Rand Paul and the Business of Discrimination

JURIST Guest Columnist Ben Bratman of the University of Pittsburgh School of Law says that while Republican Senate candidate Rand Paul claims he opposes repealing the foundational Civil Rights Act of 1964, his controversial comments on race discrimination leave one wondering whether he might support curtailing for private business the protections against race-based employment discrimination provided by other broader federal laws, such as § 1981 of Title 42 of the US Code...

Kentucky Republican Senatorial candidate Rand Paul recently got himself in some hot water - with the "liberal media," Paul claims on his website - by expressing in a series of interviews his fiercely Libertarian, free-market view that the federal government ought to leave private businesses alone, even when it comes to their decisions to discriminate.

The conventional wisdom seems to be that Paul's views on this subject are decidedly outside the mainstream of American political thought and contrary to long-standing law, particularly the Civil Rights Act of 1964. (Paul has now promised that he will "not support any efforts to repeal the Civil Rights Act of 1964.") However, as is often the case, the matter is more nuanced than the talk-show discourse, blogosphere, or Paul's own statements reveal. Paul's free-market position actually finds considerable favor under the exemptions and exceptions within most of our various anti-discrimination laws, including the Civil Rights Act of 1964. When it comes specifically to race discrimination though, Paul's position is indeed problematic, but in considerable part because of statutes other than the Civil Rights Act of 1964.

The two statutes that Paul has discussed in his recent interviews - the Civil Rights Act of 1964 and the Americans with Disabilities Act (ADA) - both contain multiple titles that directly regulate behavior by private businesses. First, they both prohibit private businesses from discriminating in employment decisions. Title VII of the Civil Rights Act of 1964 prohibits discrimination because of race, color, sex, national origin, or religion; Title I of the ADA prohibits discrimination because of disability, mandating that employers provide a reasonable accommodation to an employee with a covered disability. Second, in separate titles, both statutes also prohibit private businesses that provide accommodations to the public (hotels, restaurants, theaters, etc.) from discriminating in their provision of those accommodations.

Based on his comments regarding the government's role in securing civil rights within the private sector, Paul's philosophy can be boiled down to two theories: (1) Libertarianism--government should leave private business alone as much as possible, and the free market will resolve most problems; and (2) States' Rights--the federal government has very limited powers under the Constitution, and most domestic matters should be addressed by state and local governments.

By way of illustration, as to the Civil Rights Act, Paul has said repeatedly that he supports its elimination of discrimination by the public sector, but he has defended the right of a private business to discriminate because of race. That is full-throated Libertarianism. When Paul was asked by Robert Siegel during an interview on NPR if he thought both the ADA and the Civil Rights Act of 1964 were "overreaches and that business shouldn't be bothered by people with a basis in law to sue them for redress," Paul responded, "Right. I think a lot of things could be handled locally. . . . [T]he more local the better, and the more common sense the decisions are, rather than having a federal government make those decisions." That is a defense of states' rights within a federalist system.

The truth is that to a limited but significant extent, Paul's positions are not at all outside the mainstream and are even consistent with existing law. Paul's Libertarian and States' Rights positions actually prevail as to a huge swath of the private sector that Congress repeatedly has chosen not to regulate. For example, in Title VII of the Civil Rights Act of 1964 (as amended in 1972) and Title I of the ADA, Congress expressly exempted from coverage all employers with 14 or fewer employees. Based on the Small Business Administration's 2006 statistics, this leaves nearly 18 million employees, approximately 15 percent of the country's employees, without any protection under Title VII, the ADA, or several other discrimination statutes. It also puts a staggering 85 percent of private firms with employees outside the coverage of these statutes. In the Age Discrimination in Employment Act (ADEA), Congress expressly exempted all employers with 19 or fewer employees, leaving even more employers free to discriminate and even more employees unprotected. Other statutes have even higher employee minimums.

At least some of the reason for these small-firm exemptions is acceptance of the free-market view that anti-discrimination regulation of private business is burdensome. As Professor Richard Carlson has pointed out, "[n]early all of the congressional debates that preceded enactment of the major employment laws with small firm exemptions were animated with reference to 'corner' stores, entrepreneurs working out of their garage, family-owned retail and service operations, and other independent business people struggling to provide work for themselves as well as jobs for others despite stifling government regulation."

The exemptions are also a nod to states' rights: The federal government has limited power or should exercise its power conservatively when it comes to regulation of private business. Indeed, Congress derives its power to regulate private discrimination in employment and accommodations from the Constitution's Interstate Commerce Clause. Notwithstanding the Supreme Court's broad definition of interstate commerce, it is at least plausible that very small employers don't play enough of a role in it to justify federal regulation.

Even state anti-discrimination laws do not fully fill in the gaps left by the exemptions in the federal laws. For example, in Kentucky, the threshold for coverage under the state employment discrimination statute is eight employees. Private employers in Kentucky with seven or fewer employees can legally choose to fire, not hire, or otherwise discriminate against anyone because of national origin, sex, religion, age, or disability. A few states have no law prohibiting employment discrimination in the private sector at all, and neither the federal government nor most states (including Kentucky) prohibit private employers from discriminating because of sexual orientation.

What's more, the vast majority of employment discrimination statutes, state or federal, protect only employees. Independent contractors--essentially self-employed people engaging in contract work for one or more businesses--are not protected from discrimination under Title VII, the ADA, or any other statutes specifically prohibiting discrimination in employment. According to the United States Department of Labor's Bureau of Labor Statistics, in 2005 there were 10.3 million people in this country working as independent contractors, representing 7.4 percent of the employed. Though the Bureau's definition of independent contractor might differ from the law's, there can be little doubt that several million more workers in the private sector, no matter the size of the entity for which they work, are not protected from most types of discrimination.

Even the public accommodations title of the Civil Rights Act of 1964 provides an exemption for private homes run as a bed and breakfast that rent out five or fewer rooms. Congress was persuaded that, at least for the smallest of the small and the most private of the private, the federal government should not intervene.

No doubt this is all music to Rand Paul's ears.

What is likely not music to Paul's ears, and what renders inadequate his promise merely to leave the venerable 1964 statute alone, is that we have other federal laws that regulate race discrimination in the private sector much more comprehensively and aggressively than the 1964 law does, both inside and outside employment. Much of Paul's recent commentary has centered on race discrimination specifically, and it is here that his views find little favor in existing law and seem largely outside of the mainstream.

In the wake of the Civil War and ratification of the Thirteenth Amendment, which outlawed slavery, Congress enacted the Civil Rights Act of 1866. In a section now appearing in Title 42, Section 1981 of the United States Code, Congress provided that everyone shall be entitled to the same rights to "make and enforce contracts" as are "enjoyed by white citizens." In another section, now appearing in Title 42, Section 1982, Congress provided that everyone shall have the same rights to "inherit, purchase, lease, hold and convey real and personal property" as are "enjoyed by white citizens." Over 100 years later, in the 1968 decision of Jones v. Alfred H. Mayer Co., 392 U.S. 409, the Supreme Court held that § 1982 prohibits all racial discrimination in the private sale or rental of property. Seven years after that, in the 1975 decision of Johnson v. Railway Express Agency, 421 U.S. 454, the Court concluded that § 1981 specifically prohibits racial discrimination in private employment.

In the 1989 decision of Patterson v. McLean Credit Union, 491 U.S. 164, the Court restricted § 1981's coverage to only some aspects of the employment relationship. This did not sit well with Congress, which two years later in the Civil Rights Act of 1991, overruled the Supreme Court and amended § 1981 to cover all aspects of a contractual relationship.

As a result, § 1981 is an anti-discrimination law with remarkably expansive coverage. While it prohibits only race discrimination, it covers all employers, no matter how many employees they have, and it applies to any adverse employment action taken at any stage of the employment relationship. Because it is phrased in terms of contractual rights, § 1981 also applies to all other private contractual relationships, including those between a private business and an independent contractor. Other standard contractual relationships are covered as well, including buyer-seller, lessor-lessee, and myriad others. Moreover, while Title VII and the ADA have caps on damages, § 1981 has no caps at all.

The existence of § 1981 results in significant discrepancies in anti-discrimination coverage and deterrence between race discrimination and other types of discrimination (sex, national origin, religion, disability, age, sexual orientation), most notably in employment. As recently as 2007, several senators, among them Barack Obama and Hillary Rodham Clinton, cosponsored legislation to remedy one aspect of that discrepancy by eliminating the damage caps provided in Title VII. The bill died in committee.

Clearly, Rand Paul would oppose such a bill or any bill that expands the federal government's role in securing civil rights within the private sector. But, in light of Paul's recent comments about race discrimination, one is left to wonder whether he would support curtailing the protections currently provided under § 1981. Would he want to bring the law on race discrimination in the private sector in line with the law on sex, national origin and other forms of discrimination by furnishing private businesses with the various exemptions, exceptions, and limitations that they are afforded under the Civil Rights Act of 1964 and other anti-discrimination statutes?

Paul's commitment not to seek repeal of the Civil Rights Act of 1964 thereby leaves at least one stone unturned and leaves open the question of just how far outside the mainstream he really is.


Ben Bratman is Associate Professor of Legal Writing at the University of Pittsburgh School of Law, where he also teaches Employment Discrimination. He wishes to thank research assistant Brad Nankerville for help gathering statistical data for this article.

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