The Attorney General of New Jersey yesterday announced a proposed rule that clarifies prohibitions against disparate impact discrimination, including financial situations, and outlines how neutral policies can still result in unlawful discrimination.
Existing state law in New Jersey against discrimination prohibits not only explicit discrimination but also policies that, while neutral on their face, disproportionately affect members of a protected class. For instance, an employer’s policy banning head coverings could negatively impact individuals who wear yarmulkes, hijabs, or turbans for religious reasons. Such a policy may violate the law even if there is no intent to discriminate.
Here are some specific situations that the proposed rule will address:
- Employment Practices: Policies regarding criminal history checks and the use of automated employment decision tools (AEDTs) must be scrutinized. The rule emphasizes that these tools should not disproportionately exclude candidates from protected classes unless they are necessary to achieve a substantial, legitimate, nondiscriminatory interest.
- Credit History: Housing providers and financial institutions must be cautious about using consumer credit history as a criterion. The rule highlights that such practices can have a disparate impact on racial and ethnic minorities, who historically have lower credit scores.
- Minimum Income Requirements: Policies that set minimum income standards for housing applicants must be applied proportionally to the portion of rent paid by the tenant, not the entire rental amount, to avoid disparate impacts on low-income individuals.
The proposed rule clarifies the legal standards for disparate impact claims and the burdens of proof required. In employment, housing, public accommodations, financial lending, and contracting, the rule outlines that:
- Complainants must show that a policy has a disparate impact on a protected class.
- Respondents must then demonstrate that the policy is necessary to achieve a substantial, legitimate, nondiscriminatory interest.
- If the respondent meets this burden, the complainant can still prevail by showing that there is a less discriminatory, equally effective alternative.
The proposed rule is open for public comment until August 2. Comments can be submitted electronically to regulations@njcivilrights.gov.
