A race discrimination complaint filed in federal court often leads with 42 U.S.C. section 1981 instead of FEHA or Title VII. Plaintiffs’ lawyers use it because it skips the agency charge, has no minimum employee count, and isn’t subject to Title VII’s damages caps. Employers have one strong answer built into it: the employee must prove race was a but-for cause of the decision, and the Supreme Court has said that “the burden itself remains constant” from filing to judgment.
What does Section 1981 prohibit?
Race discrimination in making and enforcing contracts, and employment is a contract. Section 1981(a) gives all persons “the same right in every State and Territory to make and enforce contracts” as “is enjoyed by white citizens.” The 1991 amendments added a definition that reaches the whole working relationship: under section 1981(b), “make and enforce contracts” includes “the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.”
The statute applies to private businesses. Section 1981(c) says the rights it protects “are protected against impairment by nongovernmental discrimination and impairment under color of State law.” So nearly every employment decision a private California employer makes is within its reach.
Because the statute speaks of contracts, not just employment, it can also come up in disputes with independent contractors and vendors. A company that ends a contractor relationship and is then accused of doing so for racial reasons may see a section 1981 count even though FEHA’s employment provisions don’t fit.
Why would an employee’s lawyer use Section 1981 instead of FEHA or Title VII?
Mostly for procedure and forum. Three features drive the choice.
No agency charge is required. In Johnson v. Railway Express Agency, Inc. (1975) 421 U.S. 454, the Supreme Court held that “the remedies available under Title VII and under § 1981, although related, and although directed to most of the same ends, are separate, distinct, and independent.” The Court described section 1981 as a remedy “separate from and independent of the more elaborate and time-consuming procedures of Title VII.” That means an employee can file a section 1981 suit without first going to the EEOC or the Civil Rights Department, though time limits still apply to any claim.
Small employers are covered. Title VII defines an employer as one “who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year,” according to 42 U.S.C. § 2000e(b). FEHA reaches employers “regularly employing five or more persons” under Government Code section 12926(d) for most claims. Section 1981’s text has no employee threshold at all.
Title VII’s caps don’t apply. 42 U.S.C. § 1981a(b)(3) caps combined compensatory and punitive damages in Title VII cases on a sliding scale from $50,000 to $300,000 depending on employer size. But section 1981a(b)(4) says, “Nothing in this section shall be construed to limit the scope of, or the relief available under, section 1981 of this title.” FEHA isn’t capped either, which is why California complaints filed in state court usually lead with FEHA. The section 1981 count matters most when the employee wants a federal forum or the employer is too small for Title VII.
Does Section 1981 cover retaliation?
Yes. In CBOCS West, Inc. v. Humphries (2008) 553 U.S. 442, the Supreme Court held that the statute reaches retaliation against someone who complained about race discrimination affecting another person’s contract rights. The former employee in that case said he was dismissed because he is Black and because he complained to managers that a Black coworker had also been dismissed for race-based reasons.
For employers, that means a complaint about race discrimination, even one made on behalf of a coworker, creates the same retaliation exposure under section 1981 that it creates under FEHA and Title VII. A termination that follows soon after such a complaint needs a documented, independent reason.
What does the employee have to prove?
That race was a but-for cause of the injury. In Comcast Corp. v. National Assn. of African American-Owned Media (2020) 589 U.S. 327, the Supreme Court held that “a plaintiff bears the burden of showing that race was a but-for cause of its injury.” The Court added that “while the materials the plaintiff can rely on to show causation may change as a lawsuit progresses from filing to judgment, the burden itself remains constant.”
The Court framed the test as a counterfactual. It asked what “would have happened if the plaintiff had been white,” and explained that “If the defendant would have responded the same way to the plaintiff even if he had been white,” the plaintiff received the same legally protected right, according to the opinion.
That’s a harder standard for the employee than Title VII’s motivating-factor rule. The Comcast opinion noted that under Title VII as amended in 1991, a defendant “may still invoke lack of but-for causation as an affirmative defense, but only to stave off damages and reinstatement, not liability in general.” Under section 1981, but-for causation is part of the employee’s case from the complaint through trial.
How do the three race discrimination laws compare?
| Feature | 42 U.S.C. § 1981 | Title VII | FEHA |
|---|---|---|---|
| Employer size in the statute | No threshold | 15 or more employees (42 U.S.C. § 2000e(b)) | 5 or more for most claims (Gov. Code § 12926(d)) |
| Agency charge before suit | Not required (Johnson) | Required (EEOC) | Required (Civil Rights Department) |
| Causation the employee must prove | But-for cause (Comcast) | Motivating factor for liability, with a same-decision limit on remedies | Substantial motivating factor |
| Damages cap | None (42 U.S.C. § 1981a(b)(4)) | $50,000 to $300,000 combined, by employer size (§ 1981a(b)(3)) | None |
| Protected traits | Race and related ancestry or ethnicity | Race, color, religion, sex, national origin | Race and many others |
How should an employer defend a Section 1981 claim?
Build the case around causation. Because the employee must show the same decision wouldn’t have been made for an employee of a different race, the employer’s best evidence is the decision itself and the documents made at the time.
Comparator evidence carries a lot of weight. If other employees with the same performance problem or policy violation were treated the same way regardless of race, that goes directly to the but-for question. If they weren’t, the employer needs a documented reason for the difference.
The pleading standard gives employers a real early motion. Comcast arose from a motion to dismiss, and the Court said the but-for burden applies at that stage too. A complaint that alleges only that race was one factor among several, without facts suggesting the outcome would have been different, is open to challenge before discovery.
Watch the related claims. Section 1981 counts usually travel with FEHA or Title VII counts, and those use more forgiving causation standards. Winning the section 1981 count on causation doesn’t end a case that also pleads FEHA, so the defense plan has to account for both.
What should an employer do when a Section 1981 claim arrives?
- Preserve the decision file: the personnel file, the performance and discipline records, the emails and texts among the decision-makers, and the policy that was applied, under a written litigation hold.
- Calendar the response deadline on the summons, and check for an arbitration agreement and an employment practices liability (EPLI) policy with notice requirements.
- Identify every person who had input into the decision, and make sure nobody takes further action against the employee, or any coworker who complained on the employee’s behalf, that could look like retaliation.
- Pull the comparator records: how the company treated other employees with similar conduct, performance, or circumstances, and the documentation for each decision.
- Talk to a lawyer before responding to the complaint, contacting the employee or the employee’s lawyer, or discussing settlement.
The firm’s page for employment defense attorneys in California describes how it handles discrimination and retaliation claims for employers.
Section 1981 questions from California employers
Can an independent contractor sue under Section 1981?
Potentially, yes. The statute protects the right to “make and enforce contracts,” and the definition in section 1981(b) covers the making, performance, modification, and termination of contracts generally. A contractor who says a company refused to hire or renew it because of race can frame that as a section 1981 claim. Contract decisions should be documented as carefully as employment decisions.
Does Section 1981 cover sex or disability discrimination?
No. The statute’s text compares rights to those “enjoyed by white citizens,” and it’s a race statute. Claims based on other protected traits belong under the federal antidiscrimination statutes and FEHA. A complaint that pleads section 1981 for a non-race claim is open to an early motion on that count.
Is a Section 1981 claim harder for an employee to win than a FEHA claim?
On causation, yes. Under Comcast, the employee must prove race was a but-for cause, which is stricter than FEHA’s substantial motivating factor standard. That’s why many California plaintiffs plead both. The section 1981 count gets them the procedural advantages, and the FEHA count gets them the easier causation test.
Can we be sued under Section 1981 if we have fewer than five employees?
Yes. FEHA’s five-employee threshold and Title VII’s fifteen-employee threshold don’t appear in section 1981, so a very small business that’s outside both of those statutes can still face a section 1981 claim. Small employers shouldn’t assume their size takes race claims off the table.
If a former employee has filed a race discrimination suit
If your company has been sued under section 1981, the decision records and the treatment of comparable employees usually decide whether race can be shown to have changed the outcome. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving race discrimination and retaliation. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The statutes are 42 U.S.C. § 1981, 42 U.S.C. § 1981a, 42 U.S.C. § 2000e, and Government Code section 12926. The decisions are Johnson v. Railway Express Agency, Inc. (1975) 421 U.S. 454, CBOCS West, Inc. v. Humphries (2008) 553 U.S. 442, and Comcast Corp. v. National Assn. of African American-Owned Media (2020) 589 U.S. 327.
This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.