More reason to prevent race bias: Courts open new avenue for claims

Jackie Lauture, an African-American, was an at-will employee at IBM for 16 years before she was fired for poor performance. She sued for race discrimination but not under Title VII. Instead, she took an increasingly common route, and one with the potential for a bigger windfall.

She filed suit under Section 1981 of the Civil Rights Act of 1866, which prohibits racial discrimination in making and enforcing contracts.

The "contract" in this case, she argued, was that she agreed to work and the employer agreed to pay her. The argument worked, and she won.

Not all courts are open to this line of reasoning. Many have ruled that at-will employment is not a contract because either the employer or the employee may end the employment relationship at any time for any reason. But an increasing number of circuits including the 4th, 5th, 10th and now the 2nd are allowing such Section 1981 claims.

The 2nd Circuit rejected IBM's argument that Title VII is the only remedy for workplace discrimination, noting that more than 11 million at-will employees work for companies that aren't covered by Title VII because they have fewer than 15 employees. (Lauture v. International Business Machines Corp., No. 99-7732, 2nd Cir., 2000)

Advice: If you work in a company that's too small to be covered by Title VII, don't be complacent about the potential for discrimination lawsuits. This ruling shows that you need an anti-discrimination policy that's enforced throughout the company.

Also, as more courts allow employees to bring Section 1981 discrimination cases, your liability increases in two big 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.