The Civil Rights Act of 1866, in particular 42 U.S.C. section 1981, protects the rights of all Americans, regardless of race or color, to make and enforce contracts. One contract Section 1981 protects is the contract of employment.
Section 1981 claims, including retaliation claims, are analyzed very much like claims brought under Title VII of the Civil Rights Act of 1964, but Section 1981 is, in some respects, more employee-friendly than Title VII. For example, Section 1981 does not cap an employer’s liability for damages, while Title VII’s damage cap is based on the size of the business. Section 1981 also does not require plaintiffs to file a claim with the Equal Employment Opportunity Commission (EEOC) as a procedural prerequisite, and it does not require that the employer have over 15 employees. While Title VII requires that employees file charges with the EEOC within 180 or 300 days, the statute of limitations for most claims arising under Section 1981 is four years.
Section 1981 does have significant limitations for potential plaintiffs. Unlike Title VII, which prohibits discrimination on the basis of race, color, national origin, religion or sex, Section 1981 covers only claims of discrimination based on race, color, or national origin. Claims of discrimination based on sex, or religion, or age, or disability, are not available under Section 1981. For example, Section 1981 does not address disparate impact claims, unlike Title VII; rather, it only prohibits intentional discrimination. Additionally, if a plaintiff recovers under Section 1981, he or she cannot then go on to collect additional damages under Title VII. Also, while state employees may be able to recover under Title VII, sovereign immunity prohibits their recovery under Section 1981.