Even if Unintended, Businesses Can Be Liable for Discrimination in New York and New Jersey

Countering a Trump Executive Order issued last spring, New York and New Jersey have each declared that the states’ laws against discrimination prohibit both overt, intentional discrimination, and behaviors that have the effect of discriminating against individuals based on a protected characteristic, even without proof of intent.  Known as “disparate impact” theory, this second level of anti-discrimination protection addresses business decisions that effectively treat one group less favorably, where the circumstances suggest that bias was an underlying factor.

Trump Administration Actions

In April 2025, the Trump Administration directed federal government agencies to deprioritize consideration of discrimination claims that are predicated on the “disparate impact” theory.  As we noted in this LEL blog article at the time, the president could not outright prohibit employees from relying on this theory because in 1991, Congress literally wrote this method of proof into Title VII of the Civil Rights Act, which is the foundational prohibition against discrimination in U.S. workplaces.

Nevertheless, in the months since the Trump Administration’s Executive Order, the Equal Employment Opportunity Commission is reported to have dismissed all complaints pending before it based on a disparate impact theory of liability.  That report is based on an internal, leaked memo cited by the Associate Press in September 2025.  In December 2025, the Department of Justice finalized regulations that specifically removed all references to disparate impact under a different section of the Civil Rights Act (Title VI).  Title VI prohibits discrimination in federal government grants, loans, and contracts.  Because the disparate impact theory of proof had not been legislatively incorporated into Title VI, the administration could write the theory out of the federal regulations applicable to government contractors and grant recipients.

New York and New Jersey Respond

States have the legal authority to pass laws and adopt regulations that are more protective of individual rights than the provisions of federal law.  In recent months, both New York and New Jersey have done just that.

New York amended its own Human Rights Law to add a new section expressly providing that discrimination may be proven if a practice actually or predictably results in a disparate impact on individuals because of their membership in a protected class unless the practice:

• Is job related for the position in question and consistent with business necessity and
• that business necessity cannot be served by another practice that has a less discriminatory effect.

In other words, unless an employer can show a reasonably good business reason why it needs to continue a selection practice that has been shown to negatively impact a particular protected class (such as women, black or Latina people, or individuals with disabilities), the practice can be found to be discriminatory. The New York Law took effect December 19, 2025.

Paralleling the legislative action taken by New York State, New Jersey’s Division on Civil Rights (DCR) issued new rules effective December 15, 2025, under the state’s Law Against Discrimination that expressly recognize disparate impact theory as a means of proving a claim of discrimination.  The rules now provide that:

• facially neutral policies that are shown by empirical evidence to have a disparate impact on members of a protected class will be considered unlawful discrimination under state law,
• unless (i) they are show to be necessary to achieve a substantial, legitimate, nondiscriminatory interest and (ii) there is no less discriminatory alternative that would achieve the same interest.

The new rules apply not only to employment claims, but also to claims of discrimination in public accommodations and contracting.

Potential Scope of Disparate Impact Analysis

The New Jersey DCR’s rules warn that the following employment practices could potentially result in an unlawful disparate impact on members of a protected class:

• language restrictions such as English proficiency or English-only rules;
• citizenship requirements;
• height or weight requirements;
• health or physical ability requirements;
• dress or appearance requirements including regarding men’s hair length or facial hair or that proscribe employees from affirming their gender identity;
• driver’s license requirements;
• dress code or break period requirements that impact pregnancy or related conditions; and
• criminal history exclusions that fail to consider relevance and rehabilitation.

The DCR’s new rules also address selection decisions in hiring processes that are driven by AI (“automated employment decision tools”), recognizing that such tools may have a disparate impact on applicants in various ways if they have not been adequately tested.

Takeaways for Employers

The lesson for employers in New York and New Jersey is less about doing something new, and more about continuing what should be long-standing practices.  Given that disparate impact theory has been part of Title VII for the past 35 years, and it was judicially recognized by the courts even prior to that, this method of proving discrimination is far from new.  Employees in New York and New Jersey have multiple avenues for pursuing legal claims of discrimination, and the state and local enforcement agencies have made clear that they will accept and consider disparate impact claims.  Employers should therefore remain vigilant as to the impact of seemingly neutral policies and practices on various protected classes, and take seriously employee concerns that a particular policy or practice subjects individuals to less favorable treatment based on their protected characteristic.

By Tracey I. Levy