Numerous articles in this issue of Club Director make mention of the impact the Equal Employment Opportunity Commission (EEOC) can have on businesses. In simplest terms, the EEOC is the federal agency that enforces rights protected under the Civil Rights Act (CRA) of 1964.
If an employee who is part of a protected class of people (based on race, color, religion, gender or national origin) believes he was wrongly treated by his employer, then he may file a discrimination claim under Title VII of the CRA. The EEOC determines if these claims are valid.
Not only do businesses have to deal with (and pay for) defending these claims, but the EEOC also creates new enforcement regulations. Earlier this year, the EEOC announced a rule requiring businesses with more than 100 employees to report pay by race, ethnicity and gender. This is part of a larger effort to close pay gaps and identify discrimination in the workplace.
While the actions of the EEOC and some employees certainly can cause significant financial burdens for businesses across the country, private clubs have one major benefit over everyone else: Private clubs are exempt from the CRA and the EEOC’s actions.
Under 42 U.S.C. Section 2000e, the CRA states:
(b) The term “employer” means a person engaged in an industry affecting commerce who has fifteen or more employees … but such term does not include … a bona fide private membership club … which is exempt from taxation under section 501(c) of [the Internal Revenue Code] ….
With the growing number of EEOC regulations, investigations and discrimination claims, private club leaders must remember how important this benefit is. The value of being truly private can be seen no more clearly than in a seminal court case entitled Equal Employment Opportunity Commission v. The Chicago Club, 86 F.3d 1423 (1996).
In that case, the EEOC accused the club of failing to file CRA mandated reports. Naturally, the club argued it was not an “employer” under the law and did not have to file the reports. At the federal district court level, the club prevailed. The EEOC appealed to the U.S. Circuit Court of Appeals, Seventh Circuit.
The Circuit Court’s opening two sentences set the tone for the judgment:
The [EEOC] is apparently dissatisfied with the provisions of federal law that places truly private clubs outside its regulatory reach. EEOC seeks to remove this congressionally enacted impediment by interpreting the bona fide private club exemption of 42 U.S.C. Section 2000e(b) out of existence.
With those opening lines, there was no doubt the EEOC had lost. The court went on to show how The Chicago Club met all requirements to be a truly private club. First, it was owned and controlled by its members, with a selective membership process. Second, it did not advertise for members nor did it advertise the use of its facilities to nonmembers. Third, the club limited use of the facilities to members and their guests. See NCA’s privacy checklist on page 7 for the list of essential criteria.
The final two sentences of the decision highlighted the magnitude of the ruling for private clubs and how important it is to maintain your club’s private status:
In the hopes of altering the playing field for all private clubs under Title VII, EEOC decided to go after the biggest fish in the pond. In the process, it has diminished its reputation and needlessly squandered both its own resources and those of the federal courts.
With the EEOC broadening its reach and with claims coming from more employees alleging they are part of a protected class, a club leader must do all he can to protect his club’s private status. By so doing, the exemption so forcefully affirmed by the Seventh Circuit Court of Appeals will be there should it ever be needed by your club.