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The best way to avoid an EEOC fine

In late July, Bass Pro Shops settled with the Equal Employment Opportunity Commission (EEOC) for $10.5 million dollars and a promise to enforce certain initiatives, including the creation of an Office of Diversity and Inclusion.

A few weeks later, UPS settled a lawsuit with the EEOC for $2 million after claims of discrimination against the disabled.

In August, Ford had to pay $10.1 million to the EEOC after charges of harassment led to a legal dispute.

These big numbers don’t include the time—in some cases, over six years—spent settling discrimination lawsuits. While not all of these cases came about because of EEO-1 reporting, they’re clear examples of what can happen when you get lax about hiring practices and pay.

As the EEO-1 reporting deadline inches closer, here’s why you should pay close attention to the EEOC, and the best ways to keep it away from your front door.

Don’t mess with the EEOC

As the above examples indicate, the EEOC has had a number of high-profile settlements come out of charges of discrimination against different businesses in the past year.

Discriminatory hiring and pay practices shouldn’t be taken lightly, and the EEOC makes sure of that. Because of this, businesses can get into years-long negotiations, incur massive legal fees, and end with huge payouts, regardless of an admission of guilt.

The aftermath also tends to include requirements for some kind of bureaucratic shakeup, whether that means installing an HR employee dedicated to cutting down on discriminatory hiring practices, changing recruiting routines, or increasing pay for certain employees.

The EEOC can come after you for a number of reasons. In many cases, the commission is following up on employee complaints. In some, it’s because job applicants insist they were unfairly rejected from a position. And in a few, unusual numbers or facts on an employer’s EEO-1 form is the tipping point.

What you can do to prevent an audit

The EEO-1 report’s purpose is to discourage and discover inequality in workplace hiring practices and pay. It does this in two ways: First, by making employers take a good look at their workforce and their employees’ compensation, and second, by having the EEOC review those factors.

The hope is that employers will catch and amend these practices on their own when they begin the filing process for the EEO-1 report. As you collect data throughout the year, try to see the collected data through the eyes of the EEOC, and be on the lookout for pay or hiring disparities between different genders and races.

For example, if you have five male, white executives, but all your factory workers are Latina females, and all your warehouse workers are African American males, you might have a diversity problem in your hiring practices.

If you have four male, white executives and one female, Asian executive, and the four former are making more than the latter despite the same amount of time on the job and similar responsibilities, you might have a pay equality problem.

Take a close look at the data you’re collecting so you can work to fix your own problems before the EEOC is forced to intervene. The EEO-1 may not lead directly to fines associated with poor hiring and pay practices, but if your report indicates these might exist, the EEOC might issue you a Letter of Determination, which could trigger these kinds of penalties, and at the very least lead to some hefty legal fees.

Similarly, not reporting or reporting clearly inaccurate information will also set off the EEOC’s alarm bells—in addition to guaranteeing you get fined for late or falsified reporting.

Solve your problems while they’re small

No one wants a lawsuit, especially if it comes from the EEOC. The process of resolving such a legal battle is time consuming, expensive, and generates negative press for the company. No one wants to be seen as discriminatory, even if it’s due to an accidental oversight.

Take care to review your hiring and pay data, properly fill out your EEO-1, and file it with the EEOC before the March 31 deadline. It may seem like a lot of work, but you’ll save yourself from the scrutiny of the EEOC, and you’ll thank yourself later.