July 17, 2024

By Ty Hyderally, Esq., Martin Min, and Nichole Nunes, Esq.

On June 6, 2024, the New Jersey Attorney General Matthew J. Platkin and the Division of Civil Rights (DCR) proposed a new rule codifying existing state and federal case disparate impact case law to help employers and employees better understand the types of practices and policies that may violate the New Jersey Law Against Discrimination (NJLAD). The NJLAD prohibits discrimination in employment, housing, and places of public accommodation based on a broader set of protected classes than is protected under federal law, including race or color; religion or creed; national origin, nationality or ancestry; sex, pregnancy, or breastfeeding; gender identity or expression; disability; age, genetic information, and blood traits.

New Jersey courts have recognized disparate impact claims which involve facially neutral policies or practices that do not appear to target a specific protected class but in practice have disproportionate negative impacts. Importantly, disparate impact claims under the NJLAD do not require demonstrating discriminatory intent. The New Jersey Supreme Court first formally acknowledged discriminate impact claims in Gerety v. City Hilton Casino Resort. 184 N.J. 391 (2005).

The proposed rules state the legal standards used to establish a disparate impact claim. In the employment context, plaintiffs must first demonstrate that an employer’s practice or policy has a disparate impact on a protected class.

Plaintiffs can establish a prima facie case of disparate impact discrimination through empirical evidence that a practice or policy affects members of a protected class more than other members. For example, data that shows an employer’s applicant selection rate disproportionately favors one gender over another could be introduced to support a claim. While evidence that is speculative or hypothetical cannot be used to make a disparate impact claim, anecdotal evidence with empirical evidence could be admissible. As such, knowledge that an employer hired a man in a position where women applied could be used in addition to empirical evidence to make a claim. The proposed rule provides a non-exhaustive list of the types of evidence that could support a claim, including “National, State, and local statistics; applicant or employee files or data; and applicant or employee selection, suspension, pay setting, and termination rates by race, gender, and other protected characteristics.”

Once a prima facie case is established, the employer must then show that the practice or policy is “necessary to achieve a substantial, legitimate, nondiscriminatory interest,” also known as a “legitimate business necessity.” In other words, the employer must show that the practice or policy is necessary and related to a legitimate job purpose.

If an employer successfully meets the burden of showing a legitimate business necessity, then the employee could show that there are “less discriminatory, equally effective alternative means of achieving the substantial, legitimate, nondiscriminatory interest.”

The proposed rules provide important examples of the types of practices and policies that could be discriminatory such as, solely relying on word-of-mouth recruitment without taking further steps to ensure that the employer’s applicant pool is not restricted to a singular group; language restrictions; citizenship requirements; height or weight requirements; health or physical ability requirements; dress or appearance requirements; driver’s license requirements; pregnancy; and criminal history. Notably, the proposed rules also make clear that an interest in “achieving diversity or increasing access to underrepresented or underserved members of a protected class may constitute a substantial, legitimate, nondiscriminatory interest.”

The proposed rules are an important affirmative step in continuing New Jersey’s stance against discriminatory practices. At the least, the proposal serves as a reminder that NJ employers should reexamine any policies and practices that do not serve a job-related purpose to ensure that they are in compliance with the law. As more advanced tools and technologies are created, the proposed rules also clarify that employers still must take reasonable steps to ensure that any algorithm or tool that they use for recruitment purposes do not create disparate impacts and that employees have some recourse under current anti-discrimination laws even without laws aimed at ai-based recruitment practices.

Comments on the proposed rules can be in the notice and comments period until August 2, 2024.

Resources

https://www.njoag.gov/division-on-civil-rights-proposes-new-rule-on-disparate-impact-discrimination-under-new-jersey-law-against-discrimination/

https://www.njoag.gov/wp-content/uploads/2024/06/Disparate-Impact-Discrimination-Rule-Notice-of-Proposal_5.30.24.pdf

https://www.employmentlit.com/2024/05/13/new-jersey-and-new-york-propose-bills-to-prevent-ai-discrimination-in-hiring/

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