Q. Is there a new standard in New Jersey for disparate impact discrimination?

A. The New Jersey Division on Civil Rights recently proposed new rules revising the legal standard for disparate impact discrimination and outlining the burdens of proof required under the New Jersey Law Against Discrimination. In addition to outlining a new standard for disparate impact discrimination in employment, the rules also include updated standards and guidance for housing, housing financial assistance, public accommodations, and contracting sectors.

New Disparate Impact Discrimination Standard

Currently, an employment practice or policy is deemed to have an unlawful disparate impact on an employee or group of employees if it disproportionately affects a protected class, unless it is essential for a “legitimate business necessity.” The proposed new rule heightens this requirement, requiring employers to prove that the practice or policy is for a “substantial, legitimate, nondiscriminatory interest.” The proposal also allows for a complainant to prove that, even if the substantial, legitimate, nondiscriminatory interest standard is met, a practice or policy still is unlawful because a less discriminatory, equally effective alternative exists.

The proposed rule defines a “substantial interest” as a core interest directly related to the function of the entity, a “legitimate interest” as a genuine and not pretextual justification, and a “nondiscriminatory interest” as meaning that the justification does not discriminate based on a protected characteristic. The new standard would require an employer to support its claim that the practice or policy effectively advances a substantial interest with empirical evidence. Interests such as promoting diversity or increasing access for underrepresented groups may qualify as a substantial, legitimate, nondiscriminatory interest. However, the practice or policy must be job-related and consistent with a legitimate business necessity, meaning that it must also be appropriately tailored to successful job performance.

The Burden-Shifting Framework

The proposed rule codifies existing common law providing for a burden-shifting framework for establishing a disparate impact claim. To establish a prima facie case, a complainant must provide empirical evidence showing that the challenged practice or policy disproportionately affects members of a protected class. If the complainant succeeds, the burden shifts to the respondent to prove that the practice or policy is necessary to achieve a substantial, legitimate, nondiscriminatory interest. If the respondent meets its burden, the complainant must then prove that a less discriminatory, equally effective alternative exists to achieve the respondent’s substantial, legitimate, nondiscriminatory interest to prevail on a disparate impact claim.

Employment Practices Identified as Potential Violations

The proposed new rule also gives guidance to employers by identifying how various common practices may have a disparate impact on members of protected classes.

Pre-Employment Practices
The proposal warns employers against relying on word-of-mouth recruitment by a predominantly homogenous workforce, as this practice may disproportionately impact protected classes. Additionally, the proposal highlights the potential disparate impact that automated employment decision technology can have on employment practices, including screening, interviewing, and hiring. It cautions that untested automated tools may adversely affect protected individuals. For example, online application systems that screen applicants based on schedules may disproportionately impact those with religious obligations. Facial analysis technology may disadvantage interviewees with religious headwear or facial hair. Furthermore, automated tools using data from current employees may disproportionately impact underrepresented protected classes in the company or industry.

Employment Practices
The proposal also identifies certain employment practices that may disproportionately affect protected classes and prohibits them unless the employer can prove they are essential to achieving a substantial, legitimate, nondiscriminatory interest. For example, the proposal suggests that a physical ability requirement, such as a lifting requirement, could have a disparate impact on employees based on gender, age, or disability. Therefore, the employer would have to meet the “substantial, legitimate business interest” requirement to justify the requirement. And, even then, it could still be found to have a disparate impact if an employee could show that a less discriminatory, equally effective alternative exists.

Other examples of employment practices that could have a disparate impact include:

  • Language restrictions and citizenship requirements: Except where legally mandated, these requirements can disproportionately affect individuals based on national origin or ancestry.
  • Height and Weight Requirements: These requirements may disproportionately affect individuals based on gender, national origin, ancestry, or disability.
  • Dress or Appearance Requirements: These requirements may affect individuals wearing religious articles (e.g., yarmulkes, hijabs, turbans) or maintaining religiously mandated hair/beards. Dress codes that do not accommodate gender identity expression also may have a disparate impact.
  • Driver’s License Requirements: These requirements may disproportionately affect individuals with disabilities and immigrants.
  • Pregnancy/Breastfeeding: Certain policies, such as requiring employees to wear high heels, not allowing breaks during work hours, or prohibiting the use of personal refrigerators in work areas, may disproportionately impact employees who are pregnant or breastfeeding.
  • Criminal History: Except where legally mandated, excluding applicants based on criminal history may disproportionately affect Black, Latinx/e, or applicants of certain ancestries. Policies that include individualized assessments of an applicant’s criminal record and mitigating factors are likely less discriminatory than blanket exclusions based on criminal history.