Last week, overriding Mayor Bloomberg’s veto, the New York City Council passed a bill (Int. No. 814-A) amending the New York City Human Rights Law (“NYC law”) to prohibit discrimination based on a job applicant’s unemployment status. Set to take effect June 11, 2013, the new legislation governs both advertisements for jobs as well as the hiring process.

The NYC law is more far reaching than recently enacted laws in other jurisdictions such as New Jersey, Oregon, and the District of Columbia, which have merely made “unemployedneed- not-apply” advertising illegal, or provided for limited administrative remedies. The NYC law prohibits an employer (who has at least 4 employees) or employment agency from basing an employment decision regarding hiring, compensation or the terms, conditions or privileges of employment on an applicant’s unemployment. Unemployment protection covers those “not having a job, being available for work, and seeking employment.” Additionally, the NYC law prohibits an employer or employment agency from advertising a job vacancy in New York City that requires applicants be currently employed.

Employers are allowed to consider an applicant’s unemployment where there is a substantially job-related reason for doing so and to inquire into the circumstances surrounding an applicant’s separation from prior employment. The law allows employers to consider, and advertise for, “substantially job-related qualifications,” such as the need for an applicant to have a current and valid professional or occupational license, certificate, credentials or minimum levels of education, training or actual job experience; to limit job openings or give priority to internal candidates; and to set compensation and employment terms based on the actual amount of experience. Likewise, the law does not apply to actions taken pursuant to a collective bargaining agreement.

Under the NYC law, an aggrieved job applicant will be able to bring a private action for damages, injunctive relief, punitive damages, and seek reasonable attorney’s fees and costs, or file a charge of discrimination with the New York City Commission on Human Rights. The Commission can order an employer to cease and desist the discriminatory hiring practice, order an employer to hire the prospective employee, and order back and front pay awards, including compensatory damages for emotional distress and other nonmonetary damages. The Commission can also impose civil penalties up to $250,000 per violation, depending on the nature of the employer’s conduct.

Significantly, under the NYC law employers are now susceptible to suit (possibly on a classwide basis) based on allegations that a company’s hiring policies or practices have an overall “disparate impact” on the unemployed. Under the NYC law, if class plaintiffs can prove the employment policy or practice had a disparate impact on the protected group, then the employer must prove as an affirmative defense, that such policy or practice has as its basis a “substantially job-related qualification,” or does not contribute to the disparate impact. Even if the policy is proven to be job-related, a potential plaintiff may then have another chance to prevail if he or she can prove that there is a better-suited “alternative” with “less disparate impact” than the current presumptively legitimate hiring practice or policy, and the employer cannot establish that the plaintiff’s proposed alternative would “not serve [the] entity as well.”  

Thus, the NYC law broadens the scope of employment discrimination protection and exposure in New York City, and employers there are advised to thoroughly review employment policies and practices to ensure compliance. To eliminate or minimize employer liability, employers may consider closely examining recruiting advertisements, and recruiting and hiring materials, practices, and procedures, as well as conducting training for those involved in recruiting and hiring.