42 U.S.C. § 1981
Section 1981: race discrimination in contracts, with no EEOC charge and no damages cap
A federal claim in United States district courts · Last verified August 26, 2026
Section 1981 is the oldest civil rights statute still in heavy use, and lawyers plead it alongside the modern employment statute for three concrete reasons: no agency charge, a longer deadline, and no cap on damages.
The trade is causation. Race has to be a but-for cause — not one factor among several — and that requirement applies from the complaint forward.
What the claim is
Someone discriminated against you on the basis of race in making or enforcing a contract. The category is broader than employment, though employment is where most of these cases live:
- Employment — hiring, firing, promotion, pay, harassment, retaliation.
- Retail and service refusals — being denied service, followed, or ejected from a business.
- Commercial transactions — a supplier or distributor refusing to deal.
- Leases and financing.
"Race" here has been read to cover ancestry and ethnic characteristics, and the statute protects people of every race — it is not limited to minority plaintiffs.
Where the right comes from
The operative language is from 1866:
All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts ... as is enjoyed by white citizens.
Against private defendants, the Supreme Court recognised an implied private right of action in Runyon v. McCrary.
Against state and local government defendants, the answer is different, and this is the trap. Under Jett v. Dallas Independent School District, § 1981 does not itself supply a damages remedy against state actors — the civil-rights statute at § 1983 is the exclusive route. A plaintiff who sues a city directly under § 1981 has sued under the wrong statute.
That rule was contested for years. The Civil Rights Act of 1991 added language stating that § 1981 rights are protected against impairment "under color of State law," and one circuit read it to overrule Jett. Every other circuit disagreed — and the outlier abandoned its position in an en banc decision, holding that § 1981 creates substantive rights a state actor can violate but supplies no remedy against one. The split is now closed, and Jett is the uniform rule: sue state actors under § 1983.
What a plaintiff has to prove
- Membership in a racial group — any racial group.
- Intent to discriminate on the basis of race.
- Discrimination concerning making or enforcing a contract.
Then causation, and it is strict. In Comcast Corp. v. National Association of African American-Owned Media the Court held a plaintiff must plead and ultimately prove that race was a but-for cause of the injury — and that the standard applies at every stage, including the pleading stage. There is no motivating-factor route here, unlike the modern employment statute.
The familiar burden-shifting framework applies as a merits device for organising proof, not as a pleading requirement.
How long you have to file
This depends on when the conduct became actionable, which is unlike anything else on this site.
Claims that existed under the original statute — refusal to make a contract, refusal to enforce one — borrow the forum state's personal-injury period, typically two to four years.
Claims made possible by the Civil Rights Act of 1991 — hostile work environment, discriminatory discharge, and everything else arising after the contract was formed — get the four-year federal catch-all. In Jones v. R.R. Donnelley & Sons Co. the Court held a claim gets that four-year period if it "was made possible by a post-1990 enactment."
The practical result: most modern employment claims under this statute get four years. A pure failure-to-hire claim may get less, depending on the state.
Accrual runs from the discrete act. The Lilly Ledbetter Fair Pay Act's paycheck-accrual rule applies to compensation claims.
What has to happen before you file
Nothing. No EEOC charge. No exhaustion. No waiting period.
This is the statute's biggest practical advantage and the main reason it appears alongside the employment-discrimination statute in so many complaints. A plaintiff who blew the 180-day or 300-day charge deadline may still have a live § 1981 claim covering the same conduct — provided the discrimination was racial and the causation standard can be met.
Suits against state actors proceed through § 1983, which has no exhaustion requirement either (except for prisoners suing over prison conditions).
Who can be sued — and who cannot
Private employers and businesses, directly.
Individuals can be personally liable where they personally participated in the discrimination — the opposite of the rule under the modern employment statute, and a real reason to plead this claim.
State and local government defendants, but through § 1983 rather than § 1981 itself. That import brings § 1983's baggage with it: states are not "persons" and cannot be sued for damages, individual officials get qualified immunity, and a municipality is liable only for its own policy or custom.
Common defenses
No but-for causation — the central defense after Comcast.
A legitimate, non-racial reason for the decision.
No contractual relationship implicated — the conduct did not touch the making or enforcement of a contract.
Limitations, with the two-track analysis above.
For state actors, the Jett exclusivity bar, plus qualified immunity and the policy-or-custom requirement.
What the claim pays
Full compensatory and punitive damages, with no statutory cap. The caps that limit the modern employment statute do not apply here. For a plaintiff with serious damages against a large employer, that difference alone can be worth more than everything else about the claim.
Back pay, front pay, and injunctive relief are available. Attorney's fees run through the companion fee statute — to a prevailing plaintiff as a matter of course, and to a prevailing defendant only where the suit was frivolous, unreasonable, or groundless.
Jury trial available.
What people get wrong
"I can sue the city or the state agency directly under § 1981." No. Use § 1983.
"Race only has to be a motivating factor." No. But-for, and from the pleading stage forward.
"Section 1981 has the same short deadline as the employment statute." No charge deadline at all, and up to four years to sue on post-1991 claims.
"It only protects racial minorities." No. It protects people of every race.
"It only covers employment." No. Any contractual relationship — retail service, leases, supply agreements.
"Damages are capped like the employment statute." They are not.
Where it came from
Section 1981 descends from the Civil Rights Act of 1866, passed to give the newly freed the same contractual rights white citizens had. It sat mostly unused for a century.
Its modern shape comes from Congress overriding the Supreme Court. In 1989 the Court held in Patterson v. McLean Credit Union that the statute reached only the formation and enforcement of contracts — which meant racial harassment occurring after someone was hired fell outside it entirely. The Civil Rights Act of 1991 reversed that directly, defining "make and enforce contracts" to include "the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship."
That override is also what created the two-track limitations analysis above: claims restored by the 1991 Act get the federal four-year period, while claims that existed all along keep the borrowed state one.
Common questions
Do I have to file an EEOC charge before suing under section 1981?
No. Section 1981 has no administrative prerequisite. That is why it is often pleaded alongside the employment-discrimination statute, and why it can survive a missed charge deadline.
How long do I have to file a section 1981 claim?
Four years for claims made possible by the Civil Rights Act of 1991 — which covers most employment claims other than a pure failure to hire. Claims available under the original statute borrow the state's personal-injury period, typically two to four years.
Can I sue a city or state agency under section 1981?
Not directly. Under Jett, § 1983 supplies the exclusive federal damages remedy against state actors for a § 1981 violation. The one circuit that held otherwise has since reversed itself en banc.
Are damages capped?
No. Unlike the modern employment statute, § 1981 has no cap on compensatory or punitive damages.
Does section 1981 protect white plaintiffs?
Yes. The statute protects people of all races, and no plaintiff faces a heightened prima facie burden because of their race.