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An HR Glossary for HR Terms

Glossary of Human Resources Management and Employee Benefit Terms

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Business Necessity

What is a Business Necessity?

The definition of business necessity refers to the legal concept used to justify an employer’s employment criteria that disproportionately affect a group of individuals. The justification resides in the possibility that a company has legitimate reasons to operate under such restrictive employment practices.

What Are Examples of a Business Necessity?

Business necessity practices are quite common today. The following are some examples of hiring practices that could be protected by business necessity:

  • Educational requirements. Many job listings mention a minimum requirement for completed education. For example, physician and doctor’s positions require applicants to complete an advanced medical school degree, which excludes a large number of people.

  • Experiential requirements. Companies may also require job applicants to have a certain number of years of experience in a similar field. This ensures that applicants are properly prepared for the tasks that will be assigned to them. However, this also negatively affects the chances of a large number of potential applicants. 

  • Travel requirements. Some jobs require employees to travel long distances frequently throughout the year. If that’s the case, they may look for someone with good enough health to make those travel commitments. This may affect the chances of some candidates’ eligibility for the job.

What Does “Job-Related and Consistent With Business Necessity” Mean?

“Job-related and consistent with business necessity” is the term companies will use to justify their unique hiring practices. It essentially means the company is able to demonstrate that its hiring criteria are necessary for the success of the business. 

How Do You Prove Business Necessity?

To prove business necessity, businesses must offer viable evidence that the exclusionary criteria are strictly related to job performance and do not have a disparate impact. The business necessity rule stems from Griggs v. Duke Power Co., a Supreme Court case. 

Since that case, key factors have emerged as a way to assess the legality of employment and hiring practices. From these factors, employers must be able to prove that:

  • The level of disparity caused by the employment criteria is relatively low.

  • There is a factual relationship between the employment criteria and the successful performance of the job.

  • The employment standard is determined by a “neutral” entity that is not related to the employer.

  • The job has a direct impact on public safety.

  • The employment criteria are not based on natural or unalterable characteristics of applicants.

  • There are no alternative employment criteria that could be less disparaging for applicants.

How Can You Prevent Discrimination With Business Necessity?

It is discriminatory and unlawful to influence employment decisions based on discrimination of age, sex, race, and disability. These discriminatory practices cause employers to rely on assumptions and stereotypes about the applicants based on those unalterable characteristics, which is unethical.

Of course, very few employers will intentionally use business necessity for discrimination. To best avoid any accidental discrimination, HR professionals should be able to answer the questions listed above and prove their company’s hiring practices are in no way discriminatory. It can also help to write out the company’s hiring practices and include rules and procedures that prevent discrimination in the hiring process.

What’s the Difference Between BFOQ and Business Necessity?

A bona fide occupational qualification (BFOQ) is an employment qualification an employer may enact that allows for hiring individuals based on their race, sex, age, or nationality. For example, a job posting for a restaurant server may require applicants to be at least 18 years of age so they can legally serve alcohol.

In this regard, BFOQs are like business necessities but allow businesses to hire based on factors that would not be legally covered by a business necessity.