Proposed Rule Articulates Standards for Disparate Impact Discrimination in Employment, Housing, Places of Public Accommodation, Credit, and Contracting

TRENTON – Attorney General Matthew J. Platkin and the Division on Civil Rights (DCR) announced today that DCR has proposed a new rule that describes and clarifies the prohibitions against disparate impact discrimination under the New Jersey Law Against Discrimination (LAD). The proposed new rule, which largely codifies existing state and federal case law, provides examples of policies and practices that may result in a disparate impact on members of a protected class under the LAD.

The LAD prohibits not only conduct that expressly treats people differently based on their membership in a protected class, but also policies or practices that have a negative effect on members of a protected class. For example, an employer’s policy prohibiting employees from wearing hats or head coverings at work may have a disparate impact based on religion because it would negatively affect those who wear yarmulkes, hijabs, turbans, or other religious garb or articles of faith. That policy may violate the LAD even if the employer does not intend to discriminate, and even if the policy does not on its face single out any particular religion for different treatment.

This form of discrimination is known as disparate impact discrimination. Under the LAD, policies or practices that are neutral on their face – for example, policies or practices that do not single out a protected class for different treatment – may violate the LAD if they have a disparate impact on members of a protected class.

If adopted, the proposed rule announced today would make clear the legal standard for disparate impact discrimination, as well as the burdens of proof in disparate impact discrimination claims, in the contexts of employment, housing, places of public accommodation, financial lending, and contracting.

“It’s important to understand that a policy or practice doesn’t need malicious intent to have a harmful impact,” said Attorney General Platkin. “We no longer live in a time where ‘I meant well’ or ‘I didn’t think’ are accepted excuses for denying equal opportunity to anyone. This rule will help make New Jersey a more equitable and welcoming state for all of our residents.”

“Our state’s landmark civil rights law doesn’t just prohibit conduct that intentionally discriminates, or conduct that singles out a particular group for different treatment. It also prohibits facially neutral policies or practices that result in an unlawful disparate impact based on a person’s membership in a protected class,” said Sundeep Iyer, Director of the Division on Civil Rights. “The proposed rule announced today will give members of the public and regulated entities much greater clarity on how disparate impact liability works and the limits it imposes. If adopted, it will be among the most comprehensive in the nation and will provide critical protections for the civil rights of all New Jerseyans.”

The proposed rule covers how disparate impact liability may apply to many examples of policies and practices in employment, housing, places of public accommodation, financial lending, and contracting, including employer policies and practices regarding the consideration of a person’s prior criminal history in employment; automated employment decision tools; language restrictions, citizenship requirements, and dress or appearance requirements in the workplace; housing provider policies and practices regarding the consideration of a person’s consumer credit history or prior criminal history; housing provider minimum income requirements, financial standards, or income standards; policies or practices maintained by places of public accommodation regarding religious garb or other articles of faith; and disciplinary policies or practices of educational institutions.

The proposed rule was published today in the New Jersey Register. A copy is available here. The rule is subject to a notice and comment period, which will remain open for the next 60 days. All comments on the proposed rules are due on or before August 2, 2024. Comments can be submitted electronically at regulations@njcivilrights.gov.

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DCR is the state agency responsible for preventing and eliminating discrimination and bias-based harassment in employment, housing, and places of public accommodation (e.g., places open to the public like schools, businesses, hospitals, etc.) by enforcing the New Jersey Law Against Discrimination (LAD), the Fair Chance in Housing Act (FCHA), and the New Jersey Family Leave Act (NJFLA).

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