Employment: Independent Contractors Can Sue For Race Discrimination Under § 1981
Many businesses, especially small businesses, prefer to outsource independent tasks rather than add employees to the payroll. By using independent contractors, employers save the costs of tax contributions and employee benefits and insulate themselves from certain liabilities. Hiring independent contractors, however, will not protect employers from claims of race discrimination.
The Civil Rights Act of 1964, known affectionately to employers as Title VII, prohibits discrimination in employment. It also established the EEOC to provide what was intended to be a system for investigating and resolving employment complaints without litigation. The enforcement provisions of Title VII, however, are available only to bona fide employees. But, almost one hundred years before Congress passed the Civil Rights Act of 1964, it enacted the Civil Rights Act of 1866. That statute provides that “all persons . . . shall have the same right to make and enforce contracts . . . as is enjoyed by white citizens.” An action based on this statute has come to be known as a Section 1981 claim because the statute was codified at 42 U.S.C. § 1981. Section 1981 protects both employees and non-employees, and is not limited to contracts of employment.
There are a number of differences between Title VII and Section 1981. The scope of Title VII’s prohibitions is broader. It prohibits discrimination on the basis of race, religion, sex, or national origin, while Section 1981 addresses only discrimination of the basis of race. The coverage provisions of Title VII, however, are much narrower. Title VII applies only to employers in interstate commerce with 15 or more employees and excludes federal and state governments, Indian tribes, and private clubs. Section 1981 applies to any person or entity that contracts. Title VII requires filing a charge with the EEOC within a defined number days of the act complained of, while Section 1981 does not require any pre-litigation filing with a state or federal agency and allows two years in which to bring suit.
Although Section 1981 claims have been brought for well over a century, actions by independent contractors are a fairly new development. Recent cases have included claims by sales representatives, individual truckers for hire, a company providing landscaping services to a county, and a company who maintained parking lots for a retailer. In addition, Section 1981 has been interpreted to apply to claims of retaliation and hostile work environment based upon race.
The moral of this story is that you must treat those with whom you contract just as you are required to treat those who you employ. It’s the law.
By Rebecca M. Fowler, email@example.com