9th Circuit: Federal Law Bars Employment Discrimination Against Citizens

Takeaway: Businesses must remain vigilant in their hiring practices to ensure compliance with not only federal statutes but also varying interpretations across circuits.

The 9th U.S. Circuit Court of Appeals determined that a federal statute passed shortly after the Civil War, 42 U.S.C. Section 1981, prohibits hiring discrimination against U.S. citizens on the basis of their citizenship, creating a circuit split with the 5th U.S. Circuit Court of Appeals.

The plaintiff was a naturalized U.S. citizen and an information technology professional with experience managing software development projects. On several occasions between 2020 and 2022, he unsuccessfully applied to work at Meta Platforms Inc., which operates Facebook, Instagram, and WhatsApp. He alleged that Meta refused to hire him because it prefers to hire noncitizens holding H-1B visas to whom it can pay lower wages. The H-1B program allows employers to hire qualified foreign workers for specialty occupations when there is a shortage of skilled workers authorized to work in the United States.

The plaintiff brought a class action asserting that Meta violated 42 U.S.C. Section 1981 by discriminating against U.S. citizens in hiring. The district court dismissed the complaint, holding that Section 1981 does not bar discrimination based on U.S. citizenship.

On appeal, the 9th Circuit agreed with the plaintiff that the language of Section 1981, which states that all persons must be provided with the same contract rights as “white citizens,” sets a minimum level of contract rights for all persons, including U.S. citizens. Thus, when an employer treats noncitizens more favorably than citizens, it may violate Section 1981 by denying this minimum level of contract rights. The court cited a 1976 decision of the U.S. Supreme Court, McDonald v. Santa Fe Trail Transportation Co., that found white employees are protected from racial discrimination by Section 1981.

A dissenting judge, Judge Lawrence VanDyke, pointed out that, in the 1976 decision, the Supreme Court focused on the legislative history of the statute and the fact that lawmakers seemed to assume the statute would also protect white individuals from reverse discrimination. However, no such legislative history showed any belief that the law would protect citizens against reverse discrimination. Moreover, the protection of contractual rights in Section 1981 bars racial discrimination and does not bar other forms of discrimination, including discrimination based on gender, religion, disability, age, or political affiliation.

VanDyke also noted that the ruling contradicted a decision by the 5th Circuit, Chaiffetz v. Robertson Research Holding Ltd., dismissing a lawsuit claiming reverse employment discrimination against citizens under Section 1981. The 9th Circuit’s ruling created an unnecessary circuit split based on a questionable statutory interpretation, according to the dissent.

Because the decision creates a circuit split, there is a good chance the U.S. Supreme Court might one day decide whether the 9th Circuit or the 5th Circuit is correct in their varying interpretations of Section 1981.

Rajaram v. Meta Platforms Inc., 9th Cir., No. 22-16870 (June 27, 2024).

Jeffrey Rhodes is an attorney with McInroy, Rigby & Rhodes LLP in Arlington, Va.