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Employment and Anti-Discrimination Laws: An Introduction

Small business owners have obligations to their employees under federal employment and anti-discrimination laws. State laws may give other protections for workers. This article reviews the most common federal anti-discrimination laws small business employers encounter.

The U.S. Equal Employment Opportunity Commission (EEOC) enforces most of these laws and refers other claims to the U.S. Department of Labor. The state EEOC office will handle any workplace discrimination claims.

Visit FindLaw's Small Business Discrimination and Harassment page for more anti-discrimination laws.

Americans With Disabilities Act (ADA)

The Americans with Disabilities Act bans discrimination in hiring or employment based on the presence or perception of a disability. The ADA defines a "disability as any physical or mental impairment that substantially limits a life activity."

The ADA applies to businesses with more than 15 workers. A covered employer must make reasonable accommodations for people protected under the act. "Reasonable accommodations" are any workplace or job function changes that allow the employee to carry out the tasks.

Employers must offer reasonable accommodations unless there would be an undue hardship. For instance, a two-story office might not need to install an elevator for a single worker. The employer might need to remodel a first-floor office to give the employee equal facilities.

Under the ADA, an employer may not:

  • Make hiring, firing, or other employment decisions based on the worker's disability
  • Discriminate against workers because of a perceived disability or because of a family member's actual or perceived disability
  • Use pre-employment tests or medical exams to remove workers with disabilities

Age Discrimination in Employment Act (ADEA)

The Age Discrimination in Employment Act applies to employers with 20 or more employees. This law bans employers from discriminating against workers or job applicants over 40 in hiring, firing, or promotions. Employers may not selectively fire older workers to avoid paying retirement benefits.

Employers may have a seniority system, even if it favors older workers. The act does allow age to play a factor in circumstances where it is a bona fide occupational qualification. For instance, the FAA has an upper age limit for pilots based on health risks that increase with age.

Consolidated Omnibus Reconciliation Act (COBRA)

The Consolidated Omnibus Reconciliation Act allows workers to keep their group health plan after leaving. COBRA applies whether employment ended due to firing, resignation, or layoffs.

Employees must have the option to continue coverage for themselves and their families. But they must pay the total insurance premium. COBRA applies to employers with 20 or more workers.

Equal Pay Act

The Equal Pay Act applies to any business with more than two employees. Employers must pay male and female employees the same wage for equal work. The Equal Pay Act applies only where the employees are about equal in seniority and experience. Employers do not have to pay equal wages where work is not equivalent.

Employers who must follow the Equal Pay Act must also obey the Fair Labor Standards Act (FLSA).

Employee Retirement Income Security Act (ERISA)

The Employee Retirement Income Security Act affects employers who offer employees health insurance or retirement plans. ERISA has rules for telling employees about plan changes, recordkeeping, and filing claims with insurance carriers. ERISA applies to any employer offering retirement or health care plans.

Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act applies to businesses with at least 50 employees. Some state laws apply to smaller companies. A covered employer must give eligible employees up to 12 weeks of unpaid leave every 12 months. The employee may use leave for:

  • The birth or adoption of a child
  • Care for an immediate family member with a serious health condition
  • Care for their own serious health condition

A serious health condition is any medical condition requiring an overnight stay in a health care facility. The FMLA includes any incapacity or treatment related to that health care.

Following their leave, the employee must return to the same or equivalent job as they had before. Employees may take the 12 weeks intermittently or use them as an adjunct to other sick leave or vacation time.

Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act applies to any business with more than $500,000 in annual gross sales, or that engages in interstate commerce. The FLSA sets basic standards on:

  • Federal minimum wage
  • Workweek hours and overtime
  • Child labor
  • Recordkeeping and reporting

State laws may be more restrictive and require higher minimum wages and overtime pay. Business owners should consult state labor laws when setting wages and hours.

Genetic Information Nondiscrimination Act (GINA)

Title II of the Genetic Information Nondiscrimination Act applies to any business with 15 or more employees. It bans discrimination against a worker based on a person's genetic makeup. The law specifically bars:

  • Getting genetic information without that employee's knowledge or consent
  • Discrimination based on actual or perceived genetic disabilities
  • Offering financial incentives for the collection of genetic material
  • Disclosure of genetic information for any purpose

Title VII of the Civil Rights Act of 1964

Title VII of the Civil Rights Act applies to employers with 15 or more employees. Title VII prohibits discrimination based on:

  • Race
  • Color
  • National origin
  • Religion
  • Gender. The 2020 Supreme Court decision Bostock v. Clayton County said Title VII includes sexual orientation and gender identity.

Employers must make all hiring and firing decisions based on employee qualifications.

Employers may hire employees with particular characteristics, such as requiring candidates to be "fluent in Spanish" if a position requires a bilingual worker. But employers may not exclude potential candidates based on characteristics such as "English-speaking only."

A "bona fide occupational qualification" exception exists when a position requires a worker with a specific trait. A classic example is a Catholic school that is permitted to hire only Catholic clergy. Outside those exceptions, BFOQs are very rare.

Get Legal Advice

Small businesses may not have an HR department to ensure compliance. To be sure you're following state and federal laws, talk with an employment law attorney in your area.

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