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Civil Rights Act of 1866 Section 1981

Most everyone knows that Title VII of the Civil Rights Act of 1964 prohibits discrimination in employment based on an individual’s race, color, religion, sex, or national origin. Title VII also prohibits retaliation against an employee because he has opposed any practice made unlawful by the Act or has made a charge, testified, assisted, or participated in an investigation, proceeding, or hearing.

Mastering HR: Discrimination

The U.S. Supreme Court has ruled that employees may file suit under the Civil Rights Act of 1866 for retaliation in employment. Among the differences between Title VII and the Civil Rights Act of 1866 are that Title VII has a shorter deadline for filing lawsuits and a limit on the amount of money an employee who successfully sues can receive.

So what’s Section 1981 of the Civil Rights Act of 1866? Shortly after the Civil War ended, many Southern (and some Northern) states enacted the so-called “Black Codes” in protest of and to circumvent the recently enacted Thirteenth Amendment, which prohibited slavery. The Black Codes imposed onerous legal limitations on newly freed former slaves. In response, Congress enacted the Civil Rights Act of 1866, a law generally recognized as the United States’ first significant civil rights legislation. Section 1981 of that statute confers a series of legal rights equally to all citizens, including the right to contract and to hold and convey property, and states in part:

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 like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.

HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including discrimination

In 1991, Congress amended Section 1981 by adding a subsection (b), which made clear Section 1981 prohibits not only discrimination in the formation of contracts but also in all aspects of the contractual relationship between the parties. Section 1981(b) states:

For purposes of this section, the term “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.

In the employment context, Section 1981 applies to the formation of the employment relationship and all aspects of that relationship, or its termination. Section 1981 also applies even if an employee is at-will and there is no formal written contract and no specific terms of employment.