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Re-evaluating the “Business Necessity” of “Residents Only” Hiring Requirements

Posted on January 04, 2012

For state public sector employers, residency requirements for police, firefighters, and other protective services personnel are not only commonplace, but an oft-practiced and widely accepted condition to employment. In fact, many cities, townships, and municipalities throughout Pennsylvania continue to employ some form of residency requirement as a pre-condition to hiring. Residency requirements, however, have come under recent fire by police and firefighter unions and other employee groups who argue that such policies have a discriminatory or disparate impact on minorities. These groups have also shown an increased willingness to litigate against any rule that requires protective services personnel and other local government employees to live in the cities and towns where they work. Last month, those groups scored a local victory when the United States Court of Appeals for the Third Circuit, (which has federal appellate court jurisdiction over Pennsylvania), affirmed the decision of the District Court of New Jersey, which permanently enjoined a fire department’s use of a residency requirement in the hiring process.

In NAACP v. North Hudson Reg’l Fire & Rescue, 2011 U.S. App. LEXIS 24562 (3d Cir. N.J. Dec. 12, 2011), the Newark Branch of the NAACP, the New Jersey Conference of the NAACP, and a number of firefighter candidates (collectively, NAACP Plaintiffs) sued North Hudson Regional Fire and Rescue under Title VII of the Civil Rights Act of 1964, alleging that its residency requirement caused a disparate impact on African-American applicants. Title VII makes it illegal for an employer to “limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities . . . because of such individual’s race, color, religion, sex, or national origin.” 42 U.S.C. § 2000e-2(a)(2).

North Hudson Regional Fire and Rescue is a fire department comprised of five New Jersey municipalities. At the time the department was formed, each of its member municipalities imposed a residency requirement, a common practice in New Jersey. After the merger, North Hudson retained the residency requirements; thus, only candidates who lived in one of its five member municipalities when they took the written exam were eligible for employment. As of 2000, the population of North Hudson’s member municipalities was 69.6% Hispanic, 22.9% white non-Hispanic, and 3.4% African-American. In contrast, North Hudson’s firefighter ranks included 240 white non-Hispanics, 58 Hispanics, and only two (2) African-Americans.

In April 2007, the NAACP Plaintiffs filed suit against North Hudson on the theory that its residency requirement, though not discriminatory on its face, has had a disproportionately adverse effect on African Americans. The District Court of New Jersey found merit in that argument, and preliminarily enjoined North Hudson from hiring firefighters from its then-current eligibility list, which included only those candidates who were residents of the North Hudson municipalities. North Hudson then appealed that decision to the Third Circuit Court of Appeals.

While acknowledging that the North Hudson residency requirement for firefighter candidates was not facially discriminatory, the Third Circuit Court found convincing the plaintiffs’ demonstration of the statistical disparities which had resulted from North Hudson’s enforcement of the residency requirement. The Court stated, “the NAACP Plaintiffs have provided ample evidence of not only a statistical disparity, but also a causal connection. In more than a decade since North Hudson’s inception, it has hired only two African-American firefighters (0.62% of its firefighters), despite an African-American population of 3.4%. For the reasons we explained in Harrison, a minority workforce representation that low suggests discrimination.” Accordingly, the Court found no error in the District Court’s conclusion that the NAACP Plaintiffs proved a prima facie case of disparate impact.

The Court’s analysis then turned to whether a legitimate business necessity justified the residency requirement. The law provides for a defense of business necessity when an employer can show that its challenged hiring criteria define minimum qualifications for the position. “Even if business necessity is shown, however, a plaintiff can still prevail if there are less discriminatory alternative means of selecting for the crucial qualification.” After hearing North Hudson’s business necessity defense, the Third Circuit Court concluded that it did not sufficiently justify the continued use of its discriminatory hiring practice: “In sum, the District Court properly concluded that North Hudson’s purported business-necessity arguments fail. They are not tied to minimum firefighter qualifications in North Hudson and, in some cases, less discriminatory alternatives are available.” Consequently, the Third Circuit Court affirmed the District Court’s injunction against any future use of the residency requirement.

The North Hudson decision illustrates the present vulnerability of “resident’s only” requirements and other limitations to hiring which may have the unintentional effect of discriminating based on race, color, religion, sex, or national origin.

For more information about the North Hudson case, or for guidance on whether or not your high hiring requirements comply with Title VII, please contact a Knox Labor and Employment attorney at 814-459-2800.

Labor & Employment Department Attorneys

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