Title VII Civil Rights Act Guide for Small Businesses
Learn who Title VII of the Civil Rights Act covers, what it bans, EEOC filing deadlines and damages caps, with slides, tables and a checklist for employers.
Last reviewed October 29, 2026 · General information, not legal advice
General information only, not legal advice. CPA Tax Payroll and Accounting Corp is a CPA firm, not a law firm. Laws change: confirm with the official source or a licensed attorney before you act. Read the full notice.
Title VII of the Civil Rights Act of 1964 is the main federal law against job discrimination. It bans unequal treatment at work based on race, color, religion, sex and national origin, and it bans retaliation against people who complain. The U.S. Equal Employment Opportunity Commission (EEOC) enforces it. This page is for owners of small businesses and nonprofits, and for professionals with staff, who want to know whether Title VII applies to them.
Slide show: Title VII in seven slides
What the law does
Title VII bans job discrimination based on race, color, religion, sex and national origin, and bans retaliation.
Who it covers
Employers with 15 or more employees for 20 or more calendar weeks. Tribes, some private clubs and religious hiring have limited exclusions.
The core rule
Equal treatment in hiring, pay, promotion and firing. Employers also accommodate sincere religious practices and prevent and correct harassment.
The key number
Compensatory plus punitive damages are capped at $50,000, $100,000, $200,000 or $300,000, depending on how many people the employer has.
The deadline
A worker has 180 days to file a charge with the EEOC, or 300 days in Illinois. After the EEOC gives notice, a worker generally has 90 days to file a lawsuit.
The penalty
Back pay and other relief, damages up to the cap, and recoverable attorney, expert and court costs.
A practical tip
Post the EEOC notice, keep personnel records at least 1 year and set a clear complaint route. Page 3 walks through the Hire-to-Exit Fairness Walk.
Who is covered
Question
What the statute says
Covered employer
15 or more employees on each working day in each of 20 or more calendar weeks, in the current or preceding calendar year; agents count
Excluded
The United States and wholly government-owned corporations, Indian tribes, and bona fide private membership clubs that are tax-exempt under IRC 501(c)
Religious organizations
May employ people of a particular religion for work connected with the organization's activities
Other covered groups
Employment agencies, labor organizations and joint labor-management apprenticeship programs
Protected traits
Race, color, religion, sex (which includes pregnancy, childbirth and related conditions) and national origin
Fewer than 15 employees
Title VII does not apply, but state or local law and the Equal Pay Act may; see the Illinois Human Rights Act
How it touches your taxes and payroll
Your payroll records show the headcount that decides coverage and the damages cap tier, counted over 20 weeks. IRS Publication 957 treats back pay awarded under employment and wage statutes as wages, reported on Form W-2 in the year it is paid, while personal-injury damages, interest, penalties and legal fees in an award are not wages; see our Form W-2 guide. The publication does not name Title VII, so ask your payroll advisor how it applies to any award or settlement. A business cannot deduct a payment tied to sexual harassment or abuse that is covered by a nondisclosure agreement, or the related attorney fees (IRC 162(q)).
