An employment discrimination settlement is the final legal agreement that resolves all issues of a discrimination charge. Once a settlement is reached between the employer and employee or potential employee, no further legal action can be taken. An employment discrimination charge may be settled any time during a discrimination investigation.

How an employment discrimination settlement is reached

Anyone who believes his or her employment rights were violated may file a charge of discrimination with the Equal Employment Opportunity Commission (EEOC). Once a charge is filed, the EEOC notifies the employer and starts an investigation. If both the charging party and employer express an interest in settling the charge, the EEOC can make an effort to do so at any time during the investigation.

EEOC investigators may work with both parties to reach a settlement, or the charge may be referred to the EEOC's mediation program. These options are voluntary and offered at no cost.

Both parties, their respective attorneys (if retained), and the EEOC must agree to the terms of the settlement for it to be valid. If settlement or mediation efforts are unsuccessful, the charge is returned to the EEOC for investigation.

If the EEOC dismisses a charge or decides not to file suit, the charging party is given the right to file a private employment discrimination lawsuit. A private lawsuit may also be settled outside of court.

Benefits of employment discrimination settlement

The advantages of a settlement include the following:

  • Saves time and effort, especially if a charge is settled early in the investigation

  • Avoids lengthy litigation and the costs, uncertainty, and potential animosity associated with going to trial

  • Resolves a charge informally

  • Requires no admission of liability on the part of the employer

  • Dismisses the charge so that no further legal action can be taken

  • Is enforceable by court order

Additional resources:

U.S. Equal Employment Opportunity Commission: Federal Laws Prohibiting Job Discrimination Questions and Answers

U.S. Equal Employment Opportunity Commission: EEOC Investigations-What an Employer Should Know