Critics Claim DEI Policies Unfair, Sparking Debate on Hiring Practices

A provision of the Civil Rights Act of 1866 is being used by opponents of workplace diversity initiatives more frequently to argue against equity laws and support for minority-owned companies.

The initial intent of Section 1981 of the legislation was to shield Black people, in particular, who had previously been enslaved, from economic marginalization. But now the American Alliance for Equal Rights, a group run by Edward Blum, the conservative activist who challenged affirmative action in higher education and won, is citing the section to go after a venture capital fund called the Fearless Fund, which invests in businesses owned by women of color.

While the lawsuit is pending, a federal appeals court has temporarily stopped financing the grant program of the Fearless Fund.

Using the 1981 provision, conservative activists have sued a number of organizations and businesses, such as the insurance provider Progressive and the multinational pharmaceutical Pfizer. Following the U.S., the fight over racial concerns has moved to the workplace, where the cases are being closely watched. Affirmative action in college admissions was terminated by a June Supreme Court decision.

Alphonso David, the president and CEO of The Global Black Economic Forum and legal counsel for Fearless Fund, noted that although the 1981 statute had been used to demonstrate reverse discrimination long before the most recent affirmative action ruling, there is now a "coordinated use of Section 1981 that we did not see before."

What You Need to Know About Section 1981

A federal legislation from 1866 called the Civil Rights Act forbade discrimination on the grounds of race, color, and ethnicity in contract negotiations and implementation. In terms of commercial relationships, Section 1981 expressly gives everyone under U.S. jurisdiction the same rights and advantages as those "enjoyed by white citizens."

But those rights were expanded when the Supreme Court decided in the 1976 case of McDonald v. Santa Fe Trail Transportation that Section 1981 forbade discrimination against both people of color and whites in private employment.

There is a high standard of proof for the 1981 portion. This is due to the Supreme Court's ruling in Comcast v. National Association of African American-owned Media in 2020, which established that the burden of proof for a plaintiff bringing a racial discrimination lawsuit under this section is to demonstrate that race was the primary cause of the denial of a contract opportunity rather than just a motivating factor.

A few businesses have already modified the requirements for their diversity fellowship initiatives.

In October, the legal firms Morrison Foerster and Perkins Coie announced that they were opening their diversity fellowship programs to all candidates, regardless of race. The companies said these changes were already planned before Blum filed litigation against them. After that, he dropped them. Programs for first-year law students had previously focused on students from historically underrepresented backgrounds.