How California Employers Can Defend Critical Job Policies—Understanding the Business Necessity Defense
Introduction
California’s Fair Employment and Housing Act (FEHA) prohibits workplace policies that—whether intentional or not—negatively impact a “protected group.” This includes individuals identified by race, color, national origin, sex, gender identity, sexual orientation, age (over 40), disability, religion, and other characteristics (Cal. Gov’t Code § 12940(a) (West 2025)). At the same time, FEHA recognizes that some policies may be essential for safe and efficient operations. The business necessity defense provides employers with a principled way to justify truly essential practices, while upholding fairness and legal compliance (Cal. Code Regs. tit. 2, §§ 11010(b), 11017(a), (e) (2025); 42 U.S.C. § 2000e-2(k) (2025)).
What Is the Business Necessity Defense?
This defense applies only in disparate impact cases—where a neutral policy disproportionately affects a protected group, such as women, ethnic minorities, older workers, or people with disabilities. It does not excuse intentional discrimination. Employers must show both:
The purpose of the practice is to operate the business safely and efficiently; and
The practice substantially achieves this business purpose (City & Cnty. of S.F. v. Fair Emp. & Hous. Comm’n, 191 Cal. App. 3d 976, 989–90 (Ct. App. 1987)).
Employers also need to demonstrate that no equally effective, less discriminatory alternative exists (Civil Rights Act of 1991, Pub. L. No. 102-166, § 3(2), 105 Stat. 1071 (1991); 42 U.S.C. § 2000e-2(k)(1)(A) (2025)). Courts require these standards to be compelling and directly tied to job performance or business needs (Griggs v. Duke Power Co., 401 U.S. 424, 431–32 (1971); Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 659 (1989)).
How the Defense Works
Disparate impact cases generally proceed in three steps:
An employee shows that a neutral policy creates barriers for a protected group (Jumaane v. City of L.A., 241 Cal. App. 4th 1390, 1405 (Ct. App. 2015)).
The employer must establish the policy is job related and essential for business operations (City & Cnty. of S.F., 191 Cal. App. 3d at 989–90).
If an equally effective, less discriminatory alternative is identified, the employer must show why the original policy remains necessary (42 U.S.C. § 2000e-2(k)(1)(A) (2025)).
Practical Examples
Policies often accepted by courts include:
Strength or stamina requirements for physically demanding jobs
Valid professional licenses or certifications for specialized roles
Strict attendance rules that support safety or business continuity
Policies that may not hold up include unnecessary degree requirements or outdated physical standards lacking a true business connection.
Guidance for California Employers
Regularly review and refresh job requirements and policies for potential disparate impact
Clearly document the business reason for each policy, focusing on safety, efficiency, and necessity
Consider less discriminatory alternatives whenever practical
Foster transparency and seek HR or legal guidance as needed
Bottom Line
California law supports employers who rely on genuinely needed standards for safe, efficient operations when those standards are applied fairly and with care. By making informed decisions, maintaining good records, and considering reasonable alternatives, employers can foster both legal compliance and a healthier workplace.
Citations
Cal. Gov’t Code § 12940(a) (West 2025); Cal. Code Regs. tit. 2, §§ 11010(b), 11017(a), (e) (2025); 42 U.S.C. § 2000e-2(k) (2025); Griggs v. Duke Power Co., 401 U.S. 424, 431–32 (1971); Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 659 (1989); City & Cnty. of S.F. v. Fair Emp. & Hous. Comm’n, 191 Cal. App. 3d 976, 989–90 (Ct. App. 1987); Jumaane v. City of L.A., 241 Cal. App. 4th 1390, 1405 (Ct. App. 2015); Civil Rights Act of 1991, Pub. L. No. 102-166, § 3(2), 105 Stat. 1071 (1991); Judicial Council of Cal. Civil Jury Instructions (CACI) Nos. 2503–2504 (2025).
