On Monday, June 3, 2024, Attorney General Platkin and Director Sundeep Iyer of the New Jersey Division on Civil Rights (DCR) proposed a new rule (N.J.A.C. 13:16) that would clarify the legal standard and the burdens of proof for claims of disparate impact discrimination under the New Jersey Law Against Discrimination (LAD). 

The standard does not change the legal framework already applied by the courts in the employment context under the LAD, but this would resolve any question about the viability of a disparate impact claim and/or the framework to be applied.

Disparate impact discrimination occurs when a policy or practice that is neutral on its face has a disproportionately negative effect on members of a protected class. Such a policy is unlawful unless the policy or practice is “necessary to achieve a substantial, legitimate, non-discriminatory interest” and there is no “equally effective alternative that would achieve the same interest.”

The proposed rule codifies this standard for disparate impact discrimination in several contexts, including employment. An employment practice or policy that causes a disparate impact on members of a protected class is unlawful and a violation of the LAD, unless it is necessary to achieve a substantial, legitimate, non-discriminatory interest. The relevant inquiry is whether the practice or policy is job related and consistent with a legitimate business necessity, and if there are no less discriminatory, equally effective alternatives that would achieve the same interest.

The proposed rule also provides some examples of situations that could lead to a disparate impact issue unless it is necessary to achieve a substantial, legitimate, nondiscriminatory interest and there is not a less discriminatory alternative. These examples include:

  • Advertising and recruitment practices that limit the pool of potential applicants based on a protected characteristic, such as relying on word-of-mouth recruitment by a mostly homogenous workforce or using automated employment decision tools that screen out applicants based on a protected characteristic.
  • Employee selection procedures that use tests, criteria, or standards that are not valid, reliable, or job related, or that have an adverse impact on a protected class, such as height, weight, health, physical ability, language, or citizenship requirements.
  • Dress or appearance requirements that interfere with an employee’s expression of their religion, gender identity, or other protected characteristic, such as prohibiting hats, head coverings, religious garb, or articles of faith, or requiring employees to dress in a way that does not affirm their gender identity.

The proposed rule does not preclude affirmative efforts to recruit, hire, or promote members of underrepresented or underserved protected classes, as long as such efforts are consistent with the LAD and do not discriminate against other protected classes.

Finally, the proposed rule states that where there is a conflict between the federal guidelines and the proposed rule, the proposed rule shall control.

The proposed rule was published in the New Jersey Register and is open for public comment until August 2, 2024. A copy of the proposed rule can be accessed here. If you have any questions or concerns about the proposed rule or your rights and obligations under the LAD, please contact your Reed Smith Employment attorneys.