By Gerald L. Maatman Jr. and Howard M. Wexler

Over the past several years, several states and cities have adopted legislation designed to aid unemployed workers in securing employment, including Oregon, the District of Columbia, and New York City. In 2011, New Jersey joined this growing list and passed legislation barring (subject to certain exceptions) employers seeking to fill job vacancies in the state from purposefully or knowingly publishing advertisements stating that job applicants must be currently employed in order for their application to be accepted, considered, or reviewed. N.J.S.A. 34:8:8B-1.

In New Jersey Department of Labor and Workforce Development v. Crest Ultrasonics et. al., Case No. A-0417-12T4 (N. J. App. Div. Jan. 7, 2014), a New Jersey Appellate Division panel upheld the constitutionality of New Jersey’s prohibition of employment as a qualification in job vacancies and rejected an employer’s contention that the law constituted improper content-based infringement under the U.S. and New Jersey constitutions.

The Crest Ultrasonics ruling is significant for employers, as challenges to hiring screens are emerging as a key litigation target in class actions and governmental enforcement litigation.

Case Background

Shortly after the adoption of the New Jersey statute, an employer, Crest Ultrasonics posted a job advertisement to fill the vacant position of Service Manager with the requirement that an applicant “Must be currently employed.” Id. at 4. The New Jersey Department of Labor and Workforce Development (“Department”) learned of this advertisement, conducted an investigation, and issued a $1,000 fine – the maximum penalty for a first-time offender on the legislation. Id. at 5. Crest Ultrasonics subsequently brought suit alleging that the statute’s prohibitions “are improper content-based infringements upon their rights of free speech under the federal and state constitutions.” Id. at 7.

The Court’s Decision

The Court denied Crest Ultrasonics’ challenge as to the constitutionality of the statute, relying on the U.S. Supreme Court’s test for content-based restrictions on commercial speech set forth in Central Hudson Gas & Electric Corp. v. Publis Service Commission, 447 U.S. 557 (1980). Under Central Hudson, the four-part test requires courts to determination whether: (1) the speech concerns a lawful activity and is not misleading; (2) whether the asserted governmental interest is substantial; (3) whether the regulation directly advances the governmental interest asserted; and (4) whether it is more extensive than is necessary to serve that interest. Id. at 21.

Based on Central Hudson, the Court held that the statute’s “modest aim” of maximizing the ability of jobless persons to present their qualifications to potential employers is “narrowly tailored to advance a limited, but nevertheless substantial, governmental objective of “increasing the opportunities for unemployed workers to apply for work.” Id. at 27 & 30. In fact, the Court noted that the statute’s limited reach is reflected by the fact that it does not “require employers to read such applicants, or to bring in any jobless persons for interviews, or to hire any of those persons in lieu of applicants who already have other jobs.” Id. at 27. Accordingly, the Court held that the statute “reaches no further than what is required to achieve its stated purpose.” Although it thus upheld the constitutionality of the statute, the Court nonetheless remanded the case to the Department for reconsideration of the penalty imposed upon Crest Ultrasonics given the “non-frivolous” arguments it presented as to the constitutionally of the statute and the fact that this was a first offense.

Implications For Employers

In addition to those statutes that are already on the books, several other states and municipalities are weighing the adoption of legislation such as New Jersey’s designed to aid the unemployed in obtaining employment. In fact, as set forth by the Court in this opinion, Rhode Island is considering similar legislation to New Jersey’s law, but was waiting on the outcome of the case and the resolution of the constitutional challenge. Id. at 15. Furthermore, the EEOC has held public meetings to examine the impact of employers considering only those currently employed for job vacancies and President Obama’s American Jobs Act, first introduced in 2011, would make it illegal for employers to run advertisements saying that they will not consider unemployed workers, or to refuse to consider or hire people because they are unemployed. Employers across the country should stay tuned as similar legislation continues to spread across the county.