What is the case against Meta and what did the court say?

The class action was filed by Purushothaman Rajaram, an Indian origin U.S. citizen, who claimed that Meta refused to hire him in favour of "noncitizens holding H1B visas to whom it can pay lower wages." Initially, a California federal judge dismissed Rajaram's claim, holding that section 1981 “does not bar discrimination based on U.S. citizenship.” However, the Ninth Circuit's recent ruling overturned this decision in a 2-1 vote, stating that 42 U.S.C. section 1981 prohibits employment discrimination against U.S. citizens based on their citizenship.

Rajaram claimed, between 2020 and 2022, he unsuccessfully applied to work at Meta Platforms but was denied a job as, "Meta violated section 1981 by discriminating against United States citizens in hiring.

"The disputed question is whether section 1981 prohibits employers from discriminating against United States citizens. The statutory text answers that question in the affirmative. An employer that discriminates against United States citizens gives one class of people—noncitizens, or perhaps some subset of noncitizens—a greater right to make contracts than “white citizens.”

If some noncitizens have a greater right to make contracts than “white citizens,” then it is not true that “[a]ll persons” have the “same right” to make contracts as “white citizens.” That is precisely what the literal text of the statute prohibits.

Debate over Section 1981: Does it bar hiring based on citizenship?

In this court observation, Judge Miller observed, that section 1981 guarantees equal rights in contracting for "all persons" within the U.S., extending protections to citizens and noncitizens alike. He went on to argue that if employers discriminate against citizens in favour of non-citizens, they violate the statute's mandate for equal contractual rights.

The judge also dismissed Meta's reliance on other statutes and previous court decisions that interpreted section 1981 differently, asserting that such interpretations do not align with the statute's explicit language and intent.

However, in his dissent against the ruling Judge Vandyke argued that Section 1981 is not as clear-cut as the majority suggests. The phrase "same rights ... as enjoyed by white citizens" could imply a "leveling-up" requirement, where everyone gets rights equivalent to those of white citizens. Citizens, who inherently possess these rights, might not need protection under this statute if interpreted strictly. Alternatively, if the statute aims at strict equalization, mentioning "white citizens" seems redundant.

Ultimately, the court ruled in favour of Rajaram, concluding that he has sufficiently alleged discrimination under section 1981 based on Meta's hiring practices.

Potential Impact of Meta ruling on H-1B Visas and Employment Litigation

Experts believe this ruling has the potential to create a circuit court split, as it directly contradicts a 1986 ruling by the Fifth Circuit, which held that the law does not prohibit bias against U.S. citizens. If Meta appeals, the case could escalate to the U.S. Supreme Court to resolve these conflicting interpretations.

However, this decision is being seen as a seteback against H-1B and can lead to more lawsuits by U.S.-born workers against companies that hire temporary visa holders. Hence, potentially challenging the employment practices of many tech giants and other companies that rely heavily on H-1B visa holders.