Let’s say you have been discriminated against based on your race, but either work for a company with less than 15 employees or are an independent contractor.  You know that neither Title VII nor the Texas Labor Code applies to you.  Is there any other protection?  YES! The answer is 42 U.S.C. §1981.

Let’s say you are an employee of a company with 15 or more people, but that you didn’t hire a lawyer until well after the 300-day statute of limitations for Title VII to assert your race discrimination claim.  Do you have any hope? YES! The answer is 42 U.S.C. §1981.

So, what is 42 U.S.C. § 1981?

42 U.S.C. § 1981 prohibits race discrimination and retaliation in the making and enforcing of contracts. It is meant to provide “broad and sweeping” protection against all race discrimination.  Faraca v. Clements, 506 F.2d 956, 959 (5th Cir. 1975). According to the Supreme Court, the Civil Rights Act of 1866, from which § 1981 is derived, “was designed to prohibit all racial discrimination . . . with respect to the rights enumerated therein.”  Jones v. Alfred H. Mayer Co., 392 U.S. 409, 422-36 (1968).

Under Section 1981, the phrase “make and enforce contracts” includes “the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.” 42 U.S.C.  § 1981 (b).  It applies to all sorts of contracts.    For example, at-will employment is a contractual relationship subject to § 1981 even though an employer can fire an employee for any reason or no reason at all.  See Fadeyi v. Planned Parenthood Assoc. of Lubbock, Inc., 160 F.2d 1048, 1051 (5th Cir. 1998).  Pool memberships and admission to private school are likewise contractual relationships subject to § 1981.  See Tillman v. Wheaton-Haven Recreation Assoc., Inc., 410 U.S. 431, 439-40 (1973) (pool membership); Runyon v. McCrary, 427 U.S. 160, 172 (1976) (admission to private school).  Moreover, section 1981 applies equally to independent contractor relationships as well.  See Webster v. Fulton County, 283 F.3d 1254, 1257 (11th Cir. 2002).

But, I hear you say, does there have to be a direct contractual relationship between the party being discriminated against and the party discriminating based on race?  In other words, you continue, does § 1981 prohibit third-party interference in a person’s contractual rights based on race?  The case law very clearly shows that it does, even in the Fifth Circuit.

In 1969, the Supreme Court held unambiguously that the nearly identical § 1982 protected the right to lease “against the actions of third parties.”  Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 237 (1969).  Six years later, this Court unambiguously stated that the Sullivan decision applied “with equal force to a suit for interference with the right to contract guaranteed by Section 1981.”  Faraca v. Clements, 506 F.2d 956, 959 (5th Cir. 1975); see also CBOCS West, Inc. v. Humphries, 553 U.S. 442, 447 (2008) (Finding that § 1981 prohibits retaliation based on Sullivan because “our precedents have long construed §§ 1981 and 1982 similarly.”).  

While it is true that since Faraca, this Court has expressed skepticism in dicta about the full extent of third-party liability, the fact is that this Court appears to always assume such a cause of action exists.  See e.g., Foley v. University of Houston Sys., 355 F.3d 333, 337-38 (5th Cir. 2003) (reversing summary judgment on a third-party § 1981 claim and sending to a jury); Bellows v. Amoco Oil Co, 118 F.3d 268, 274 (5th Cir. 1997) (assuming, arguendo, that Bellows’ claim is actionable, but dismissing on other grounds); Sherrod v. United Way Worldwide, No. 19-10376, 2020 WL 4381815 at *4 (5th Cir. July 20, 2020) (assuming Sherrod’s claim is actionable, but dismissing on other grounds).

Moreover, citing Supreme Court and Fifth Circuit precedent, both the Eleventh and Seventh Circuits have held that third-party interference claims are actionable under § 1981.  See Moore v. Grady Memorial Hospital Corp., 834 F.3d 1168, 1173 (11th Cir. 2016); Shaikh v. City of Chicago, 341 F.3d 627, 630 (7th Cir. 2003) (“A third party’s interference with an individual’s equal opportunity to enter into contracts or purchase property can support civil rights claims under §§ 1981 and 1982.”).

In conclusion, you may be able to take action if you have been discriminated against based on race even if you employer or work situation is not subject to Title VII or the Texas Labor.  If you think you have been discriminated against based on race, please consult with an attorney to discuss your options for moving forward.    

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Photo of Colin W. Walsh Colin W. Walsh

We asked Colin W. Walsh, an experienced Trial Attorney in the Austin office of Wiley Walsh, P.C., to impart his candid answers to a range of questions.   After reading, you will be more more informed on the well-respected reputation that Mr. Walsh

We asked Colin W. Walsh, an experienced Trial Attorney in the Austin office of Wiley Walsh, P.C., to impart his candid answers to a range of questions.   After reading, you will be more more informed on the well-respected reputation that Mr. Walsh carries.

1. What do you like most about being an employment lawyer?

I enjoy getting tangible results for my clients and being involved in an area of law that affects everybody every day.

2. What is the most important issue to you of being an advocate?

One of the most important issues to me as an advocate is to not only zealously represent my clients, but also the law.

3. What kind of clients do you like best?

I like the clients that I am able to help who were not able to find help elsewhere.  On a couple of occasions now, a client has told me that my firm is the first one that has listened to his or her issue and offered any kind of assistance.

4. What do you think is the most important part of a good case?

The client.  If the client is not invested, then the other side won’t take it seriously and neither will the jury.

5. What labor and employment issues do you think are currently trending?

The biggest employment discrimination issues I see right now are related to age, disability, and pregnancy discrimination.  For some reason, these types of discrimination seem to be acceptable to employers.  The other issues right now are minimum wage and overtime pay.

6. Who is your favorite Supreme Court Justice?

Justice William Brennan.

7. What would you say to HR of a company about how to treat employees?

It would be to listen to your employees.  Most employees are not looking to sue when he or she goes to Human Resources.  These employees are sincerely looking for help.  Nothing makes an employee seek legal counsel like when he or she complains about something and HR starts investigating the employee instead of the complaint.

8. Besides Rob Wiley, P.C., what is the most interesting job that you have had?

The most interesting job I’ve had is working as an extra in film and television.  I should have known that I was destined to be a lawyer at that point because two of my biggest gigs were the TV show “Boston Legal” and the film Charlie Wilson’s War.

9. What is your favorite food?

Meat pies.  I first discovered them when I studied abroad in undergrad.  I can’t believe these have not caught on in the U.S. because they are brilliant.

10. What’s the best part of living in Austin?

All of the outdoor festivals.  And the Longhorns.

Colin W. Walsh is a Trial Attorney in the Austin office of Wiley Walsh, P.C.  He graduated from The University of Texas at Austin with a bachelor’s degree in theatre in 2006.  Mr. Walsh then graduated from The University of Texas School of Law with honors in 2011.