By Ronald Rice

What you don’t know about the EEOC can hurt you.

The U.S. Equal Employment Opportunity Commission (EEOC) announced in January that private sector workplace discrimination charge filings with their federal agency nationwide hit an unprecedented level of 99,922 during fiscal year 2010.  These complaints from employees and ex-employees of private businesses led to the individuals recovering $404 million from the owners of those businesses, which is an average of $4000 paid per complaint.  Further costs to a business would be incurred if the ex-employee proceeds to file a lawsuit after the review by the EEOC.  Legal costs, court costs and the settlement of a lawsuit can bring the total expense to over $100,000 for the business owner for just one case of alleged discrimination.  A good website to review is

Owners who have experienced an EEOC investigation and a lawsuit by an ex-employee tell me that the time involved and the stress upon the owner are just as much a concern as the monetary costs.  With a record number of discrimination complaints filed, and a record amount paid out by businesses, 2011 is an ideal time to review your knowledge of the EEOC and to prepare for how you would respond to an inquiry from the EEOC if confronted by a complaint from one of your employees or former employees.

I’ve never had a problem before… I use common sense.

Many business owners have a general idea about discrimination law and I’ve heard owners say they have never had a claim in the past, and have good ‘common sense’ when it comes to having fair employment practices.  This general competence has proven to be insufficient to avoid EEOC investigations and large payouts.

The first issue is the rising occurrence of discrimination charge filings.  It seems that the cost to an employee to allege discrimination is virtually zero.  The EEOC will usually investigate and provide legal assistance free of charge to the complainant.  Furthermore, private attorneys representing the employee have been known to take discrimination cases on a contingency basis to eliminate any upfront expenses to the employee.  Even if the employee’s claim is later shown to have no merit, or is merely a nuisance claim filed to inconvenience the employer, there does not seem to be any penalties or consequences for the employee.

The employee’s mere perception that they were mistreated seems to be enough for the EEOC to accept the case and start an investigation.  A business census I found showed that there are about 107,000 private businesses in the U.S. with more the 100 employees.  If the EEOC is investigating 100,000 claims per year, it is likely that your enterprise will be contacted in the future even if you haven’t been in the past (The EEOC can investigate businesses with as few as 15 employees, although investigations of large businesses are more common).

Additionally, there have been an increasing number of cases where employers ended up offering large settlements to ex-employees even though the owners were certain that no discrimination had occurred, by the owner’s own definition of what would be considered illegal discrimination.  Quite often the discrimination is based on the perception of the employee victim and not on any intent to break the law by the employer.  Thus, the ‘common sense’ approach to using fair business practices is not enough.

OK, now what?

There are important steps you can take to mitigate the likelihood of an EEOC investigation.  It helps to understand the EEOC, their mission and scope.  In addition, it’s important to know what to do – and what NOT to do – if you are notified your business is under investigation.  And of course, it makes sense to provide training in your business to avoid any claims in the first place.  For more information, please refer to my complete article as found at blog post is for educational purposes only, and is not intended to substitute for the advice of legal counsel.

Mr. Rice is President of Diamond Corporate Services, a human resources outsourcing firm specializing in payroll, PEO services, employee benefits and HR.

GGFA Members Only
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fer from Diamond Corporate Services

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February 4 – 28, 2011

Call now to schedule.
Ronald Rice
P:  (512) 431-7620



About GGFA

The Gold's Gym Franchisee Association is the independent voice of the Gold's Gym franchisees.
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