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Section 1981

General

Section 1981(a), which was originally enacted as the first section of the Civil Rights Act of 1866, 42 U.S.C. 1981, provides that:

All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to the like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.

In 1989 the Supreme Court limited the application of Section 1981 when it decided Patterson v. McLean Credit Union, 491 U.S. 164 (1989). In Patterson, the Supreme Court held that Section 1981 was limited to the making and enforcing of contracts, but it rejected the notion that the law applied to “conduct by the employer after the contract relation has been established, including breach of the terms of the contract or imposition of discriminatory working conditions.” 491 U.S. at 177. Thus construed, Patterson severely limited the application of Section 1981 to employment discrimination claims, where the overwhelming majority of claims deal with post-hire (and, therefore, post contract formation) conduct.

In response to the Patterson decision Congress passed the Civil Rights Act of 1991. Among other changes, the Civil Rights Act of 1991 added Section 1981(b), which states:

[f]or purposes of this section, the term “make and enforce contracts” includes the making, performance, modification, and termination of contacts, and the enjoyment of all benefits, privileges, terms, and condition of the contractual relationship.

Accordingly, the 1991 amendments permits employees to sue under Section 1981 for post contract formation/modification conduct, including discriminatory termination.

Lastly, although Section 1981 does not itself use the word “race,” the Supreme Court has construed the section to forbid all “racial” discrimination in the making of private as well as public contracts. Over the years, “racial discrimination” has been expanded to cover ethnic groups, such as, Hispanics, Asians and Arabs, just to name a few.

Limitations Period

There is a four-year statute of limitations for Section 1981 claims. There is no requirement to file with the EEOC or administrative agencies before instituting a Section 1981 action in court.

Jurisdiction

There is no requirement for a minimum number of employees. State courts have concurrent jurisdiction with federal district courts.

Remedies and Damages

Section 1981 permits victims of race-based employment discrimination to obtain a jury trial at which both equitable and legal relief, including compensatory and, under certain circumstances, punitive damages may be awarded. Johnson v. Railway Express Agency, Inc., 421 U.S. 454 (1975). Such damages may include:

  • Back pay, which can consists of wages, salary and fringebenefits the employee would have earned during the period of discrimination from the date of termination (or failure to promote), to the date of trial.

  • Compensatory Damages are allowed for future loss, emotional distress, pain & suffering, inconvenience, mental anguish & loss of enjoyment of life. The caps placed on compensatory damages do not apply in a Section 1981 claim.

  • Attorney’s Fees may be awarded to the prevailing party.

  • Punitive Damages are limited to cases where the “employer has engaged in intentional discrimination and has done so with malice or reckless indifference to the federally protected rights of an aggrieved individual.” Kolstad v. American Dental Association, 119 S.Ct. 2118 (1999). There are no caps on punitive damages in a Section 1981 claim.

  • Injunctive relief is available when there is an intentional discriminatory employment practice. For instance, an employee can be reinstated and an employer can be ordered to prevent future discrimination.

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