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.