Race Discrimination Against Corporations

Can a company have a racial identity and be the victim of race discrimination under the law? If so, will jurors protect a company from race discrimination in contracting, just as they would protect an employee from such prejudice at work?

Yes, yes, and yes, according to recent decisions in the federal district court in Philadelphia, where our client – a small, privately held business — prevailed on a race discrimination in contracting claim earlier this summer. Under Section 1981, the first part of the Civil Rights Act of 1866, all “persons” have an equal right “to make and enforce contracts” without regard to race. Courts across the nation, including the Eastern District of Pennsylvania, have ruled that this right protects corporations (Mitt Romney was right, “corporations are people”) from race discrimination in contracting, if they have a racial identity and were denied contract rights “because of race.”

In our case, Security and Data Technologies, Inc. v. The School District of Philadelphia, et al., a jury found that our client had indeed been denied a $7.5 million contract because of its racial identity, and awarded $2.34 million in lost profits damages. The case was reported here.

The decision reminds us that race discrimination is not just something that we have to be concerned about in the employment context – it is also illegal in business deals with private and public entities.

Michael Homans is a Labor & Employment attorney and Chair of the Litigation Department at Flaster Greenberg PC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business,subscribeto Michael’s blog, or follow him on Twitter @EmployLawUpdate.