Business Necessity

What is a business necessity?

A business necessity is a legal justification for role requirements that may seem neutral at face value, but can be deemed discriminatory if they disproportionately affect any protected group.

In order for an actual business necessity to be proven, it must be essential for business operations or a legal requirement, and justifiable because less discriminatory alternatives don’t exist.

For instance, a commercial driver needing a valid commercial driver’s license is a legal requirement. This automatically disqualifies candidates who do not possess such a license, regardless of whether or not it disproportionately affects a protected group.

Real-life example

A business necessity can also be discriminatory when misused. For instance, in 1971, the U.S. Supreme Court ruled in Griggs v. Duke Power Co that employers couldn’t use seemingly neutral employment practices with discriminatory effects, unless those practices were related to job performance. 

In the case in question, it was shown that the employer required a high school diploma and standardized test requirements not directly related to the skills needed for the job. This was deemed discriminatory, as not only were those educational requirements unnecessary, they were found to disproportionately exclude Black candidates.

The importance of business necessity

Role requirements must only be invoked when absolutely necessary to promote fairness and prevent legal and operational issues. Consider the following:

• Legal compliance: Employers must ensure their practices don’t create a disparate impact on protected groups. Proving that any potential disparity is driven by legitimate operational needs and not discriminatory intent helps avoid legal issues. 
• Operational efficiency: Employment practices tied to genuine business necessities create a smoother and more effective workflow. For instance, a data analyst with the required software skills can do their work efficiently, boosting the overall employee productivity rate.
• Risk mitigation: Not understanding or applying business necessity correctly can lead to costly litigation, reputational damage, and regulatory penalties. Thorough assessment and documentation of every business necessity can lower these risks.

5 examples of business necessity

Here are a few common examples of genuine job requirements, where employers can’t find less discriminatory methods to achieve the same results:

Example 1: Education and experience

A company can require a specific degree or certain amount of experience for highly specialized roles that need in-depth knowledge of complex topics. For instance, a financial analyst role requiring a degree in finance or a certain number of years of experience in that field is a necessity for the role, not just a preference.

Example 2: Physical or travel requirements

For jobs that involve heavy lifting or frequent travel, these requirements are a business necessity, as they are essential for the job to be done properly. For example, a delivery driver might need to be able to lift a certain weight, or a sales representative might have to travel to meet clients.

Example 3: Job-specific certifications or licenses

Some jobs require specific licenses or certifications that are legally required and therefore, are considered a business necessity. Examples include a truck driver requiring a commercial driver’s license, a doctor needing a legitimate medical license, or a teacher needing a relevant Bachelor’s degree and teaching certificate.

Example 4: Language proficiency

Proficiency in certain languages is a business necessity for companies to ensure effective communication and customer service for multilingual customer bases. For instance, a company whose largest customer bases speak English and Mandarin would reasonably require employees to be fluent in either or both.

Example 5: Technical skills

Some jobs require extensive technical skills for technology-focused projects, making them a business necessity. For example, a software developer needs to know programming languages, or a graphic designer needs to be proficient in design software, making these skills a business necessity.

When does business necessity apply?

Understanding when business necessity is applicable is vital for HR professionals. It’s important to recognize it’s not a universal justification for any company rule but rather, a specific legal defense that applies only in certain circumstances.

These are scenarios where business necessity can be invoked:

• Company policies: If a company policy requires all staff to work rotating night shifts and this disproportionately affects those with caregiving responsibilities, the company must prove these shifts are essential for business operations.
• Hiring: If a job requires specific technical skills, like advanced coding for a software engineer role, the employer can require candidates to demonstrate those skills. This is a business necessity as those skills are fundamental to the job’s performance.
• Termination: If an employee becomes unable to fulfill essential job requirements that have been proven a business necessity and consistently performs poorly at work, termination of their employment contract may be justified.

HR tip

To avoid discrimination claims, you must prove business necessity. Meticulously document how each requirement is essential for a role’s function when defining job scope, and focus on job-related skills and qualifications to ensure fair and inclusive hiring practices. Keep records of job analyses, expert opinions, and the alternative solutions your company has considered. This evidence will be crucial if the policy is challenged.

How to prove business necessity

Proving business necessity requires solid evidence and careful documentation. It’s not enough to simply claim a rule is necessary for a role — you have to prove it.

If a neutral third party (e.g., a professional licensing board) sets the employment standards directly related to your company’s job requirements, it strengthens your company’s case. For example, a doctor needing a medical license is a clear business necessity, because a neutral board sets those standards.

Employers must also demonstrate a direct, factual link between employment criteria and job requirements. If a job requires heavy lifting, you must prove that being able to lift a specific weight is essential for performing the job.

Additionally, be sure to avoid criteria based on immutable traits, such as gender, sexual orientation, ethnicity, or age — unless it’s a Bona Fide Occupational Qualification (BFOQ). Instead, focus on job-related skills and abilities.

You must also clearly demonstrate that no alternative employment criteria could help meet job requirements. If there’s a less discriminatory way to achieve the same business goal, you must use it, so it’s important to show and document your process of determining employment criteria.

If the job directly impacts public safety (e.g., firefighting or air traffic control), it strengthens your argument for strict requirements, as safety is deemed a compelling business necessity. If in doubt, seek legal advice from a qualified professional.

Business necessity vs. BFOQ

Understanding the distinctions between a business necessity and Bona Fide Occupational Qualification (BFOQ) is essential for HR professionals to ensure legal compliance and fair employment practices. While both concepts address employment criteria, they differ significantly in their application and legal basis.

Here are the main differences between the two:

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