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Dylan C. Penningroth, Race in Contract Law, 170 U. Pa. L. Rev. 1199 (2022).

In the 2022 paper, Race in Contract Law, Professor Dylan C. Penningroth examines in great depth how race and slavery affected the development of modern contract law. Penningroth provides a unique historical perspective by reviewing a “sample of 9,113 cases from trial court dockets in twenty-two courthouses and five state archives.” (P. 1209.) What makes this paper one that I like a lot for work law scholars is how it unearths the unspoken use of race from Reconstruction to the end of Jim Crow in the development of contract law canons such as freedom of contract as well as analytical concepts reflecting voluntariness and consent that still affect or coerce Black workers today.

Penningroth seeks to address broad goals within this paper. This includes transforming the law school curriculum to train law students on the history of “racial thinking” related to ending slavery that also contributed to leading rules on how to regulate contractual behavior in a multiracial economy with newly emancipated slaves. Penningroth also encourages contracts casebook authors to reframe the evolution of those canons by using more cases that show Black people’s stories. Beyond those laudable pedagogical goals, this paper shows how the development of contract law after slavery responded to fears regarding an organized labor narrative that still divides all workers today based upon race.

While the #MeToo movement galvanized ongoing efforts at the state and federal level to limit contractual enforcement of non-disclosure and arbitration agreements, progress in reforming contract law to address an employee’s racial claims as a response to the Black Lives Matter (BLM) movement has stagnated. With respect to further efforts to provide fairness for Black workers in response to BLM, Penningroth’s paper provides some enlightenment in understanding the consideration of race in enforcement of employment contracts even when the matters involved do not explicitly refer to race. As a result, it serves as an excellent read for those seeking additional analytical tools to challenge non-disclosure and arbitration agreements as well as other coercive employment agreements by revealing how racism can be embedded in basic and colorblind canons of contract law.

Penningroth begins his tracing of the racial influence in the development of contract law by focusing on the Reconstruction era. Importantly, Republican antislavery proponents and abolitionists wanted a guarantee that slavery contracts would be unenforceable after the Civil War. Unfortunately, according to Penningroth, the focus on overt racism as an antislavery reform led to the expansion of contractual doctrine to encourage the imposition of coercive contract terms on laborers as long as their actions did not involve literal slave contracts.

This expansive approach to enforcing worker contracts arose from concerns that the emancipated slaves could unduly increase labor costs for employers seeking to hire them as workers in the southern states during the Reconstruction era. Businesses might face hiring difficulties if emancipated slaves adopted an organized labor mindset. These Black laborers could start to challenge basic employer labor practices similar to concerns being espoused by northern labor leaders who objected to the oppressive conditions faced by white workers.

Penningroth even highlights near the end of the Civil War how one white labor leader compared the harsh working terms for laborers in contracts with northern employers as resulting in situations where the “white working man was just ‘a slave without a master’” who was being forced “to ‘either work or starve.’” (P. 1218.) Antislavery and abolitionist interests needed to counter the northern white workers’ labor challenges by showing that this massive entry of emancipated slaves into the southern workforce would lead to their selection for jobs with fair pay for their labor, rather than shifting into a new system that just perpetuated slavery.

As business interests in the Reconstruction era began to employ the “[f]our million newly-freed Black people” (p. 1219), their fears about economic difficulties in attempting to hire emancipated slaves proved true as ”freedpeople viewed labor contracts not as divine salvation, but rather as practical tools to be handled warily, and that many freedpeople thought, like white northern workers did, that the labor contract threatened ‘a practical return to slavery.’” (P. 1219.) This pessimistic view of labor contracting also led emancipated slaves to pursue various options to improve their bargaining position, rather than blithely accepting offers by southern businesses for their labor.

Penningroth argues that the emancipated slaves’ “hard-nosed market behavior” led to the advancement of broad principles regarding freedom of contract that became “known as ‘Lochnerism.’” (P. 1219.) These developing contract doctrines ignored concerns about unequal bargaining power and enforced laborer contracts as long as some aspect of voluntariness remained, as opposed to the complete prohibition of choice or lack of free will associated with slavery. (P. 1220.)

According to Penningroth, the antislavery proponents’ first response to the labor contracting concern was led by the Freedmen’s Bureau, an agency created by Congress in 1865 to develop policies to assist emancipated slaves in integrating into the “free-labor society” within the former rebel states in the South. The Bureau helped by building schools and hospitals, providing food, seeking land redistribution, assisting families by legalizing marriages and locating lost relatives, and “negotiat[ing] labor contracts for ex-slaves and settl[ing] labor disputes.”

The Bureau also facilitated the development of the freedom of contract doctrine by coercing Black people to sign labor contracts and prohibiting “‘collective bargaining, strikes, land redistribution, and better jobs in towns.’” (P. 1221.) As a result, contract law was faced with a conundrum: “how ‘voluntary’ could a contract be when one of the parties was barred from any other way of making a living, ‘coerced by troops and Bureau agents if they refused to sign, and fined or imprisoned if they struck for higher wages?’” (P. 1221.)

The antislavery proponents’ second response to the labor contracting concern involved proposing that basic legal rules on contracting should be colorblind under a general rationale of freedom of contract. Under this focus, labor contracts could be considered illegal only when compulsion was targeted as a form of racism or an attempt to perpetuate slavery. This approach also established that any other forms of compulsion – including policies of the Freedmen’s Bureau or a state law’s baseline contractual principles such as protecting a business through freedom of contracting – could not serve as a basis to challenge enforcement.

The third and final response from the antislavery proponents, as described by Penningroth, focused on the Freedmen’s Bureau practice of resolving contractual cases in favor of emancipated slaves by treating them as needing special protection via equity including the extraordinary remedy of specific performance due to their ignorance. This consideration extended beyond the actions of the Freedmen’s Bureau to address certain “Black rights” through “traditional contract defenses: incapacity, duress and undue influence, inadequacy of consideration, and what would eventually become the law of unconscionability.” (P. 1224.)

As a result, ignoring concerns about compulsion due to a lack of bargaining power became embedded in the Freedmen’s Bureau policies and state laws deferring to a business right to freedom of contract. This general freedom of contractual doctrine would not be disturbed as part of the overall effort to show that labor and employment contracts with the newly emancipated slaves did not perpetuate slavery. More importantly for scholars invested in work law research, Penningroth captures how fears about labor organizing among emancipated Black workers led to a broad “antislavery idea of contract freedom” that ended up prohibiting most regulation of working conditions aimed at protecting vulnerable employees.

Penningroth also concludes that most contract cases leading to the development of strong freedom of contract protections during Jim Crow involved questions involving Black persons. As those bedrock contractual principles became commonplace, the courts and scholars involved failed to note that references to the Black plaintiffs bringing the claims had been dropped from the discussion. This colorblind removal of race also masks the racial implications involved.

Penningroth’s thoughtful and detailed analysis of the race-based origins of harsh and coercive contract doctrines offers attorneys and legislators a source to start restricting and prohibiting coercive contracts that limit the rights and negotiation options of Black workers. And for that reason, I like this paper a lot.

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Cite as: Michael Z. Green, Identifying Racial Dimensions Within Contract Norms That May Coerce Black Workers, JOTWELL (May 24, 2023) (reviewing Dylan C. Penningroth, Race in Contract Law, 170 U. Pa. L. Rev. 1199 (2022)), https://worklaw.jotwell.com/identifying-racial-dimensions-within-contract-norms-that-may-coerce-black-workers/.