Employers are well aware that the protections provided by 42 U.S.C. § 1981 extend to both United States citizens and permanent residents, colloquially referred to as “green card holders.”

Some employers, however, may be unaware that lawfully present aliens who are not green card holders may also be protected by § 1981. In Ruben Juarez v. the Northwestern Mutual Life Ins. Co., Inc., Civ. No. 14-cv-5107, Judge Katherine Forrest of the Southern District of New York recently held that a lawfully resident alien had a cognizable cause of action against a potential employer for its “US citizen and green card holder only” employment policy.

Plaintiff Ruben Juarez (“Juarez”), an alien legally authorized to work in the US, applied for a position with Defendant Northwestern Mutual Life Ins. Co. Inc. (“Northwestern Mutual”). During his interview, Juarez explained his status and noted that “he could legally work for Northwestern Mutual regardless of whether he was a citizen or had a visa.” Northwestern Mutual disagreed and informed Juarez after the interview that in order to be hired by Northwestern Mutual, a candidate had “to be a US citizen or have a green card.” Six months after his interview, Juarez filed a putative class action against Northwestern Mutual, alleging alienage discrimination in violation of § 1981.

Northwestern Mutual promptly filed a motion to dismiss for failure to state a claim. On November 14, 2014, Judge Forrest denied this motion. Northwestern Mutual argued that Juarez was denied employment because he did not possess a green card, not due to his citizenship. Thus, it could not have discriminated against him on the basis of alienage.

In rejecting this argument, Judge Forrest reasoned that the protection afforded by § 1981 extends to “all lawfully present aliens.” This conclusion was based on the statutory language. Namely, “[a]ll persons within the jurisdiction of the United States shall have the same right . . . .” Judge Forest also relied on “a long line of precedent interpreting the Equal Protection Clause.” This bevy of case law, as noted by Judge Forrest disallows discrimination on the basis of alienage.

Displeased with the finding, Northwestern Mutual sought to certify the Judge Forrest’s opinion for interlocutory appeal. On December 30, 2014, the Court granted Northwestern Mutual’s motion to certify the Court’s Opinion & Order for interlocutory appeal pursuant to 28 U.S.C. § 1292(b) because the opinion “addresses a pure legal question of first impression and significant practical importance: whether a policy that expressly denies employment to lawfully present aliens without green cards runs afoul of § 1981.” On March 17, 2015, the Second Circuit determined that it would review the District Court’s interlocutory order.

The implications of Juarez, depending on its outcome, could be significant for employers. It is likely that many employers are not cognizant that a “US citizen or green card holder only” policy may be in violation of § 1981. If the Second Circuit uphold this decision, it could require employers to reanalyze their employment policies to ensure they are complying with the Juarez holding.

This decision may also place a burden on employers to remain current on immigration and work permit laws. To avoid improper hiring practices, an employer will need a thorough understanding of whether lawfully present aliens are indeed legally authorized to work in the US. It may also require employers to bolster their applicant review process.

Should the Second Circuit uphold Juarez, employers should review their employment application and hiring processes and policies. Employers should also be cognizant that providing employment exclusively to US citizens and green card holders may generate liability under § 1982.