Who's Counting?

Implications For You

The decision is likely to affect more than Title VII cases. Eric Dreiband, an employment attorney with Mayer, Brown & Platt in Chicago, notes other federal laws have similar wording, including the Age Discrimination in Employment Act of 1967 (which has a threshold of 20 employees) and the Family and Medical Leave Act (which has a threshold of 50).

Dreiband says many states and municipalities have anti-discrimination laws with lower thresholds or none at all; you can be sued under some of these laws with three employees or fewer. However, plaintiffs would generally rather sue in federal court, where they're entitled to a jury trial.

What does the ruling mean for small employers? Patrick Falahee, the Chicago attorney who defended Metropolitan before the Supreme Court, says employers who haven't yet reached the Title VII threshold may want to consider the implications of adding that 15th employee. "The question is whether you want Big Brother looking over your shoulder and second-guessing employment decisions," Falahee says. Not that employers are looking for freedom to discriminate, he explains: "Even if the claim is false and without merit, the cost of defending [yourself] can run to six figures."

In one sense, Falahee adds, the Supreme Court's decision may hurt the very people the civil rights laws are designed to help. Suppose you have 13 employees and need to add a receptionist. Should you hire a student who can only work three days a week and a young mother or a senior citizen to work the other two? You'd be better off with one full-time employee because the part-timers would give you 15 or more employees and make your business subject to job bias lawsuits.

What's an employer to do?

Be aware of the thresholds and the way employees are now counted: by the number of employees on the payroll, whether or not they're working full time.

Before taking action against an employee, consult an attorney to make sure you do it without bias.

Look into employment practices liability insurance, a relatively recent form of insurance that for a modest premium covers the cost of defense in discrimination cases, plus compensatory damages if you lose. Most "comprehensive" liability policies for businesses exclude job bias lawsuits. Learn what's covered and what's not, just in case.

Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.

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This article was originally published in the May 1997 print edition of Entrepreneur with the headline: Who's Counting?.

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