A federal law prohibiting discrimination on the basis of race, color and ethnicity when making and enforcing contracts. Section 1981 specifically grants all individuals within the US jurisdiction the same rights and benefits as "enjoyed by white citizens" regarding contractual relationships (42 U.S.C. § 1981(a)). Courts have interpreted Section 1981 to apply to the employment context, including at-will employment (www.practicallaw.com/4-501-5240) and the independent contractor (www.practicallaw.com/6-502-8864) relationship. Section 1981 also prohibits retaliation. It does not prohibit discrimination on the basis of any other protected class (www.practicallaw.com/5-501-5857).
Section 1981 applies to all private employers and labor organizations, but does not apply to discrimination by the US federal government as an employer.
Section 1981 does not require an individual to exhaust administrative remedies by filing a charge before any government agency and waiting for that charge to be adjudicated or released before proceeding to court.
There is no damages cap under Section 1981.
For more information, see Practice Note, Discrimination: Overview: Section 1981 (www.practicallaw.com/3-503-3975).