Legal Information for Entrepreneurs

What to Do When Sued for Discrimination

Every business owner should take all charges of job discrimination very seriously. Here's what you need to know about discrimination laws and how to handle a discrimination lawsuit.

Like beauty, fairness is sometimes in the eyes of the beholder.

So it should come as no surprise that no matter how fairly you treat your employees, it's still possible to find yourself in court, defending your company against claims of discrimination.

Federal law prohibits employers from discriminating against employees or job applicants based on age, sex, race, ethnicity, religion or physical disability. If an employer uses any of these factors as a basis for hiring, compensation, promotion, or termination, it is a violation of federal law and the employer can be liable for significant penalties.

However in many instances, discrimination claims filter into civil litigation. Regardless of the claim's federal status, employees have the ability to file a discrimination-based lawsuit against their employer. So as a small business owner, it's important to know what to expect if one of your workers files suit against your company.

EEOC charges

Federal discrimination violations are passed through the Equal Employment Opportunity Commission (EEOC). If the EEOC receives a complaint about your company, they will contact you and the complainant to hear both sides of the story. If the EEOC rules that discrimination has occurred, they usually allow the parties to reach an acceptable resolution. Alternatively, they can also join the complainant in filing a lawsuit.

Civil Litigation

Even if the EEOC decides that discrimination did not occur, you could still be forced to defend yourself against the charge in civil court. Once the EEOC has made its ruling, the employee has 90 days to file his own suit. Since it is impossible to predict the employee's response following the EEOC ruling, it's a good idea to enlist the service of an attorney as soon as possible, preferably when the EEOC notifies you that a claim has been filed against you. The longer your attorney has been involved in the process, the more opportunities he has to prevent the complaint from ballooning into full-blown litigation.

Legal Alternatives

The civil litigation process can go on for years. As an employer, it is in your best interest to resolve the claim as quickly as possible. Unless your attorney advises against it, you should be prepared to resolve the claim through mediation. The good news is that you have many options for mediation at your disposal. In fact, the EEOC provides a free mediation service that is designed to resolve discrimination cases before they reach the courts.


One of the most effective ways to defend your company against discrimination lawsuits occurs before the claim is even filed. A proactive, anti-discrimination program can go a long way toward demonstrating that your company takes the subject of discrimination seriously. Ideally, your program should include both a comprehensive policy and training for all of your employees. It should also outline an in-house reporting process that is included in new hire orientation.

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