Think Small Businesses Are Immune from Discrimination Laws? Think Again.
A recent case involving Jewish therapists facing workplace discrimination has sent a clear message to small employers: being under the 15-employee threshold of Title VII does not give employers a free pass to discriminate.
The therapists, who were employed at a practice with fewer than 15 employees, alleged that they were terminated because of their Jewish identity in a recent lawsuit. They had no recourse under Title VII of the Civil Rights Act of 1964, which only applies to employers with 15 or more employees. But their case moved forward—thanks to Section 1981 of the Civil Rights Act of 1866, a powerful and often overlooked federal statute prohibiting race discrimination. Junger, etc. al. v. Dsquared Relationships PLLC, et. al, Case No. 4:25-cv-00650 (E.D. Tex. 2025).
What is Section 1981?
Section 1981 protects against racial discrimination in a variety of legally significant contexts (e.g., the making of contracts, suing and giving evidence in legal proceedings, etc.). It also includes a broad provision acknowledging the right of all persons in the United States, regardless of their race, to the “full and equal benefits of all laws.” Courts have rightly applied the law broadly to many forms of racial and ethnic discrimination—including discrimination against individuals of Jewish ancestry, who are legally recognized as a protected ethnic/racial group under §1981. Reid v. Evergreen Aviation Ground Logistics Entertainment, Inc., No. 07–1641–AC, 2008 WL 1902226 (D. Oregon 2008) (“The court also finds that ‘race,’ for purposes of this ruling, includes alleged comments and conduct directed at persons of Jewish ancestry.”); Krain v. Kahn, No. 90–56208, 1992 WL 354531, at *3 (9th Cir. Dec. 1, 1992) (finding that the district court “incorrectly concluded that Jews are not a race for purposes of § 1981. The Supreme Court has held that Jewish ancestry is a race for purposes of § 1981.”); Rubin v. Kirkland Chrysler–Jeep, Inc., No. C05-0052C, 2006 WL 1009338, at *2 n.3 (W.D. Wash. Apr. 13, 2006) (noting that “[e]thnic Jews are a ‘race’ within the ambit of federal anti-discrimination statutes”).
Importantly, Section 1981 expressly protects against discrimination whether by the government (i.e., “under color of State law”) or nongovernmental (i.e., private) persons. Also of importance, unlike Title VII, Section 1981 has no minimum employee requirement and applies to independent contractors. It applies to all employers—large and small, public and private. That means that even where Title VII may not apply, small businesses can still be held liable for race-based discrimination under Section 1981.
The Therapists’ Case
According to the complaint filed by the Lawfare Project, the therapists faced antisemitic remarks and were ultimately dismissed following a series of incidents that highlighted the employer’s antisemitic bias. The employer, perhaps assuming it was too small to be sued under federal anti-discrimination laws, allegedly made no effort to address the concerns raised.
But Section 1981 doesn’t ask how big your business is—it asks what the business did.
The court allowed the case to proceed under §1981, recognizing that discrimination based on Jewish identity could fall within the statute’s protections. The ruling is not only a legal victory for the therapists but also sends a clear message to employers nationwide: racial discrimination is bad for business.[1]
Why This Matters: A Legal and Moral Obligation
In this era of rising antisemitism, business owners—regardless of size—should take proactive steps to foster inclusive, respectful workplaces. That includes implementing clear anti-discrimination and anti-harassment policies (which include Jews), training all employees on manifestations of contemporary antisemitism (including the International Holocaust Remembrance Alliance working definition of antisemitism), investigating and responding to all complaints of workplace discrimination, and when in doubt, consulting employment counsel.
Section 1981 was enacted more than 150 years ago, but its relevance is as clear as ever, and it serves as a vital tool for employees—especially those working for small businesses— seeking justice when targeted because of their race or ethnicity. This case involving Jewish therapists is not just about a legal technicality. It’s about the duty of all employers—large or small—to ensure their workplace is free from unlawful discrimination, regardless of the size of the employer’s payroll.
[1] Section 1981 is not the only law with this broader type of reach. Some state and local laws also apply to small employers and can be utilized even if an employer does not meet the 15-employee threshold under Title VII. For example, Palm Beach County in Florida has an ordinance prohibiting employment discrimination which applies to employers with 5 or more employees and the New Jersey Law Against Discrimination is applicable to all employers, regardless of size. Palm Beach Cnty. Code, Article VI, Sec. 2-263; N.J. Stat. Ann. § 10:5-5.