legal business concepts that allow organizations to apply employment criteria that affect a group of people more than another, based on the business needs of the organization.
A business necessity is a business need or purpose that must be fulfilled to ensure the optimal operation or goal achievement of an organization. Business necessities are mostly applicable to the employment policies of organizations. When an organization has special business needs that must be met for the optimal operation of the business, the company is allowed to apply a biased hiring criterion to meet that need. However, the necessity must be such that it cannot be filled by any other means than a biased hiring criterion.
Business necessities are legitimate and provide organizations with a means to avoid running afoul of the disparate impact in the American labor law. Disparate impact refers to employment, housing, or another essential service offered in a way that negatively affects one group of people more than another based on a protected characteristic. Protected characteristics include, but are not limited to, color, sex, religion, place of origin, and race. Of course, protected characteristics differ by statute, and some laws may include some disabilities as well.
All hiring criteria are inevitably biased against some group of people. For example, when you hire for your company and you require that all applicants have college degrees, you have effectively discriminated against the lower socio-economic group who cannot afford college and those who chose not to go to college. However, these hiring criteria are not causing disparate impact because the disadvantages to such groups are unintended, and there is no other way to optimally meet the organization’s goals without hiring only candidates with college degrees. According to the US and most countries’ labor laws, it is illegal to use hiring criteria that favor one group of people over another when that criterion is not necessary for effective performance on the job.
Real World Example of Necessity
King Paratransit Services hired Douglas El in January 2000 to drive paratransit buses. As a driver of the paratransit buses, Douglas was required to provide door-to-door and curb-to-curb transportation services for people with physical and mental disabilities; King had subcontracted to provide these transportation services on behalf of the Southeastern Pennsylvania Transportation Authority (SEPTA). Based on the subcontract agreement between King and SEPTA, King was not allowed to hire anyone with a violent criminal record. Douglas was offered conditional employment, and one of those conditions, among others, was a complete criminal background check. A few weeks after Douglas’ employment, King discovered a second-degree murder record for Douglas, and Douglas’ employment was immediately terminated.
Douglas El decided to sue SEPTA, alleging its hiring policy was discriminatory against his race. Douglas El claimed that SEPTA was unnecessarily discriminating against applicants that already have criminal convictions, stating that such a policy had a disparate impact on minority applicants (African Americans and Hispanics) because they are more likely than white applicants to have criminal records. Douglas accused SEPTA’s hiring policy of violating the Title VII of the Civil Rights Act of 1964 by discriminating based on race.
Despite his accusations, the District Court granted summary judgment in favor of SEPTA on the grounds that SEPTA had provided sufficient evidence that its policy was justified by business necessity, and that El Douglas could not provide an alternative policy that would meet SEPTA’s public safety goal. The business necessity for SEPTA was public safety. All its customers must be safe from potential harm from violent drivers. This case shows how business necessity can be used to defend against issues of disparate impact.