Supreme Court Holds That Employees May Bring Race-Based Retaliation Claims With Fewer Restrictions Under Section 1981

June 03, 2008

On May 27, 2008 the Supreme Court issued its opinion in CBOCS West, Inc. v. Humphries. The Court held, for the first time, that plaintiffs may bring claims for race-based retaliation under Section 1981 of the Civil Rights Act of 1866. Retaliation claims already are available under Title VII of the Civil Rights Act of 1864, but that statute imposes significant limits on damages and requires plaintiffs to submit their claims for review by the Equal Employment Opportunity Commission (EEOC) before they may file suit. The CBOCS ruling will have substantial consequences for employers, including exposure to unlimited damages, and a longer time period for employees to file retaliation suits.

In CBOCS, Humphries, an African-American assistant manager at an Illinois Cracker Barrel restaurant complained to a district manager that his supervisor's reports contained racially offensive remarks. The district manager took no action. Instead, he terminated Humphries' employment based on a report from another employee that Humphries left the store safe open overnight. Humphries filed suit under both Title VII and Section 1981, alleging race discrimination and unlawful retaliation for his complaints about the alleged racial remarks. Humphries' Title VII claims were dismissed because he failed to pay a filing fee on time. The district court also dismissed his Section 1981 retaliation claim, holding that the statute does not authorize such claims.

The Supreme Court disagreed, and in a 7-2 decision, held that plaintiffs may recover for race-based retaliation under Section 1981. The majority opinion, written by Justice Breyer, acknowledged that Section 1981 does not expressly prohibit retaliation against employees who raise concerns relating to race. However, the Court held that its previous decisions required it to interpret Section 1981's protections broadly. The dissent, written by Justice Thomas and joined by Justice Scalia, called the majority's deference to precedent a "fig leaf" and said that Section 1981 should be strictly interpreted in accordance with its plain statutory language.

The CBOCS decision is likely to trigger an increase in the already-growing number of retaliation lawsuits filed by employees. For plaintiffs, Section 1981 provides a far easier road to victory on retaliation claims than Title VII does. First, it allows plaintiffs to bypass administrative review by the EEOC and go directly to court. Second, employees will have up to four years to file suit-far longer than the 180 day limit under Title VII. Third, Section 1981 contains no cap on compensatory or punitive damages, in contrast to Title VII's ceiling of $300,000. Fourth, Section 1981, unlike Title VII, applies to small employers with fewer than fifteen employees, opening them up to retaliation suits (and unlimited damages) for the first time.

Considering the prospect of unlimited damages under CBOCS alongside the Supreme Court's current, broad interpretation of what actions may give rise to a retaliation claim, it is absolutely imperative that employers have in place effective policies for addressing complaints relating to bias in the workplace. If you have questions or concerns about the Supreme Court's decision, or retaliation claims generally, please contact Brett Harvey at harveyb@phelps.com or your regular Phelps Dunbar attorney.