Does Section 1981 Protect At-Will Employees From Race Discrimination?
As mentioned above, Section 1981 applies only to “contracts.” That raises the following question: Do at-will employees — who work with no formal contract — nevertheless have a sufficiently contract-like relationship with their employers to fall with Section 1981? Prior to McClease, six federal courts of appeals had addressed the question. Five said yes. The sixth — the U.S. Court of Appeals for the Seventh Circuit — said no. (However, it did so in “dicta”: reasoning that does not determine the result, and need not be followed as precedent by later courts.) Is An Employment Contract the Kind of “Contract” Section 1981 Envisions? What does the word “contracts” mean, as used in section 1981? The meagerly drafted statute provides no definition. Indeed, it says very little beyond guaranteeing that individuals of all races will have equal rights “to make and enforce contracts.” Without guidance from the statute, most courts have looked to relevant contract law in the state where the suit
