The Constitution guards against violations of rights by government officials, not violations by private parties. Thus, to be liable in a § 1983 claim, the defendant must either be a state (or local) government worker or a private worker acting under color of state law. This may be a difficult determination when the government outsources public work to private parties. The Supreme Court has issued some guidance in this area, holding that a "private action will be considered to be 'state action' for purposes of [the] Fourteenth Amendment if, though only if, there is such close nexus between state and challenged action that seemingly private behavior may be fairly treated as that of state itself." Brentwood Academy v. Tenn. Secondary Sch. Athletic Ass'n, 531 U.S. 288 (2001). Such a showing is sufficient to demonstrate that the defendant individual was acting under color of state law. Id. Unfortunately, this standard still leaves room for unpredictability because, as the Court declares, no single factor is a necessary condition that applies across the board for finding state action, nor is any set of circumstances absolutely sufficient, for there may be some countervailing reason against attributing activity to government. Id. at 930.

Private workers acting under color of state law can not raise the defense of qualified immunity. Richardson v. McKnight, 521 U.S. 399 (1997). In that case, the Court found no historical or policy reasons for granting qualified immunity to private individuals working for a private corporation that operated a state prison. This rule has since been applied to a physician performing contract work for a state health facility. Jensen v. Lane County, 222 F.3d 570 (9th Cir. 2000).

In a § 1983 action, the Supreme Court ruled that a doctor who was under contract with the state to provide medical services to a state prison hospital on a part-time basis was acting under color of state law. West v. Atkins, 487 U.S. 42 (1988). However, many other courts have held that those who contract with the state to perform public functions do not necessarily become state actors for § 1983 purposes. The Third Circuit has said that acts of private contractors do not become acts of the state under § 1983 simply because public contracts are being performed. Boyle v. Governor’s Outreach and Assistance Ctr., 925 F.2d 71 (3d Cir. 1991). The Sixth Circuit ruled that a private mental health facility under contract with the state is not a state actor when it comes to personnel decisions because such decisions are not directly related to any legal obligation of the state. Simescu v. Emmett County Dept. of Soc. Serv., 942 F.2d 372 (6th Cir. 1991).

An example of a private contractor who received state immunity in a § 1983 action is in the case Ostrzenski v. Seigel, 177 F.3d 245 (4th Cir. 1999). Dr. Ostrzenski brought a § 1983 action against Dr. Seigel, who conducted a peer review of Dr. Ostrzenski at the behest of the Maryland Board of Physician Quality Assurance. Dr. Ostrzenski alleged that Dr. Seigel denied him due process under the Fifth and Fourteenth Amendments as a result of procedural irregularities in the peer review process. The court dismissed the claim, reasoning that Dr. Seigel was entitled to absolute quasi- judicial immunity from prosecution on Dr. Ostrzenski's § 1983 claim. In the court’s view, Dr. Seigel was performing a function analogous to a prosecutor reviewing evidence to determine if charges should be brought, and absolute immunity was necessary to foster an atmosphere in which a reviewing physician could exercise professional judgment without fear of retaliation.