New York — The American Alliance for Equal Rights, led by conservative activist Edward Blum, is leveraging Section 1981 of the Civil Rights Act of 1866 to contest workplace diversity initiatives and funding for minority-owned businesses. Originally enacted to protect Black people from economic exclusion, the 1981 section is now being used to challenge programs such as the Fearless Fund, a venture capital fund investing in businesses owned by women of color.
Blum’s group, known for challenging affirmative action in higher education, recently succeeded in temporarily blocking funding for Fearless Fund’s grant program through a federal appeals court. Similar lawsuits have been filed against companies like Progressive and Pfizer, marking a shift in the battle over racial considerations in the workplace post the U.S. Supreme Court’s June ruling ending affirmative action in college admissions.
Understanding Section 1981:
Section 1981 of the 1866 Civil Rights Act prohibits discrimination in making and enforcing contracts based on race, color, and ethnicity. Originally intended to protect Black individuals, the Supreme Court’s 1976 McDonald v. Santa Fe Trail Transportation decision extended those protections to include discrimination against white people as well.
Challenges and Implications:
Conservative activists argue that Section 1981 lawsuits present a faster alternative to Title VII of the 1964 Civil Rights Act, which protects employees from employment discrimination but involves a lengthier legal process. While Section 1981 has a higher standard of proof, it is broader in scope and has no limitations on compensatory and punitive damages.
The case against the Fearless Fund, which awards grants to Black women entrepreneurs, is seen as significant. The American Alliance For Equal Rights argues that the Fearless Strivers Grant Contest violates Section 1981 by excluding certain individuals based on race. Fearless Fund’s legal counsel contends the grants are donations protected by the First Amendment.
Impact of Similar Lawsuits:
Some companies have already modified their diversity programs in response to lawsuits. Law firms Morrison Foerster and Perkins Coie revised their fellowship programs to be open to all applicants, regardless of race. Pfizer dropped race-based eligibility requirements for a fellowship program after facing a lawsuit claiming a Section 1981 violation.
Legal experts suggest companies might lower their profiles by not explicitly considering race in decisions related to diversity programs. The ongoing legal challenges raise concerns about the potential implications for workplace diversity initiatives and minority-owned businesses.
The Fearless Fund case may potentially reach the Supreme Court, highlighting the evolving landscape of legal battles over diversity and equity programs.