Every company faces HR burdens. Administrative issues such as payroll, benefits administration, and risk management take time away from the core of your business. Thankfully, you can offload these burdens onto a professional employer organization (PEO). When you get risk management services from a PEO, part of the deal is EEO-compliance.
The U.S. Equal Employment Opportunity Commission (EEOC) is responsible for enforcing federal anti-discrimination laws and protecting employees and applicants.
Complying with the Equal Employment Opportunity (EEO) rules is a requirement for most employers with 15 or more employees (age discrimination cuts in at 20 employees). This was established by Title VII of the Civil Rights Act of 1964, which prohibits discrimination based on sex, race, color, national origin, and religion. The EEOC also enforces discrimination based on age, disability, or genetics.
An EEO violation occurs if you:
In some cases, subtle bias may show in recruiting, hiring, or promotion, such that you might not realize you are coming close to an EEO violation, which can result in significant fines or lawsuits.
If you have 15 or more employees (20 in the case of age discrimination), you need to be in compliance. It is also good practice to do your best to avoid discrimination in general. Also, all companies must pay all genders equally for equal work.
Companies with more than 100 employees have to submit an EEO-1 report each year. If you have a federal contract, the threshold drops to 50 employees. This report is demographic data about your workforce including race/ethnicity, sex, and job categories. This allows them to track discrimination and is also used for overall data collection.
If you are close to the threshold, it is a good idea to make sure you have this data so that you can file the report easily when required.
So, how does partnering with a PEO help make sure that your company is compliant with the EEO? There are several ways in which PEOs can help. They can:
Your managers and supervisors need to understand their responsibilities as they relate to non-discrimination, reasonable accommodations, responding to discrimination complaints, and avoiding retaliation.
Note that an accommodation does need to be reasonable; working out when an accommodation constitutes an undue burden and doesn't need to be done is an important part of this training. Managers also need to learn how to overcome any biases they themselves might have.
When you start working with a PEO, they can provide you with an independent audit to look for biases you might have. Internal people often miss these things because they are used to the way things are. They might not, for example, notice a tendency for women with a certain level of seniority to still be in cubicles when their male peers get offices.
They can also audit you for best practices and help you with other issues such as eliminating discrimination in your 401(k).
When an employee asks for accommodations for a disability or religious belief, you are required to provide "reasonable" accommodations. This is intended to be a balance between the employee's needs and the needs of your business; you do not have to provide accommodations that would run you out of business or which are technically infeasible.
Creating these accommodations can be a challenge, especially for newer companies. A PEO can help by giving you advice on developing a process to handle accommodation requests.
EEO-1 reporting can be a significant administrative burden. A lot of work is required to ensure that the appropriate demographic information is collected and that job categories are set up correctly. You also need to make sure that the personal information being collected is kept secure.
If you are working with a PEO, they can do your EEO-1 reporting for you. They typically have enterprise-grade HR software that information can easily be pulled from to put the report together.
An employee who thinks that they have been discriminated can file a complaint. Note that even if the EEOC doesn't think discrimination occurred, the employee can still sue you, but they have less chance of winning.
If the EEOC thinks the complaint has grounds, they will first try to bring you together in informal mediation, which is called conciliation. If this does not resolve it, either the EEOC will sue you or the employee will; and in this case they have a much greater chance of winning. You could have to pay damages of up to $50,000 for companies with 15 to 100 employees, and even higher for larger firms. Alternatively, you might have to pay back wages if you have paid somebody less based on age or sex.
PEOs can help you with EEO compliance. They also come with many, many more benefits, such as taking over administrative duties, helping you develop safety programs, and giving you access to their benefits plan negotiated by experts using economies of scale. Partnering with a PEO is the best way to outsource HR, get a good ROI, and grow your company.