December 4, 2014

Owners, contractors and other recipients of federal funds be aware: when construction or other federally-funded contracts sour, not only can contracting parties file lawsuits claiming breach of contract, but if the contracting party is a minority-owned business, it may have a discrimination claim under Title VI of the Civil Rights Act. The Fourth Circuit Court of Appeals has concluded that a minority-owned corporation may have a racial identity and standing to bring race discrimination claims.

Applying labels such as “race, color, or national origin” to business entities forges a new path in the area of employment and contract law. Now, not only must parties involved in federally-funded projects be concerned with discriminatory behavior toward employees, but also toward contracted parties. Understanding the employment implications of the Fourth Circuit’s decision when entering into a contract with a minority-owned business, may shape the future of contract language, as well as contracting party relationships.

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