.

At the end, Bob leaves the office and never even asks for his day off and instead walks out of the restaurant saying he quits. He walks straight into an attorney’s office across the street saying he was discriminated against because of his age and forced into quitting after an emotionally distressing situation. Carol is sitting in her office now, crying, realizing her stress made her snap and say something terrible.

Is this Discrimination?: While we can’t answer definitively what would happen, Bob has a case here. Carol made comments about his age and skill level, as well as other employees his age, and in an aggressive way that embarrassed Bob in front of other team members.

Let’s now think about your workplace in particular and walk through a few questions.

Is Your Workplace Discriminatory: 3 Questions to Ask Yourself

Let’s now take a hard look in the mirror and start to analyze your small business and see if there are any discriminatory practices that are happening, or have the potential for happening. We aren’t here to judge you as a small business owner- just to help you to look in the mirror and make sure that your business is safe from discrimination. The larger your business gets, the more probably that there is a practice or situation that might be occurring that you do not know about, so this is a good preventative practice too.

Start by thinking about your small business, its hiring and firing practices, and other employee practices in terms of:

Question 1: Did either of the examples above cause you to question current practices or past incidents at your business?

If the answer is yes, then you’ll want to write down what practices or recent incidents need more scrutiny. You’ll also probably want to read to our section on how to resolve discriminatory practices at your business.

If the answer is no, then question 2 is pretty important:

Question 2: What brought you to read this article?

Regardless of what brought you here, understand that, from my experience doing HR consulting, there’s more than likely a reason you are reading this article. Also know that it’s not too late to change your workplace and to get some anti-discriminatory processes and training in place, which we talk about in the section below.

If you know you have a problem or if you have been served paperwork on a discrimination suit, you’ll also want to look at our bottom section on how to handle a discrimination lawsuit.

Regardless of what brought you here, keep reading. Look at our sections below on prevention and resolution of discrimination in the workplace. You want to fix or prevent this issue now; this is not something you sweep under a rug or turn a blind eye to.

Finally, if you can’t seem to put your finger on it, you may also want to consider:

Question 3: What do your employees think?

You could introduce some discrimination-related questions on an employee engagement survey to check on the cultural health of your business.

How can you ask about discrimination? Well, you could word some questions like follows (and leave room for commentary):

• Do you feel like opportunities for advancement are available and fair at our business?
• Do you feel like we recruit from a diverse talent pool?
• Do you feel that our business respects the values of all of its employees?

If you are noticing a rapid exit of employees leaving, you might have a discrimination problem. In addition to an employee engagement survey, you’ll want to conduct exit interviews of these recently leaving or those employees that have left.

So how can you prevent discrimination in the workplace before it even happens?

5 Steps to Prevent Discrimination in the Workplace

The best way to reduce discrimination in the workplace is to create and follow a set of practices designed to eliminate individual bias.

What does this mean? This means using standardized interviews and clearly defined performance metrics to hire, manage, promote and compensate your staff.

Step 1: Create a Standardized Hiring Process

One big component to preventing discrimination is to have a rock solid hiring process. This helps to ensure you’re evaluating candidates objectively and fairly. The hiring process should include standards around:

• Job descriptions with neutral wording that relates to the job at hand. In general, you should avoid any slang and buzzwords in order to cast the widest net. We recommend working from a template.
• Job postings should be casted far and wide, and with the number of great free posting sites out there, it’s easy. This helps to make sure that you don’t get the same old, same old for every job you post.
• Have a trained professional or unbiased professional reviewing the resumes that come in. If that professional is YOU, consider taking a training course in recruitment or consider asking for a training session from an HR consultant.
• Interviewing processes, including phone screens and in-person interviewing (we recommend using a phone screen template and a structured interview for the in-person interview)
• Using an applicant tracking system or recruitment software component to track notes and for evaluating candidates on an apples-to-apples basis
• Creating an offer letter template (with standards around employee benefits, paid time off, and other perks by seniority and experience)
• Distributing an employee handbook as soon as the employee starts (with an anti-discrimination policy)

Then, once an employee is up and running, you will want to make sure that their tenure with your company is also discrimination-free. You can do that by:

Step 2: Create a Standardized Performance Management & Compensation Policy

Once an employee is onboarded and trained, you will want to make sure they are set up for standardized track at your business that is based around good behavior and strong performance metrics. Aside from the employee handbook outlining behavior standards, you will want to also have:

• A documentation process for behavioral infractions (like an employee write up form)
• A progressive discipline policy
• A documentation process for performance, both good and bad (like performance reviews)
• A full performance management system is what we recommend (you could also try performance management software to help you)
• A compensation plan that is based around performance and linked to your performance management system
• A strong, secure place to store and track of all these items like payroll software or HR software

Even though you already have an employee handbook, you will want to make sure you have a strong, supported policy on harassment and discrimination.

Step 3: Have a Policy on Harassment and Discrimination

Discrimination is treated almost like a dirty word in the workplace. But if you don’t talk about discrimination and diversity, you can’t make any progress on it. Here are some ways you can start a dialogue with your employees on diversity and preventing workplace discrimination:

• Add a diversity or inclusion statement to your company values, or remind people of the values you already have around diversity.
• Take your policy from your handbook and post it on a poster in the break room or other high traffic area.
• Make sure your workplace labor law posters are current, and when you put up new ones, use that as a time to communicate to employees what they mean.

Once you have started to talk about diversity and discrimination in the workplace, you then need to:

Step 4: Train People On It

People don’t know what they don’t know. It sounds silly, recall our example situations listed above. Our examples involved people, probably good people by all intents and purposes, who didn’t even realize they were being discriminatory. You and your employees are no different.

While many of us know the social rights and wrongs and things we should not say or do in the workplace, it’s the more complex and subtle situations that need some training.

• Find some online resources for training, including directly from the EEOC, or by asking your payroll or HR service provider for some.
• Hire a diversity consultant. There are many out there who specialize in corporate training. You might want this option especially for your hiring managers.
• Create some role playing and open forum for discussion. This is not a good option for every company though since this won’t always lead to “real” behavior and it may make people very uncomfortable and not participate; this could be something you do in addition to one or both of the first two options.
• Don’t forget to document any training executed and create an electronic or paper file on who attended and what the training was, and when it was.

Once people are trained, just like in any aspect of work, you then need to hold your employees accountable to the standards your business has set.

Step 5: Hold People Accountable

Once you have set standards and trained people at your business in non-discrimination and inclusion, you’ll want to hold people accountable to these standards. Pay attention to the small things, such as how people talk to each other, even in a casual sense. Is there an employee who always patronizes another one, or one who teases another for being young or old? While you don’t need to be the word police, you can keep an eye for things and provide feedback, promptly and with documentation, to employees who need a bit of guidance.

Also, notice situations that make people uncomfortable. Nip behaviors in the bud when you notice awkwardness or tension- some of those can lead to full-on discrimination.

Finally, create an anonymous reporting system. It can be as simple as a suggestion box on the wall, like a restaurant.

5 Steps to Resolve Discrimination in the Workplace

Again, remember that we are not attorneys here at Fit Small Business. If you think you have a discrimination problem at your workplace, we highly recommend that you consult with an employment lawyer as soon as possible.

In addition to consulting an attorney, here are some suggestions to resolve your potential discrimination problem(s):

Step 1: Document Your Problem(s)

You need to start a paperwork trail of acknowledging the problem and the steps you are going to take to solve it. You might need to consider creating personnel files if you don’t already have them. Try to document things in a clear, concise manner with an unbiased description of the events, who was involved, and the dates and times. You also will want to make sure that anyone you are documenting issues from is informed on them, which leads into step 2.

Step 2: Make Changes

If the problem is a specific person and you have plenty of documented issues, you will want to take a firm stance on this and make a change. You can most likely skip straight to firing the person, or, you can put them on a final warning if you want to give them one more chance. It will really depend on how bad the situation is and how bad the fallout has been with the rest of the employees. If you’re not sure what to do, consult your attorney.

Once you have made any personnel changes that you need to, consider our options stated before. Make changes in your office culture by including diversity and nondiscrimination in your values, and in visible places to keep it front of mind for your team.

Step 3: Train People

You still need to train everyone on diversity, inclusion and the laws in a work environment. Like we said earlier, consider hiring an outside consultant, especially if you think you already have or had a problem. If you were a 3rd party like a lawyer looking at this, bringing in a professional to help is going to be a lot more effective than using an online course or something else passive. Invest in this portion to save your business potential liability later.

Step 4: Lead by Example

As the business owner and probable face of the company, you need to lead by example, and this includes most likely in your personal life as well. Make nondiscrimination the way of your words and seek out ways to be inclusive in your workplace. This also will help your employee base to see that you are serious and will increase their buy-in.

Step 5: Hold People Accountable

Use a progressive discipline policy, or create a policy that allows you to skip those steps and move straight to firing when it comes to discrimination in the workplace. You will want to make sure that you hold people accountable to the policy and document any and all disciplinary actions taken.

Even with preventative measures, things can still happen in any workplace.

5 Steps to Take If You Are Accused of Discrimination in the Workplace

If you are accused or sued for discrimination in the workplace, you will want to immediately consult your attorney for advice. You will then, most likely, want to cooperate as much as possible with the investigating authority. Follow our 5 steps below if you are served with a discrimination suit:

1. Get an attorney

First, you will want to consult your attorney or find one as soon as possible. For this type of lawsuit or accusation, you will want an attorney who is specialized in representing small businesses, an expert in employment law, or is an expert at discrimination in the workplace cases.

If you don’t already have an attorney to speak to, you can find one using local community reviewing sites like Yelp or by asking your network who represents them in legal matters (you don’t need to say why!)

2. Collect documents/evidence as directed

Then, collect and document what you need to handle the issue and as directed by your attorney. Make sure you have at least 2 copies of everything so that you can have one and so can the opposing side. We recommend making at least 3 copies to be sure.

3. Cooperate with the attorneys

Things will go a lot more smoothly if you just cooperate. Stay in composure, stick to the facts, and cooperate fully with all the events as they unfold.

4. Keep quiet

This is a situation that you will want to keep completely confidential between yourself and your attorney. You will probably need to involve some employees in the investigation process. Ask your attorney about if/how you can require them to sign a non-disclosure agreement about the situation.

5. Stay positive

This is going to be a difficult situation with a lot of interpretation and looking into your business by other people. Make sure that you take care of yourself and take time to relieve stress. You will need to keep up appearances, and you still have a business to run after all— remember that this will pass!

This is when having organized personnel files and clear documentation on all training events can help prevent or settle any claims on discrimination in the workplace.

The Bottom Line

Discrimination, no matter if you have 1 employee or 1,000 employees, is never ok. Though some of the laws require employers of a certain size to comply, we urge and standby all businesses abiding by non-discriminatory practices as the ethical path.

Don’t forget to check out Gusto’s HR software as the perfect place to store personnel files, employee handbooks, discrimination policies, and more. Click here for a free 30 day trial.

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Please note that this article contains general information, and we suggest consulting your own legal professional with any specific questions about discrimination in the workplace.