New York City Council Overrides Mayor Bloomberg’s Veto and Passes Law Prohibiting “Unemployment” Discrimination

New York City will soon become one of only a handful of jurisdictions prohibiting discrimination on the basis of “unemployment” status and, in doing so, has adopted arguably the most stringent such law in the United States. As we previously reported our February 2013 issue, the New York City Council recently passed Bill No. 814-A that would modify the New York City Human Rights Law and create a private right of action prohibiting discrimination based on unemployment status. The bill was then vetoed by Mayor Michael Bloomberg, who called it a “misguided attempt to further protect the unemployed from discrimination” and stated that the bill “merely serves to add litigation, not jobs.” Despite Mayor Bloomberg’s strong objections, on March 13, 2013, the City Council overwhelmingly voted 43-4 in favor of overriding his veto. As a result, the bill goes into effect 90 days after final passage, or Monday, June 11, 2013.

The new law amends the New York City Human Rights Law, N.Y. Admin. Code § 8-102, and applies to all non-public employers with four or more employees, all employment agencies, and their agents (Covered Entities). Under the new law, Covered Entities are prohibited from:

• Basing any employment decision with regard to hiring, compensation, or the terms, conditions, or privileges of employment, on an applicant’s unemployment; and
• Advertising any job vacancy within New York City that states or indicates that being currently employed is a requirement or qualification for the job, or states that the employer will not consider individuals for employment based on their unemployment.

In addition, because “unemployment” status is incorporated under the existing New York City Human Rights Law, the new law also forbids retaliation against any person who opposes “unemployment” discrimination. The terms “unemployed” and “unemployment” are defined as “not having a job, being available for work, and seeking employment.”

Under the existing New York City Human Rights Law, job applicants will now have a private right of action to redress alleged violations and may recover compensatory damages, punitive damages (without a statutory cap as under Title VII of the Civil Rights Act), and attorneys’ fees and costs. The law does contain several notable exceptions, including that:

• Covered Entities may consider an applicant’s unemployment where there is a substantially job-related reason for doing so;
• Covered Entities may inquire into the circumstances surrounding an applicant’s separation from prior employment;
• Covered Entities may consider and advertise for any substantially job-related qualifications, including licenses, certificates, registrations, permits, minimum levels of education or training, or minimal professional, occupational, or field experience;
• Covered Entities may limit or give priority in hiring and compensation decisions to applicants who are currently employed by the employer; and
• Covered Entities may set compensation or terms or conditions of employment based on a person’s actual amount of experience.

However, because these exceptions are fact-specific and may often involve issues of credibility, and given prior case law involving existing classes protected by the New York City Human Rights Law, it may be challenging for employers to obtain summary judgment on “unemployment” discrimination claims.

Similar to other New York City Human Rights Law discrimination claims, the amended law also creates an explicit cause of action whereby a plaintiff may allege that a Covered Entity’s policy or practice creates a disparate impact that unlawfully affects the unemployed. Although the law permits a Covered Entity to plead as an affirmative defense that its policy or practice is based upon a substantially job-related qualification or does not contribute to the disparate impact, the plaintiff is not required to demonstrate the specific policy or practice resulting in the alleged disparate impact. The plaintiff may produce substantial evidence that an alternative policy or practice with less disparate impact is available.

To date, New Jersey, Oregon, and Chicago have passed laws prohibiting job postings or advertisements that limit applications by the unemployed, and the District of Columbia prohibits such advertisements and also bans employers from considering “unemployment” status when making hiring decisions. Unlike the District of Columbia law, however, New York City’s law creates a private right of action to redress such alleged discrimination, making it arguably the broadest in the country. Despite the obvious impact that the law will have upon employers and employment agencies operating in New York City, the City Council justified the measure by noting that the unemployed are often “screened out” of job opportunities and unemployment status disproportionately affects communities of color and military veterans. Although a federal measure proposed by President Barack Obama remains unlikely to pass, the New York City law could compel other states and municipalities to join the small but growing ranks of jurisdictions that have added “unemployment” status to existing anti-discrimination laws and statutes. At least 15 states have proposed similar bills, and California Governor Jerry Brown vetoed such a bill last year.

Prior to the effective date of June 11, 2013, all covered employers and employment agencies doing business in New York City should take immediate steps to ensure that their hiring practices and advertising fully comply with the new anti-discrimination law. To help avoid litigation, employers and employment agencies in New York City should omit any reference to “unemployment” status in advertising materials and job application forms. Despite the available exceptions, “unemployment” status should be avoided during job interviews and the hiring process, just as New York City employers should avoid any discussion with job applicants regarding their race, gender, national origin, age, disability, marital status, citizenship status, and sexual orientation. Employers may also wish to consider exhausting all internal candidates for job openings prior to public postings, because internal hires would likely obviate any potential liability.