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McKenna Minutes

“The life of the law has not been logic; it has been experience.”

-Oliver Wendell Holmes, Jr.



Smaller companies often mistakenly believe that the state and federal employment discrimination laws do not apply to them because they are too small to be expected to know the laws or should not be held to the same standards of a larger company. This incorrect belief leaves both the companies and the management open to claims and damages under the various state and federal anti-discrimination laws that protect employees, even employees of very small companies.Whether federal or state employment anti-discrimination laws apply to a company depends on the number of employees a business has, and the number of employees is smaller than most think. Let us review the basic employment laws small companies need to know and the minimum number of employees for each law.


Federal Equal Pay Act– One Employee

If you have at least one employee, you are covered by the federal law that requires employers to provide equal pay for equal work to male and female employees. The jobs need not be identical, but they must be substantially equal. Job content (not job titles) determines whether jobs are substantially equal. All forms of pay are covered by this law, including salary, overtime pay, bonuses, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits. If there is an inequality in wages between men and women, employers may not reduce the wages of either sex to equalize their pay.

Title VII of the Civil Rights Act of 1964– Fifteen Employees

If you have at least 15 employees, you are covered by the laws that prohibit discrimination based on race, color, religion, sex (including pregnancy and possibly sexual orientation), and national origin.

Race discrimination involves treating someone (an applicant or employee) unfavorably because he/she is of a certain race or because of personal characteristics associated with race (such as hair texture, skin color, or certain facial features). Color discrimination involves treating someone unfavorably because of skin color complexion. Race/color discrimination also can involve treating someone unfavorably because the person is married to (or associated with) a person of a certain race or color.

Religious discrimination involves treating a person (an applicant or employee) unfavorably because of his or her religious beliefs. The law protects not only people who belong to traditional, organized religions, such as Buddhism, Christianity, Hinduism, Islam, and Judaism, but also others who have sincerely held religious, ethical or moral beliefs.Religious discrimination can also involve treating someone differently because that person is married to (or associated with) an individual of a particular religion.

Gender discrimination is any discrimination based on sex and includes discrimination based on gender as well as "sexual harassment" or unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature. Harassment does not have to be of a sexual nature, however, and can include offensive remarks about a person's sex. Both victim and the harasser can be either a woman or a man, and the victim and harasser can be the same sex.

Sexual orientation is discrimination based on the sexual orientation of an employee. It may be covered by Title VII as well. In 2015, the EEOC concluded that Title VII does not allow sexual orientation discrimination in employment because it is a form of sex discrimination. Some federal circuit courts have ruled on this issue but the U.S. Supreme Court has yet to rule on whether sexual orientation is protected against by Title VII.

National origin discrimination involves treating people (applicants or employees) unfavorably because they are from a particular country or part of the world, because of ethnicity or accent, or because they appear to be of a certain ethnic background (even if they are not). National origin discrimination also can involve treating people unfavorably because they are married to (or associated with) a person of a certain national origin.

The Pregnancy Discrimination Act– Fifteen Employees

If you have at least fifteen employees, you are covered by the Pregnancy Discrimination Act (PDA). PDA forbids discrimination based on pregnancy when it comes to any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoff, training, fringe benefits, such as leave and health insurance, and any other term or condition of employment.

Americans with Disabilities Act and Rehabilitation Act– Fifteen Employees

If you have at least fifteen employees, you are covered by the Americans with Disabilities Act (ADA) or if a federal employer, the Rehabilitation Act. Disability discrimination occurs when an employer or other entity covered by the Americans with Disabilities Act or the Rehabilitation Act treats a qualified individual with a disability who is an employee or applicant unfavorably or less favorably because she has a disability or a history of disability. The law requires an employer to provide reasonable accommodation to an employee or job applicant with a disability, unless doing so would cause significant difficulty or expense for the employer ("undue hardship"). The law also protects people from discrimination based on their relationship with a person with a disability even if they do not themselves have a disability.

Genetic Information Nondiscrimination Act– Fifteen Employees

If you have at least fifteen employees, Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits genetic information discrimination in employment. Under GINA, it is illegal to discriminate against employees or applicants because of genetic information. It also prohibits the use of genetic information in making employment decisions, restricts employers and other entities covered by Title II (employment agencies, labor organizations and joint labor-management training and apprenticeship programs - referred to as "covered entities") from requesting, requiring or purchasing genetic information, and strictly limits the disclosure of genetic information.

Age Discrimination in Employment Act (ADEA)

If you have twenty or more employees, you are subject to the Age Discrimination in Employment Act (ADEA). Age discrimination involves treating an applicant or employee less favorably because of his or her age. The ADEA forbids age discrimination against people who are age 40 or older. The law prohibits discrimination in any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoff, training, benefits, and any other term or condition of employment. It is also unlawful to harass a person because of his or her age. Harassment can include, for example, offensive or derogatory remarks about a person's age.


State and/or local employment discrimination laws may also apply to your business. Every state has employment laws that either mimic the federal law or provide even greater protection to employees.

For example, the Illinois Human Rights Act (“IHRA”) provides broader employee protections than the federal anti-discrimination laws. The IHRA prohibits employment practices that discriminate based on race, color, religion, sex, sexual harassment, national origin, ancestry, age (40 years and older), order of protection status, marital status, disability, military status, sexual orientation (including gender-related identity), unfavorable discharge from military service, arrest record, citizenship status, or pregnancy (including childbirth or related medical conditions). The IHRA applies to employers of just one employee, “when a complainant alleges civil rights violation due to unlawful discrimination based upon his or her physical or mental disability unrelated to ability, pregnancy, or sexual harassment” and fifteen employees for all other forms of work place discrimination.

Best Practice for Small Companies Related to Employment Laws

Despite your small size, you should familiarize yourself with the laws that apply to your company.While few companies set out to discriminate, educating yourself on what constitutes employee discrimination and setting policies to avoid engaging in such conduct should be a priority for any business owner.

Kristin Tauras has been advising small businesses on their employment practices for more than twenty years. Please contact Kristin at McKenna Storer if you have any questions regarding your small business.

Categories Employment Law

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