On March 13, 2013, overriding a veto by Mayor Michael Bloomberg, the New York City Council passed a bill (Bill 814-A) which amends the New York City Human Rights Law (NYCHRL) to prohibit employers from discriminating against job applicants based on the fact that they are unemployed. The amendment will become effective on June 11, 2013 and will be the nation’s most far-reaching law barring employment-related decisions based on an applicant’s employment status. The following Alert describes the amendment and provides guidance on compliance for employers with operations in New York City.

New York City’s Unemployment Discrimination Law

Prohibited Discrimination

Beginning June 11, 2013, New York City law will prohibit employers that employ four or more persons, including independent contractors, as well as employment agencies and their agents, from basing an employment decision with regard to hiring, compensation or the terms, conditions or privileges of employment on an applicant’s unemployment, unless one of the permitted exceptions applies. The NYCHRL will treat unemployed status as a protected class, on the same footing as race, age, national origin, gender, disability and sexual orientation. Under the NYCHRL, to be considered “unemployed,” an applicant must meet all of the following criteria: (i) not having a job, (ii) being available for work and (iii) seeking employment. Additionally, unless otherwise permitted by city, state or federal law, the NYCHRL will prohibit covered New York City employers from publishing advertisements for any job vacancy in New York City indicating that being currently employed is a requirement or that unemployed individuals will not be considered.

Disparate Impact

Importantly, the NYCHRL imposes liability upon employers that adopt a policy or practice that results in a disproportionate adverse impact on unemployed individuals, notwithstanding the fact that such policy or practice may be neutral on its face regarding employment status. Employers faced with such a claim will have the burden of proving that the challenged policy or practice was substantially job related or did not contribute to disparate impact upon the unemployed. In addition, the NYCHRL permits an applicant to argue that an alternative policy or practice was available which would have had less disparate impact. Facing such a claim, the employer would then have the burden of proving that the alternative policy or practice would not serve the employer as well as the policy or practice which is the subject of the claim.

Exceptions to the Unemployment Discrimination Law

The NYCHRL will allow an employer to consider an applicant’s present or past employment status for the following purposes:

  • When making inquiries regarding the circumstances surrounding an applicant’s separation from previous employment;
  • Where there is a substantially job-related reason for doing so (such as possessing a valid professional license, certificate, registration, permit or other credential or having a minimum level of education, training or experience);
  • Where only the employer’s current employees are considered or given priority for vacancies or promotions; and
  • Where compensation or terms or conditions of employment are tied to an individual’s actual experience.  

The NYCHRL’s prohibition against discrimination based upon unemployment will not apply to actions taken pursuant to a collective bargaining agreement or by certain public agencies, including the mayor’s office.  

Penalties

Under the NYCHRL, an individual who believes he or she has been discriminated against may either file a complaint with the New York City Commission on Human Rights (the Commission) or file a civil suit. If the applicant files a claim with the Commission and the Commission finds that the employer engaged in prohibited discrimination, the Commission may issue a cease and desist order, require that the employer hire the applicant, award front and back pay and/or impose fines up to $250,000. In the context of a civil suit, a court may award a successful plaintiff damages (including punitive damages), injunctive relief and attorneys’ fees and costs. New York City employers should note that the NYCHRL also has a whistleblower provision and will therefore protect anyone who opposes unlawful discrimination, files a complaint or commences a civil action, or otherwise assists the Commission in an investigation.

Other Unemployment Discrimination Laws

New Jersey, Oregon and the District of Columbia also have laws prohibiting discrimination against the unemployed. However, New York City’s law goes further in that it provides a right to bring a private action, while the laws in New Jersey, Oregon and the District of Columbia provide only for enforcement by state or district regulatory bodies. Currently, there is no federal statute prohibiting discrimination on the basis of unemployment, although Congress has considered such legislation. Other states are considering or have considered and rejected, similar laws protecting the unemployed, including Arizona, California, Colorado, Connecticut, Florida, Indiana, Iowa, Maryland, Michigan, Minnesota, Nebraska, Ohio, Pennsylvania, South Dakota, Tennessee and Wisconsin.

Complying with the NYCHRL

Employers with operations in New York City should consider implementing preventive measures in light of the NYCHRL. Such measures should include the following:

  • Review employment advertisements, applications and hiring procedures to ensure that they do not require applicants to be currently employed;  
  • Revise discrimination policies and other materials to include unemployment as a protected classification;  
  • Train human resources personnel, individuals who represent the company in job interviews and third-party recruiters acting on the employer’s behalf to avoid discussing unemployment during interviews unless there is a permissible jobrelated reason for doing so; and  
  • Inform headhunters and recruiting firms located outside of New York City in writing not to discriminate against or exclude applicants who are unemployed.  

Although the new law does not take effect until June 11, 2013, employers in New York City would be well advised to start training their employees on the law’s requirements now, to diminish the risk of errors after the law comes into force.