Challenging workplace equity policies and funding geared toward minority-owned businesses, opponents of diversity programs increasingly rely on the 1866 Civil Rights Act's Section 1981. Initially intended to shield formerly enslaved Black individuals from economic exclusion, the American Alliance for Equal Rights, led by conservative activist Edward Blum, now leverages this section against the Fearless Fund, a venture capital fund investing in businesses owned by women of color.
With legal opposition to diversity, equity, and inclusion (DEI) initiatives on the rise, conservative activists employ Section 1981 to file lawsuits against major companies like Progressive and Pfizer. These cases are closely monitored as the controversy surrounding racial considerations in employment ensues following the Supreme Court's finding to eliminate affirmative action in college admissions. Alphonso David, the legal counsel for Fearless Fund and president and CEO of The Global Black Economic Forum, claims a "coordinated use of Section 1981" now exists, unlike before.
Understanding Section 1981
Forbidding discrimination based on race, color, and ethnicity during contract formation and enforcement, the 1866 Civil Rights Act established Section 1981. This section guarantees all U.S. jurisdiction individuals the same contractual privileges white citizens enjoy. However, in the 1976 McDonald v. Santa Fe Trail Transportation case, the Supreme Court broadened these protections to encompass private employment discrimination against people of color and white individuals.
Experts like civil rights attorney and Pace University law professor Randolph McLaughlin acknowledge this tactic: "They want to turn civil rights law upside down." Meeting the standard of proof for Section 1981 is challenging, as it requires proving that race was the central reason for denying contract opportunities.
Why Not Use Title VII?
The 7th title of the 1964 Civil Rights Act presents protection from employment prejudice according to ethnic background, religion, gender, and national origin. However, choosing the quicker 1981 route eliminates the need to file fines with the Equal Employment Opportunity Commission and undergo a waiting period. Section 1981 also imposes no limitation on damages awarded, unlike Title VII's $300,000 maximum. Still, Title VII has a lower standard of proof, only requiring race to be a motivating factor instead of a central cause.
Significance of the Fearless Fund Case
Arguing that the Fearless Fund's grant contest, which awards $20,000 to Black female entrepreneurs, violates Section 1981 by excluding individuals based on race, the American Alliance For Equal Rights seeks relief. Fearless Fund's attorneys have claimed First Amendment protections because these grants are donations, not contracts. If deemed contracts, however, various other forms of grants could fall under the same category.
Angela Reddock-Wright, an employment and Title IX attorney based in Los Angeles, believes this case potentially reaching the Supreme Court is "very possible."
Effects of Similar Lawsuits
Several companies have revised their diversity fellowship programs in response to such lawsuits. For example, law firms Morrison Foerster and Perkins Coie have opened their programs to all races. Pfizer even removed race-based eligibility requirements from its fellowship program designed for Black, Latino, and Native American college students.
Distinguished Professor of Law George Rutherglen at the University of Virginia advises that companies "lower their profile" and emphasize alternative requirements to accomplish their goals rather than explicitly mention race in decisions.
Indeed, the importance of experienced legal assistance cannot be overstated, as these challenges to workplace equity policies and DEI initiatives continue to unfold. If you are disputing against or defending diversity measures within your organization, it's time to secure expert legal advice. Embark on your journey to DEI with conviction and knowledge.
