New Jersey Attorney General Matthew J. Platkin and the New Jersey Division on Civil Rights have announced
a proposed rule describing and clarifying the prohibitions against
disparate impact discrimination under the New Jersey Law Against
Discrimination (LAD). The proposed rule
clarifies the legal standard for disparate impact discrimination and
the burdens of proof in claims in the housing, financial lending,
employment, places of public accommodation, and contracting.
The proposed rule largely codifies existing state and federal case law
and provides examples of policies and practices that may result in a
disparate impact on members of a protected class under the LAD.
New Jersey’s proposed LAD prohibits conduct that expressly treats people
differently based on their membership in a protected class and policies
or practices that have a negative impact on members of a protected
class. Under the LAD, even policies or practices that are neutral on
their face and that do not single out a protected class for different
treatment may violate the LAD if they have a disparate impact on
protected class members.
Proposed rule
The
proposed rule is intended to clarify that the LAD prohibits practices or
policies that result in a disproportionately negative effect on members
of a protected class, even if such practices or policies are not
intended to discriminate, unless it is shown that such are necessary to
achieve a substantial, legitimate, nondiscriminatory interest and there
is no less discriminatory, equally effective alternative that would
achieve the same interest. The proposed new rule provides the standard
for determining whether a practice or policy is unlawfully
discriminatory, and the burden-shifting framework applied to the
standard for disparate impact claims arising in specific contexts. The
proposed rule covers how liability for disparate impact may apply to
many examples of policies and practices.
Subchapter 4 regards housing and housing financial assistance. A proposed burden-shifting framework putting the burden of showing that
there is not a less discriminatory, equally effective alternative means
of achieving the housing provider’s or lender’s substantial, legitimate,
nondiscriminatory interest on the respondent at the final stage of the
burden-shifting test. If the complainant can show the
practice or policy results in a disparate impact on members of a
protected class, the respondent must show that the
challenged practice or policy is necessary to achieve a substantial,
legitimate, nondiscriminatory interest and that there is not a less
discriminatory, equally effective alternative means of achieving that.The respondent may,
but is not required to, identify what policy or practice options it
considered and how and why it decided to select the policy or practice.
Here are some
examples of policies and practices that may have an unlawful disparate
impact:
- Minimum income
requirements.
- Financial standards, or income standards that have a
disparate impact on people seeking to pay rent with forms of government
low-income rental assistance; Excluding applicants based on criminal or
credit history.
- Automatically refusing all rental housing applicants who
have no credit score or a score below a minimum threshold.
- Requiring
a renter or buyer to violate or forgo a sincerely held religious
practice or observance.
This framework aligns
with how New Jersey courts and the New Jersey Division of Civil Rights
have applied disparate impact liability. Placing the
burden on the respondent to prove no less discriminatory alternatives
exist is appropriate “in light of the particularly stark information
asymmetry between housing providers and victims of housing discrimination,
as housing providers are far more likely to have access to information
about the challenged practice or policy, their interests, what potential
alternative practices or policies are available, and whether an
alternative could serve their interests while having less discriminatory
effects.” Increased use of tenant
screening reports and online platforms in housing sale and rental
markets have made it especially difficult for complainants to access
information about specific housing providers’ policies and practices,
and that there is a significant imbalance in access to
legal representation in housing cases, as landlords have legal
representation in 90% of housing cases involving eviction, while
less than 10% of renters have legal representation in such cases.
The proposed rule also would apply to the practices and policies of real estate brokers,
agents, salespersons, property management, and lending institutions. For
lending institutions, this includes making available or unavailable the
provision of housing financial assistance, establishing financial
assistance terms or conditions, and the creation and application of
criteria requirements, procedures, or standards for the review and
approval of real estate transactions, with the exception of
evaluations of an applicant’s consumer credit history where required for
a federal loan product or formula or practices or policies that enforce
federal guidelines.
Read the June 4, 2024 VitalLaw article.
Read the June 14, 2024 Fox Rothschild LLP article.
