The New Jersey Division on Civil Rights (DCR) has officially adopted new regulations that codify the legal standards for disparate impact discrimination under the New Jersey Law Against Discrimination (LAD). Effective December 15, 2025, these rules (N.J.A.C. 13:16) formalize long-standing case law while signaling a renewed enforcement focus on modern employment practices.
Understanding Disparate Impact
Disparate impact discrimination occurs when a facially neutral policy or practice appears unbiased and is applied equally to everyone, resulting in a disproportionately negative effect on members of a protected class. Crucially, unlike disparate treatment claims, disparate impact does not require proof of discriminatory intent.
While New Jersey courts have long recognized this theory of liability, these new regulations provide a clear, codified framework for how such claims will be analyzed by the DCR using a specific three-step burden-shifting process for disparate impact claims in the employment context:
- Prima Facie Case. The complainant (employee or applicant) must demonstrate, using empirical evidence, that a specific practice or policy causes a disparate impact on a protected group.
- Employer Justification. The burden then shifts to the employer to prove that the challenged practice is “necessary to achieve a substantial, legitimate, nondiscriminatory interest”.
- Less Discriminatory Alternative. Even if the employer meets their burden, the complainant can still prevail by showing that a less discriminatory alternative exists that would achieve the same interest.
Areas of Heightened Scrutiny
The regulations explicitly identify several common employment practices that will face increased scrutiny for potential disparate impact:
- Artificial Intelligence (AI) & Automated Tools. Tools used for resume screening or video analysis can inadvertently filter out protected groups (e.g., relying on data from a homogenous current workforce to score applicants).
- Criminal History Checks. Blanket bans on hiring individuals with criminal records are likely to be viewed as discriminatory. Individualized assessments are strongly preferred.
- Credit Checks. Using credit history as a screening tool may disproportionately affect certain demographic groups.
- Language & Physical Requirements. “English-only” rules or rigid physical mandates (e.g., standing limits) must be strictly tied to job duties.
Next Steps for Employers
With these regulations now in effect, New Jersey employers should proactively audit their policies to minimize liability risk.
- Audit Automated Hiring Tools: If you use AI or algorithmic software for recruiting, require your vendors to provide data on adverse impact testing.
- Review “Blanket” Policies: Eliminate rigid, across-the-board exclusions (such as “no criminal record” policies) in favor of individualized review processes.
- Evaluate Job Descriptions: Ensure that all physical, educational, and language requirements are absolutely necessary for the performance of the specific role.
- Document “Substantial Interest”: Be prepared to articulate and document the specific business reasons justifying your screening criteria.
