NJ’s New Disparate Impact Rules Reinforce Employers’ Need for Antidiscrimination Vigilance

Takeaways

• The new rules codify existing obligations under the state antidiscrimination law and clarify that policies or practices resulting in a disparate impact to protected classes are discriminatory and prohibited.
• Employers should proactively audit, validate, and document their practices, particularly with respect to the use of AI and other applicant screening tools, even if they are used through a third party. 
• Robust governance, vendor oversight, and continuous monitoring are essential for workplaces governed by the NJLAD.

Related links

• AG Platkin Announces Division on Civil Rights Adopts Landmark Rules on Disparate Impact Discrimination Under New Jersey Law (12.27.25 press release)
• New Jersey Administrative Code (N.J.A.C.) 13:16

Article

The New Jersey Division on Civil Rights (DCR) adopted new regulations re-enforcing the New Jersey Law Against Discrimination’s (NJLAD) prohibition on employment practices or policies that disproportionately harm a protected group, even absent discriminatory intent.

The New Jersey rules come following President Donald Trump’s executive order calling for an end to theories of disparate impact and ordering federal agencies to stop enforcement of antidiscrimination laws based on such theories. In response to the executive order, the Department of Justice issued a final rule eliminating liability for disparate impact discrimination under Title VII of the Civil Rights Act of 1964.

Who Is Covered? What Practices Are Affected?

The rules, adopted on Dec. 15, 2025, apply to all employers operating in New Jersey and are otherwise subject to the NJLAD, including multistate employers with New Jersey-based roles or applicants.

The regulations confirm the NJLAD’s prohibition of facially neutral employment policies or practices that disproportionately harm a protected class (race, color, national origin, ancestry, religion, age, disability, sex, pregnancy, sexual orientation, gender identity/expression, marital status, familial status, and military status), even absent discriminatory intent. The rules allow any aggrieved individual, the attorney general, the director of the DCR, the commissioner of the Department of Labor and Workforce Development, the commissioner of the Department of Education, or any other person or organization authorized by the DCR’s Rules of Practice and Procedure or the NJLAD to bring a complaint alleging disparate impact discrimination to the DCR or in Superior Court.

Legal Standard: Burden-Shifting Framework

The rules clarify that disparate impact claims brought pursuant to the NJLAD still follow the typical burden-shifting framework for NJLAD discrimination claims.

Under that framework, a complainant must first provide evidence showing a specific policy or practice causes a statistically significant adverse effect on a protected group. Once the complainant establishes the prima facie case, the employer must show “the challenged practice or policy is necessary to achieve a substantial, legitimate, nondiscriminatory interest.” The employer can achieve this by showing the practice or policy is job-related and consistent with business necessity for the role(s) at issue. The complainant must then show there is a less discriminatory alternative means of achieving the stated non-discriminatory interest.

The parties must provide empirical, non-hypothetical, and non-speculative evidence to support their positions. Relevant evidence includes, but is not limited to:

• National, state, and local statistics; 
• Applicant or employee files or data; 
• Demographic or census data; 
• Labor market data; and 
• Demographic or census data.

Rules Provide Examples of Policies Resulting in Disparate Impact

The rules clarify that the ban on disparate impact discrimination applies for pre-employment practices, employee selection procedures, and practices or policies for employees.

Some examples of policies or practices that may lead to a disparate impact include, but are not limited to:

• Language restrictions;
• Citizenship requirements; 
• Height or weight requirements;
• Health or physical ability requirements; and 
• Driver’s license requirements.

Additionally, the rules clarify that an employment practice or policy of excluding from consideration applicants based on criminal history information may have a disparate impact based on race, national origin, or ancestry.

Although “artificial intelligence” (AI) is not explicitly referenced, the rules make clear that use of an automated employment decision tool that limits or screens out applicants based on characteristics that may be associated with a protected class may have a disparate impact on applicants.

Next Steps

Despite the issuance of the new rules, employer obligations under the NJLAD have not changed. Employers should continue ensuring that:

• Any tests or assessments used in hiring or promotion are directly related to job requirements and are regularly validated. 
   
• Policies that appear neutral (such as background checks, credential requirements, or attendance rules) are reviewed for potential unintended bias. 
   
• Human resource and management personnel are trained on compliance principles and updating internal policies to ensure consistent application. 
   
• Thorough documentation of business justifications, validation efforts, and the consideration of alternatives for any policies or practices requiring certain criteria for positions are maintained. 
   
• Regular audits are scheduled.

Organizations using AI or vendor-supplied tools should require vendors to disclose how their models work, provide any validation-related documentation, identify what data is used, and describe what steps are taken to test for and mitigate bias. Additionally, employers may consider testing these tools on their own workforce data under privilege.

Finally, employers should be prepared to adjust practices as needed to ensure compliance and promote equity.

Jackson Lewis attorneys can assist with any aspect of compliance, including evaluating employment assessments, and answer any questions regarding the rules’ provisions or applicability. For assistance, please contact your Jackson Lewis attorney.