Labor and Employment

Discrimination Lawsuits: Basics for Employers

By Lisa Guerin, ​J.D., Boalt Hall at the University of California at Berkeley
Your company may not discriminate against employees based on certain protected characteristics.

Employment discrimination lawsuits are complicated, time-consuming, and expensive. And these legal battles can cost your company much more than time and money: Employee morale and productivity often decline when a company is accused of discrimination, and your company’s reputation could also be damaged.

Treating employees fairly and making job decisions based only on legitimate business reasons are the key to avoiding discrimination lawsuits. But first, your company must understand how discrimination laws work.

What Is Employment Discrimination?

Employers commit discrimination when they make job decisions based on legally protected characteristics, such as race or religion. Discrimination is prohibited in every aspect of the employment relationship, from applications, interviews, and hiring decisions to promotions, raises, job assignments, discipline, performance evaluations, and terminations.

Protected characteristics are traits that legislators have decided should not be considered by employers. Depending on which laws apply to your company, they might include (among others):

  • race
  • color
  • sex
  • age
  • disability
  • national origin
  • religion
  • genetic information
  • marital status
  • sexual orientation, and
  • gender identity.

Laws Prohibiting Discrimination

A number of federal laws prohibit discrimination, including:

  • Title VII of the Civil Rights Act: This law prohibits employers with 15 or more employees from discriminating based on race, color, sex, religion, or national origin. (For more information, see our article on race and color discrimination.)
  • Age Discrimination in Employment Act: This law prohibits employers with 20 or more employees from discriminating against employees who are 40 or older based on age.
  • Americans With Disabilities Act: This law prohibits employers with 15 or more employees from discriminating based on an employee’s disability.
  • Genetic Information Nondiscrimination Act: This law prohibits employers with 15 or more employees from discriminating based on an employee’s genetic information.

All states also prohibit certain types of employment discrimination. Some state laws apply to smaller employers or include additional protected characteristics. For example, California protects gender identity, sexual orientation, and marital status. To learn about your state’s discrimination law, select it from the list at Nolo’s Employment Discrimination in Your State page.

Charges of Employment Discrimination

Before an employee can file a discrimination lawsuit, the employee must first file an administrative charge of discrimination with a federal or state governmental agency. The federal agency that handles discrimination charges is the Equal Employment Opportunity Commission (EEOC); most states also have their own fair employment practices agencies.

Employees have either 180 days or 300 days to file a federal discrimination charge, depending on whether the type of discrimination at issue is prohibited only by federal law or by both federal and state law. An employee who wants to file a state discrimination charge may have a longer time limit in which to file.

The EEOC or corresponding state agency will notify you when an employee files a charge and ask you to respond. It may investigate the employee’s claims, suggest that you and the employee try to settle the dispute through mediation, or propose a specific resolution to the dispute. If the EEOC can’t resolve the charge, or the employee wants to move ahead with a lawsuit before the EEOC has finished processing the claim, the agency will issue the employee a “right-to-sue” letter. This letter allows the employee to file a lawsuit in court.

Private Lawsuits

Once the employee receives a right-to-sue letter from the EEOC, the employee must file a lawsuit within 90 days. However, state laws might give employees additional time to sue.

As the plaintiff, the employee has the burden to prove that your company was discriminatory. Statements by managers or other employees, emails, and company memos can be used to show that unlawful discrimination occurred. Indirect evidence of discrimination can also be used. This may include evidence that people outside the protected categories were receiving better treatment (for example, that men received promotions more often than women).

An employee who wins a discrimination lawsuit can ask the court to issue a monetary award (called “damages”), including:

  • back pay: compensation and benefits the employee lost as a result of being discriminated against
  • front pay: money to compensate the employee for wages and benefits the employee will continue to lose until he or she finds a new job
  • pain and suffering: compensation for the emotional toll that the discrimination caused
  • punitive damages: money intended to punish the employer (awarded only for especially egregious behavior), and
  • attorneys’ fees and court costs.

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