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Small Employers: Introduce the ’15-Employee Threshold’ Defense Early

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in Compensation and Benefits,Discrimination and Harassment,Human Resources

The federal job anti-discrimination law (Title VII of the 1964 Civil Rights Act) applies to employers with 15 or more employees. So, if you have fewer than 15 workers, you may think you're automatically immune from such suits. Not so fast, says a new Supreme Court ruling.

The Supreme Court said small employers must raise that 15-employee defense at trial or before. They can't wait until after losing a case to argue, on appeal, that their business was too small to qualify under the law.

As a result, federal courts may now take on more cases in which it's questionable whether the employer reaches the 15-employee threshold. It will be up to the employer to prove it is smaller, which will cost in time and legal fees.

Supreme Court case: After waitress Jennifer Arbaugh won a $40,000 sexual-harassment judgment against her New Orleans employer, the restaurant appealed, claiming it didn't reach the 15-employee threshold because some workers were independent contractors. But the Supreme Court sided with Arbaugh, saying the restaurant couldn't raise the size issue after the case had concluded. (Arbaugh v. Y&H Café, No. 04-944, 2006)

Final tip: If your organization is sued for discrimination, but it doesn't meet the 15-worker limit, raise the issue early, often and aggressively.

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