By Grace Boudjalis
BLOG OVERVIEW: Disparate impact discrimination occurs when neutral employment practices disproportionately harm a protected group, and New Jersey codified its rules on these claims (N.J.A.C. 13:16) effective December 15, 2025. The Division on Civil Rights’ March 2026 FAQs confirm the Law Against Discrimination (LAD) applies broadly to selection procedures, including criminal history exclusions, driver’s license requirements, English-only policies, and automated decision-making tools, with employers responsible for vendor-supplied tools regardless of who developed them.
In March 2026, New Jersey’s Division on Civil Rights (DCR) released a Frequently Asked Questions (FAQs) document to accompany its Rules Pertaining to Disparate Impact Discrimination (Rules; N.J.A.C. 13:16), effective December 15, 2025. As covered in a recent blog post, New Jersey is one of four states that has codified disparate impact protections as the Trump Administration scales back federal enforcement. The FAQs offer useful guidance on a question many employers are now asking: Which selection procedures and practices are covered, and what does compliance actually require?
Applicability to Selection Procedures and Practices
The FAQs confirm that New Jersey’s Law Against Discrimination (LAD) applies broadly to a range of employment selection procedures and identify several examples of practices that may produce unlawful disparate impact, including but not limited to criminal history exclusions, driver’s license requirements, English-only language policies, or citizenship requirements not based on federal or state law. The Rules also specifically reference recruiting, pre-employment screening, and interviews as practices that may similarly disadvantage protected classes.
Automated decision-making tools, which are broadly defined to include any tool that generates scores, rankings, predictions, or recommendations used in recruiting, screening, interviewing, hiring, promotion, or compensation decisions are also flagged by the FAQs as a possible source of unlawful disparate impact if not adequately tested. The accompanying Rules make it clear that employers remain responsible for the tools they use, regardless of who developed them.
It is critical for employers to note that no selection procedure is exempt from scrutiny simply because it is familiar, widely used, or vendor-supplied.
Understanding the Subtle Shift in the Burden-Shifting Framework
New Jersey's disparate impact rules mirror the three-step burden-shifting structure from Title VII of the Civil Rights Act (Title VII), with one notable exception. As with Title VII, the complainant must show that a practice or policy disproportionately harms a protected group. If they do, the burden shifts to the employer to prove that the practice is job-related and consistent with a legitimate business goal; this must be supported by actual evidence, such as criterion-related validation, not as an assumption or by convention. If the employer is able to do so, the burden shifts back to the complainant to identify a less discriminatory alternative (the third step).
However, New Jersey’s law diverges from Title VII in that it sets a lower bar for the third step. Under Title VII, a proposed alternative generally must be equally effective as the challenged practice—comparable in validity, cost, and operational efficiency. Under LAD, this bar is lowered across all three dimensions of validity, cost, and operational efficiency. The final rule requires only that the alternative “achieve the same interest,” dropping the “equally effective” language seen in the proposed version. Employers who have validated their selection practices under Title VII standards should not assume LAD compliance follows automatically. The alternative practice threshold is meaningfully different.
Recommended Employer Actions
- Review your selection tools. Take stock of every tool and practice used across the hiring and employment lifecycle, from job postings and resume screening to interviews, assessments, and promotion criteria. This includes those that have been in place for years as well as any newer artificial intelligence-powered tools your organization has adopted or is considering.
- Monitor your data for disparities. Adverse impact analyses of your selection procedures and practices can identify whether there are statistically significant differences in outcomes across race, gender, disability, national origin, or other protected groups. Regular monitoring gives employers the best chance to catch and address problems before a complaint is filed.
- Consider validation for tools or practices that produce adverse impact. New Jersey’s rules incorporate the Uniform Guidelines on Employee Selection Procedures (UGESP), which require that any practice producing adverse impact be supported by empirical evidence of job-relatedness and business necessity. Validation research provides that documentation.
While the U.S. Equal Employment Opportunity Commission has been directed to deprioritize disparate-impact-only cases, employers operating in New Jersey should be aware that the DCR retains full authority to investigate and enforce disparate impact claims under LAD, and the new Rules and FAQs signal that it intends to do so. Employers in New Jersey who have not recently reviewed their selection procedures or practices should consider doing so promptly.
DCI will continue to monitor developments in state disparate impact regulations. Sign up to receive alerts and information about upcoming webinars here.
