New York City Passes Controversial Law Banning Discrimination Based on Unemployment

Overriding Mayor Michael Bloomberg’s veto, the New York City Council passed a bill on March 12, 2013 amending the New York City Human Rights Law to prohibit discrimination based on an individual’s employment status. The law becomes effective on June 11, 2013.

Unemployment as a Protected Class

The law defines “unemployment” as not having a job, being available for work and seeking employment. The law prohibits New York City employers (who have at least four employees) and employment agencies from basing an employment decision regarding hiring, compensation, or the terms, conditions or privileges of employment on an applicant’s status as unemployed. The law also prohibits employers and employment agencies from advertising a job vacancy in New York City that requires applicants to be currently employed in order to qualify.

Defenses

The law does not prohibit a New York City employer from considering an applicant’s unemployment where there is a substantially job-related reason for doing so or from inquiring into the circumstances surrounding an applicant’s separation from prior employment. Additionally, the law does not prohibit an employer from considering “substantially job-related qualifications” defined as: “a current and valid professional or occupational license; a certificate, registration, permit or other credential; a minimum level of education or training; or a minimum level of professional, occupational or field experience.”

Unlike recently enacted laws in other jurisdictions such as New Jersey, Oregon and the District of Columbia, which have merely made “unemployed-need-not-apply” advertising illegal or provided for limited administrative remedies, this new law is the most far-reaching in the nation. It treats unemployment status in the same manner as other commonly protected classifications such as race, age, national origin, gender, disability and sexual orientation under the city’s comprehensive anti-discrimination law.

The Potential for Disparate Impact Claims

The law also covers practices that lead to a disparate impact. Disparate impact is a theory of liability that may prohibit an employer from using a facially neutral employment policy or practice if it has an adverse impact on members of a protected class. If plaintiffs who sue under a disparate impact theory can prove the employment policy or practice had the effect of disproportionately excluding the protected group, the employer must justify the continued use of the policy or practice as a “business necessity.” Thus, if an employer is using a facially neutral means of recruiting candidates that has a disparate impact on those who are unemployed, they may be liable under the new law.

Potential Liability

Employers who violate the new law will be subject to potentially severe penalties. Individuals who believe they were discriminated against on the basis of their unemployment status may file complaints either with the New York City Commission on Human Rights or in court. Employers found to have violated the law will be subject to liability for injunctive relief, back pay and front pay, compensatory damages, punitive damages, and attorneys’ fees and costs. In addition, the Commission can impose civil penalties of up to $250,000, depending on the severity of the employer’s conduct.

Conclusion

With his veto, Mayor Bloomberg said that he opposed the bill because it might lead to a flood of litigation by disgruntled job seekers. He pointed out that New Jersey’s law allows people to file workplace discrimination lawsuits seeking damages from companies they believe rejected them based on their out-of-work status.

With the passage of this latest law, other cities and states may follow suit. Arent Fox will continue to monitor these developments. Should you have any questions about this law or the topic in general, please contact the authors of this post or any member of the Labor and Employment group.