Most people in a business situation feel they are protected from discrimination by an employer because of Equal Employment Opportunity. This is not true. The coverage provided by EEO is limited by the size of the company to companies with 15 or more employees. This protects smaller businesses from being sued in all protected categories, except race. Discrimination on the basis of race has another law covering it that few employers are aware of and little mention is made of it in HR classes. However, getting sued for racial discrimination will quickly make you familiar with Section 1981.
Limitations of EEO
Most people think that the Civil Rights Act of 1964 was the first law banning discrimination. It was not. It is however the most comprehensive law that provides protections to multiple “protected categories”, the list of which has been expanded over the years. It has its limitations however, and does not protect everyone in every situation. The law only applies to companies that have more than 15 employees. (There is coverage for labor unions and employment agencies and some exemptions from coverage which can be found here.) If an employer is small they cannot be sued for discrimination, EXCEPT when the discrimination is due to race.
The first law to ban race discrimination
Following the conclusion of the U.S. Civil War there was a great deal of discrimination against African Americans. Many citizens were denied property rights or the ability to hold or enforce contracts. As a result the U.S. Congress passed what is recognized as the first civil rights law, The Civil Rights Act of 1866. (You can read the historical reasons here.) Specifically Section 1981 of this law extended protection to ALL citizens allowing the owning of property and to hold and engage in contracts. In 1991, with the passage of the Civil Rights Act of 1991, protection was extended to employment, whether or not there was a specific written contract or not and even if the relationship was deemed to be “at-will.”
Provisions of the law
Section 1981 extended protection from racial discrimination to companies of all size, even the smallest two person company. The Supreme Court determined that the law specifically dealt with race, even though the law does not specifically say so. It also extends the statute of limitations to four years, well beyond the 180 days afforded in the Civil Rights Act of 1964. This means an employer could be sued for racial discrimination several years after the incident of discrimination.
It allows for the following remedies and punishments:
- Back pay from the time of discrimination, to include wages, benefits and any other earnings that would have occurred;
- Compensatory damages, with not caps, for future loss, pain and suffering;
- Punitive damages, also with no caps, if the person can show the discrimination was intentional and done with malice or reckless indifference;
- Injunctive relief in cases of intentional discrimination, thus forcing reinstatement;
- Attorney’s fees for the winning party.
As you can see it can be expensive to lose under Section 1981.
It is never good to discriminate, under any circumstances, but discriminating on the basis of race has a double whammy associated with it that can even reach the smallest company.