On December 15, 2025, New Jersey Attorney General Matthew J. Platkin and the state’s Division on Civil Rights (DCR) issued sweeping new rules regarding disparate impact discrimination. Announcing these new rules as “the most comprehensive state-level disparate impact regulations in the country,” Platkin and DCR made clear that they will continue to aggressively investigate and pursue such claims “just as the Trump Administration has moved to reverse key protections against disparate impact discrimination at the federal level.”
Rather than introducing new standards or expanding existing ones, the “Rules Pertaining to Disparate Impact Discrimination,” New Jersey Administrative Code (N.J.A.C.) 13:16, instead codify and clarify current jurisprudence on the interpretation and application of New Jersey’s Law Against Discrimination (LAD) to disparate impact claims. Employers in the state need to be cognizant of these regulations and either modify existing policies and practices or adopt new ones to insulate them from potential exposure, no matter how much they may believe they do not engage in prohibited discrimination. Here is what employers need to know and do to minimize compliance problems and avoid discriminatory conduct based on disparate impact.
Understanding Disparate Impact
In contrast to actions or decisions made with discriminatory intent, disparate impact discrimination occurs when facially neutral practices and policies have a disproportionately negative effect on members of a protected class. For example, an employer policy prohibiting all head coverings might seem neutral on its face, but enforcing such a policy on employees whose religion compels them to wear hijabs, turbans, or yarmulkes will clearly have a disparate and discriminatory impact on those individuals.
As it is arguably the most expansive and robust anti-discrimination law in the country, the LAD protects numerous characteristics beyond those covered by federal law, including race, national origin, religion, gender, gender identity and expression, disability, sexual orientation, age, and source of lawful income. Accordingly, as a foundational aspect of their anti-discrimination efforts, employers must consider these broader protections when evaluating their hiring and employment policies and practices.
New Jersey’s Judicially Derived Three-Step Burden-Shifting Framework Now Codified
In disparate impact cases, New Jersey courts have long used a three-step burden-shifting approach when evaluating claims and defenses. The first burden is on the plaintiff to establish that a neutral employment or hiring policy produces a disproportionate adverse effect on a protected group. Such impact is typically shown through statistical or empirical evidence.
If the complainant/plaintiff meets this initial burden, the employer must then demonstrate that the challenged practice is necessary to achieve a substantial, legitimate, nondiscriminatory interest. The regulations clarify that “whether a practice or policy is necessary to achieve a substantial, legitimate, nondiscriminatory interest is equivalent to whether the practice or policy is job related and consistent with legitimate business necessity.”
Even if the employer successfully justifies the practice under the foregoing standard, the complainant can still prevail by identifying “a less discriminatory alternative practice or policy that achieves the substantial, legitimate, nondiscriminatory interest.” Notably, the final rules removed proposed language requiring alternatives to be “equally effective,” meaning employers may face liability even when less discriminatory alternatives require more time, labor, or resources.
High-Risk Employment Practices
The 93-page document containing the new regulations references several specific employment practices as worthy of heightened scrutiny. It notes that criminal history screens and blanket policies that automatically exclude applicants with criminal records often disproportionately affect certain protected groups. Credit checks present similar concerns for DCR. Physical requirements, English-only policies, and rigid dress codes also raise red flags for regulators. Employers should carefully evaluate whether such requirements are truly necessary for the position in question and whether more flexible alternatives exist.
The Increasing Use of AI in Hiring Is Also in the Disparate Impact Spotlight
A prominent feature of the new regulations addresses artificial intelligence and automated decision-making tools that have rapidly proliferated in hiring processes. The rules state that use of such tools “that [have] not been adequately tested and shown to not adversely affect people in a protected class before [their] use may have a disparate impact on members of that protected class.”
DCR provides an illustrative example of this situation: an AI system trained on a company’s predominantly white and male existing workforce may systematically favor candidates who resemble current employees, producing discriminatory outcomes with no discriminatory intent. Employers using such tools must take reasonable steps to carefully evaluate their design and testing, and cannot simply blame vendors if discrimination results. In other words, employers do not get a free pass just because a machine engaged in prohibited discrimination rather than a human.
Next Steps for New Jersey Employers
New Jersey employers should take these regulations seriously. Working with experienced employment counsel is essential. Your company’s attorney can help you audit your company’s existing employment policies for potential disparate impact, paying particular attention to criminal history checks, credit requirements, physical standards, language policies, and the adoption of AI and other automated decision-making tools. Your counsel can also provide guidance on how best to document your evaluation process and help to evaluate whether other, less-discriminatory alternatives are available to achieve your business objectives.
If you have questions about these new rules or regarding disparate impact discrimination generally, please contact Barry Capp at Ansell.Law.