The Rising Legal Battle: Section 1981 of the 1866 Civil Rights Act and Its Impact on Workplace Diversity

In a significant legal shift, opponents of diversity and equity programs in workplaces are increasingly leveraging Section 1981 of the Civil Rights Act of 1866 to challenge such initiatives. Originally intended to protect the rights of formerly enslaved individuals, this section is now being used in lawsuits against organizations that offer specific benefits to minority groups, raising crucial questions about the future of workplace diversity policies.

The Transformation of Section 1981
Section 1981 was designed to ensure economic inclusion for Black Americans post-Civil War. However, its interpretation has evolved. The American Alliance for Equal Rights, led by Edward Blum, is using this section to target the Fearless Fund, which focuses on supporting businesses owned by women of color. This has come in the wake of the U.S. Supreme Court’s decision to end affirmative action in college admissions, shifting the battleground over racial considerations to the corporate sector.

Legal Experts Weigh In
Legal experts like Randolph McLaughlin, a civil rights attorney, view this strategy as an attempt to “turn civil rights law upside down.” The Supreme Court’s decision in Comcast v. National Association of African American-owned Media raised the burden of proof in Section 1981 cases, requiring plaintiffs to demonstrate that race was the central cause of a contract denial, not just a motivating factor.

Why Choose Section 1981 Over Title VII?
Section 1981 offers a quicker legal route than Title VII of the 1964 Civil Rights Act, which covers employment discrimination and requires filing a charge with the Equal Employment Opportunity Commission. Furthermore, Section 1981 applies to all employers regardless of size and has no cap on compensatory and punitive damages, unlike Title VII.

The Fearless Fund Case: A Potential Legal Milestone
The lawsuit against the Fearless Fund could set a significant precedent. The Fund argues that its grants are donations, not contracts, and are thus protected under the First Amendment. However, if these grants are deemed contracts, it could have far-reaching implications for various grant programs and their eligibility criteria.

Ripple Effects Across Industries
In anticipation or response to such lawsuits, several companies and law firms have already altered their diversity initiatives. For example, Morrison Foerster and Perkins Coie have opened their diversity fellowship programs to all applicants, moving away from race-based criteria. Similarly, Pfizer dropped race-based eligibility for a fellowship program after facing legal challenges.

The Bigger Picture: Diversity and Legal Strategy
The use of Section 1981 in these cases reflects a broader strategy to challenge race-based initiatives in the corporate world. Companies are advised to lower their profile by not explicitly considering race in their diversity programs. Instead, they could focus on other criteria that align with their diversity objectives without directly implicating racial considerations.

The Supreme Court’s Potential Role
There is a growing belief that these cases may eventually reach the Supreme Court. Given the Court’s recent rulings, there is uncertainty about how it might interpret Section 1981 in the context of contemporary diversity programs.

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The increasing use of Section 1981 to challenge workplace diversity programs marks a significant turn in the legal landscape of civil rights and corporate responsibility. As these cases proceed, they are likely to influence how companies across America approach diversity and inclusion, potentially reshaping the legal framework governing race and equality in the workplace.

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