Workplace Harassment And Discrimination In SMBs: Prevention, Culture & Compliance

Recognizing the risks and building a better culture

Workplace harassment and discrimination continue to be of concern in the U.S., with the Equal Employment Opportunity Commission (EEOC) reporting notable figures:
 

• Fiscal Year 2023: The EEOC received 81,055 new charges of discrimination, marking a 10% increase from the previous year. This uptick indicates a growing awareness and reporting of discriminatory practices in workplaces across the nation. 
• Monetary Relief: In the same fiscal year, the EEOC secured over $665 million in monetary relief for victims of employment discrimination, reflecting a nearly 30% increase compared to Fiscal Year 2022.
• Litigation Efforts: The EEOC filed 143 merits lawsuits in FY 2023, a significant rise from the 91 lawsuits filed in FY 2022. These lawsuits addressed various forms of discrimination, including retaliation, sex, disability, and race-based claims. 

Ensuring safety, dignity, and mutual respect should be foundational in any workplace, regardless of size, yet in small to medium-sized businesses (SMBs), where teams are tight-knit, leadership is often hands-on, and where HR teams may be small or nonexistent, these issues can fly under the radar or be mishandled due to lack of formal processes or training. If this happens, the consequences can be deeply damaging.

Workplace harassment and discrimination can take many forms, including verbal or physical abuse, unwelcome sexual advances, biases against race, gender, age, or religion, microaggressions or exclusionary behaviors, and leaders and employees alike should be vigilant for signs of a toxic or hostile work environment.

For those experiencing or witnessing harassment or discrimination, the effects can be severe, ranging from increased absenteeism and reduced productivity to mental health problems (stress, anxiety) and feelings of isolation and exclusion. Victims may feel that their voice does not matter, especially in smaller organizations where the lines between leadership and staff are closer and often blurred.

For businesses, the ramifications of ignoring these issues can be significant. For SMBs, the impact can be especially damaging if faced with increased hiring and retention costs, legal liability arising from EEOC claims, or lawsuits and/or settlements. At a grassroots level, low morale impacts productivity, innovation and engagement, while negative reviews on popular hiring sites like Glassdoor or social media can affect sales and hiring, which in turn can impact a company’s ability to meet demand for its products/services.

Oftentimes, in small businesses, employees are reluctant to report harassment or discrimination, especially if there are family ties in the management team, for example, if the harassing supervisor is the son or daughter of the owner. Team leaders need to be vigilant and look out for the classic red flags of a toxic work environment.

Employees who do not feel comfortable reporting concerns will vote with their feet. Does your company have a high turnover? Is it specific to one department or manager? What about an employee who was a previously enthusiastic participant in work events/meetings now suddenly reluctant to speak up? If you have a reporting process for complaints, have you noticed an uptick recently? All these can indicate issues within your workforce that should be addressed sooner rather than later.

So, what can SMBs do to build a safer, more inclusive environment? Just because you do not have or cannot afford a dedicated HR department does not mean there are not any steps you can take to protect your business and your employees.

Start with a clear, written harassment and discrimination policy, which includes reporting procedures— and then enforce it. Update it regularly to keep it compliant with any changes in federal or state laws. Invest in training appropriate to your industry, team and business culture.

If you do not have a dedicated HR representative, appoint a trusted team member or third-party provider (attorney or external HR company) to be the point of contact for employees to speak with confidentially. If you appoint someone in-house, make sure they receive the proper training to deal with harassment and discrimination investigations. Consider utilizing anonymous surveys or online reporting tools to allow employees to report concerns without fear of retaliation.

Create a culture of accountability, make it clear that harassment of any kind and at any level will not be tolerated or ignored, and make sure your managers, owners, etc., lead by example and set the tone for the workplace.

For SMBs, prevention is far more effective and affordable than reaction. Creating a respectful, harassment-free workplace does not require a massive budget. It requires awareness, consistency, and courage from leadership to face issues head-on.

By building a workplace where every employee feels safe and valued, small businesses not only avoid costly pitfalls but also create cultures where people and performance thrive together.

Gillian Godjas (SHRM-SCP, CPSP), Administrative Director at Belzona, is an HR professional with over 15 years of experience as a generalist specializing in strategic human resources and legal compliance. A British expat now living in rural Virginia, she brings a unique perspective with deep knowledge of both U.K. and U.S. employment law. Passionate about building fair, compliant workplaces, she offers practical insights for small and growing businesses. Outside of HR, she enjoys life in the countryside with her cats, chickens, and a good cup of tea.