Employer Discrimination Laws by Company Size

Small-business owners can sometimes forget that anti-discrimination laws apply to them. These laws seem set up to protect workers in large companies, where discriminatory behavior is hard to spot. A company with as few as two employees must obey some federal laws.

Employers hiring and firing workers must consider federal and state employment laws. At the same time, the laws are not evenly applied. Not every business must follow every law. This article looks at regulations based on the size of your business.

The Fair Labor Standards Act (FLSA) covers almost all businesses. This law sets federal minimum wage, overtime pay, recordkeeping requirements, and maximum hours per work week. If your business has gross revenues over $500,000, engages in interstate commerce, or is a school or hospital, the FLSA applies to you.

Very Small Companies: 1-14 Employees

Very small businesses may consist of no more than the owner/operator and a secretary or assistant. Some federal employment and anti-discrimination laws apply even to these small businesses. Legal advice should be at the top of your checklist when hiring an assistant or part-time receptionist.

• Workers' Compensation Insurance: Labor laws in every state require employers to carry workers' compensation if they have even one employee. Although workers' comp is not a federal rule, it relates to state and federal disability insurance payments. Small-business owners should pay attention to this essential coverage when beginning a new enterprise.
• The Equal Pay Act of 1963 (EPA): This federal law applies to businesses with at least two employees. It requires equal pay for men and women performing approximately equal work. Two full-time workers of equal experience and ability should receive equal pay.

Small Companies: 15-19 Employees

The previous laws also apply to larger businesses with up to 19 employees. Larger companies must also follow these federal anti-discrimination laws.

• Title VII of the Civil Rights Act of 1964 (Title VII): Employers cannot base decisions on race, religion, gender, or national origin. Company policies may not give preferential treatment to workers based on such classifications. All workers must have equal access to employee benefits. The recent U.S. Supreme Court case Bostock v. Clayton County (2020) held that Title VII included sexual orientation.
• Americans with Disabilities Act (ADA): This law prohibits discrimination in hiring based on an actual or perceived disability. Employers must provide reasonable accommodation to workers with disabilities upon request. Employers may not ask job applicants if they have disabilities. If the applicant offers such information, an employer may inquire about accommodations.
• The Genetic Information Nondiscrimination Act (GINA): This law prevents employers from requesting, collecting, or disclosing genetic information about an employee or an employee's family. There are some exceptions, such as if an employee voluntarily supplies this information or if employees must disclose it for medical leave purposes.

Medium Companies: 20-99 Employees

All the laws described above apply to medium-sized companies with 20 to 100 employees. As companies increase in size, they are subject to other federal laws. These laws have to do with whether employees must receive time off, health insurance, and other benefits by law.

• The Age Discrimination in Employment Act (ADEA): Prevents employers from preferentially terminating workers 40 or older in favor of younger workers. Employers cannot fire more senior workers to prevent them from receiving pensions. They also can't pay new hires lower wages as a cost-cutting measure.
• Family and Medical Leave Act (FMLA): The FMLA applies to businesses with 50 or more employees. Workers with 1,250 hours of service in a 12-month period are eligible. All eligible workers must receive 12 weeks of unpaid leave per year to care for seriously ill family members or recover from their own illness or injury. Employers may not refuse FMLA if an employee is otherwise eligible. They also cannot fire an employee for requesting or taking leave.
• Affordable Care Act (ACA): Any business with more than 50 full-time employees must offer at least 95% of their workers the opportunity to buy state-sponsored health insurance. The ACA and state health plan requirements are sometimes confusing for small-business owners. Your safest course of action is to contact your state health agency for advice.

Large Companies: 100+ Employees

Businesses larger than 100 workers must follow U.S. Department of Labor recordkeeping requirements. Companies this large usually have human resources departments to manage their compliance issues. Even well-established companies with several offices are not "large" by corporate standards. Nonetheless, all federal and state laws about discrimination and fair labor practices apply to businesses once they reach this size.

State Laws and Enforcement

Very small businesses are not relieved of any duty to obey laws that apply to larger companies. For instance, federal anti-discrimination laws apply to businesses with 15 or more employees. But smaller companies don't get a free pass. State laws exist to fill the gaps left by federal laws.

For instance, California's anti-discrimination laws protect workers in businesses with five employees. They prevent harassment in businesses with fewer than that. State and local regulations can be much stricter than federal laws.

The Equal Employment Opportunity Commission (EEOC) handles harassment complaints and most discrimination claims. The EEOC is an independent federal agency with oversight of businesses with more than 15 employees. The EEOC handles most claims of sexual harassment or other violations regardless of the business size.

Seeking Legal Help

Small-business owners must stay on top of workplace discrimination laws. When you have questions about changes in your company or the laws, contact an employment attorney in your area.