New Rules Are Nation’s Most Comprehensive Disparate Impact Liability Regulations

TRENTON – Attorney General Matthew J. Platkin and the Division on Civil Rights (DCR) announced today that DCR has adopted landmark new rules that codify the prohibition against disparate impact discrimination under the New Jersey Law Against Discrimination (LAD), the oldest and strongest state civil rights law in the country.

The rules announced today, which address disparate impact discrimination in employment, housing, places of public accommodation, financial lending, and contracting, are the most comprehensive state-level disparate impact regulations in the country. The rules cement critical state-law civil rights protections just as the Trump Administration has moved to reverse key protections against disparate impact discrimination at the federal level.

The rules make clear the legal standard for disparate impact liability under the LAD, as well as the burdens of proof in disparate impact discrimination claims. Disparate impact discrimination occurs when a seemingly neutral practice or policy of a covered entity unlawfully results in a disproportionately negative effect based on a protected characteristic, even where there is no intent to discriminate.

“The landmark rules we are adopting today further solidify our state’s nation-leading civil rights protections. As the Trump Administration continues its unlawful attempts to dismantle disparate impact protections at the federal level, it’s more important than ever that states take action to protect the civil rights of their residents – and that’s exactly what we’re doing,” said Attorney General Platkin. “These landmark rules, which are the most comprehensive disparate impact rules in the country, make clear that the Law Against Discrimination prohibits discrimination in all of its forms, and they confirm New Jersey’s commitment to upholding the LAD’s protections and continuing our state’s longstanding leadership on civil rights.”

“The LAD safeguards against not only intentional acts of discrimination but also practices and policies that disproportionately affect members of protected groups,” said Yolanda N. Melville, Director of the Division on Civil Rights. “The comprehensive rules announced today provides increased clarity on disparate impact liability and helps improve the way we enforce civil rights in New Jersey.”

Disparate impact discrimination liability is a powerful tool to remedy practices and policies that harm members of historically marginalized communities. These rules will provide New Jerseyans with a better understanding of the LAD’s protections and provide regulated entities – such as housing providers, employers, and places of public accommodation – with a better understanding of their legal obligations.

The rules adopted today confirm that New Jersey’s civil rights laws continue to prohibit disparate impact discrimination – notwithstanding the Trump Administration’s unprecedented attempts to dismantle disparate impact standards at the federal level. Not only are those federal attempts to roll back disparate impact liability standards inconsistent with existing federal law, but they cannot and do not change the standards applicable under state law—standards that today’s landmark rules now codify in New Jersey.

The newly adopted rules codify existing case law and provide examples to clarify the types of practices and policies that could violate the LAD by having a disparate impact on members of a protected class. The LAD prohibits disparate impact discrimination on the basis of race, national origin, religion, gender, gender identity, gender expression, disability, sexual orientation, and other protected characteristics in employment, housing, places of public accommodation, financial lending, and contracting.

The rules provide that disparate impact discrimination is prohibited unless a regulated entity can show that the practice or policy is necessary to achieve a substantial, legitimate, nondiscriminatory interest and there is no less discriminatory alternative that would achieve the same interest.

For example, a less discriminatory alternative to a housing provider’s automatic denial of applicants with a credit score below 600 is a policy to individually assess each applicant’s ability to pay their rent, including by assessing the facts and circumstances of the applicant’s consumer credit history beyond the score alone, along with other information relevant to the applicant’s ability to reliably pay their rent like a current steady job or income. The rules make clear that a practice or policy that harms a protected group may violate the LAD if there is a less discriminatory alternative practice or policy that would achieve the same interest.

The rules adopted today cover how disparate impact liability may apply to many examples of practices and policies in employment, housing, places of public accommodation, financial lending, and contracting, including employer policies and practices regarding the consideration of a person’s criminal history in hiring; language restrictions, citizenship requirements not based on Federal or State law, and dress or appearance requirements in the workplace; housing provider policies and practices regarding the consideration of a person’s consumer credit history or criminal history; housing provider minimum income requirements, financial standards, or income standards; practices and policies maintained by places of public accommodation regarding religious garb or other articles of faith; disciplinary policies or practices of educational institutions; contractor bid selection and recruitment practices and policies; law enforcement patrolling practices and policies; and disciplinary practices and policies of correctional facilities.

The rules adopted today also explains how disparate impact liability applies to the use of artificial intelligence (AI) and other automated decision-making tools in the employment context. The rules adopted today mark the latest action by DCR as part of its Civil Rights and Technology Initiative, which seeks to address the risks of discrimination stemming from the use of AI and other advanced technologies. The rules explain how employers’ use of automated online application tools or facial analysis software in hiring employees may have a disparate impact based on protected characteristics under the LAD.

The adoption was published in the New Jersey Register on December 15, 2025. A copy can be found here, and a fact sheet on disparate impact discrimination claim analysis can be found here. The new rules can be found at N.J.A.C. 13:16. The adopted rules do not create additional liability under the LAD. Rather, the new rules clarify how DCR and the courts analyze disparate impact claims under the LAD.

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The New Jersey Division on Civil Rights enforces the New Jersey Law Against Discrimination, the New Jersey Family Leave Act, and the Fair Chance in Housing Act, and works to prevent, eliminate, and remedy discrimination and bias-based harassment in employment, housing, and places of public accommodation throughout New Jersey.

To find out more information or to file a complaint, go to www.njcivilrights.gov.