Employees who suffer retaliation after voicing complaints about on-the-job race discrimination can file lawsuits under a little-known Civil War-era law, the U.S. Supreme Court ruled on May 27.
That’s bad news for employers. Reason: Employees who file suit under that ancient law (Section 1981 of the Civil Rights Act of 1866) have longer filing deadlines than the more common route, Title VII of the Civil Rights Act of 1964. Plus, damages aren’t capped under Section 1981, so lawsuits have greater potential for a bigger windfall.
Section 1981, which was written after the Civil War to benefit newly freed blacks, doesn’t specifically mention retaliation. Business groups argued that because of that, employees shouldn’t be able to file retaliation lawsuits under that law.
But in a 7-2 ruling, the U.S. Supreme Court said that retaliation is simply another form of unlawful discrimination and should be actionable under Section 1981.
Writing for the court, Justice Stephen Breyer said the idea that Section 1981 "encompasses retaliation claims is indeed well embedded in the law.”
Ron Chapman, Jr., an attorney in the Dallas office of Ogletree Deakins, says the ruling is "means we're going to see more race discrimination and race-based retaliation cases and more of these will be brought under Section 1981, rather than Title VII."
The case revolved around a black manager at a Cracker Barrel restaurant who claims he was fired after complaining about race discrimination at the restaurant. He filed a Section 1981 retaliation lawsuit and lower courts allowed him to proceed. The U.S. Supreme Court on Tuesday upheld the lower court’s ruling.
The impact: Section 1981 has become an increasingly common route for African-Americans to bring to federal court a variety of discrimination claims. As more courts allow such suits, your liability increases in two major ways:
- Maximum damages available under Section 1981 aren’t capped as they are under Title VII. Consider buying insurance that will cover a judgment larger than the Title VII cap.
- The statute of limitations is the same as that of your state’s contract law, which is usually a much longer time limit than under Title VII. Make sure your record-retention practices cover the statute of limitations under your state’s contract law.