The New Jersey Appellate Division Holds that Nepotism in Employment Is Not Prohibited by the LAD

In a case of first impression in New Jersey, the Appellate Division, in Bumbaca v. Township of Edison, 2004 WL 2624180 (App. Div. Nov. 19, 2004), holds that nepotism in employment is not prohibited by the Law Against Discrimination, N.J.S.A. 10:5- 1 et seq. (“the LAD”). The court ruled that discrimination based on “familial status” is proscribed by the LAD only with regard to the fair housing and sale of property provisions of the statute. The court also holds that nepotism in employment does not violate New Jersey public policy, and thus an employee terminated because of nepotism may not pursue a claim of wrongful discharge in violation of public policy.

Plaintiff sued the Township of Edison, the Edison Fire Department (EFD), and the Fire Chief, alleging that defendants discriminated against him based upon familial status in violation of the LAD when they failed to hire him as a paid firefighter. Plaintiff had served as a volunteer firefighter with the EFD since 1995. Volunteers interested in becoming paid firefighters were required to pass a written test, a physical performance test, an initial and final oral examination, and an essay test. The composite scores were used to rank individuals to determine the order of appointment to paid firefighter positions. The Edison Municipal Code mandated that a candidate not be eligible for hire if he or she fails any one of the required tests. However, an individual who fails a medical or psychological examination may be placed on the next list, when compiled, and be retested at that time.

On June 30, 1998, plaintiff was placed fifteenth out of forty-four on the ranking list. There were fifteen openings for paid firefighter positions during the three-year period that the June 30, 1998 list was in effect. However, a psychologist employed by the defendants concluded that that plaintiff did not possess the “psychological characteristics” required for the position and pointed to, among other things, plaintiff’s criminal record. The Fire Chief informed plaintiff that the psychologist had not recommended him for a firefighter’s position and thus he could not be appointed. Plaintiff claimed that most of those appointed “had far worse psychological examinations for employment as a paid firefighter and more extensive criminal histories than he, and that the reason they were hired was because they had a relative employed by Edison Township in the past or at present.”

On appeal from summary judgment in defendants’ favor the Appellate Division framed plaintiff’s LAD claim as “based upon the contention that references to ‘familial status’ in the statute serve to prohibit, as constituting an unlawful employment practice, the practice of nepotism, which has been defined as ‘favoritism shown by persons in office to relatives or close friends, especially in granting jobs.’ Webster’s II New College Dictionary 743 (1995). In this case, the practice is alleged to be favoritism in the hiring of paid firefighters shown to relatives or friends of Edison Township employees.” While the Court noted that the LAD is remedial legislation which must be liberally construed, “liberality of interpretation does not require turning a blind eye to the plain meaning of the statute.” Turning to the statutory text, the Court observed that the reference to discrimination based on “familial status” appears in N.J.S.A. 10:5-4, which “sets out the general sweep of the entire statutory scheme” covering employment, public accommodations, publicly assisted housing accommodation, and other real property. But, as the Court also observed, the specific section of the statue on unlawful employment practices, N.J.S.A. 10:5-12, proscribes discrimination because of

race, creed, color, national origin, ancestry, age, marital status, affectional or sexual orientation, genetic information, sex, disability or atypical hereditary cellular or blood trait of any individual, or because of the liability for service in the Armed Forces of the United States or the nationality of any individual, or because of the refusal to submit to a genetic test or make available the results of a genetic test to an employer,

and makes no reference to familial status. In contrast, the statue’s provisions proscribing discrimination in the leasing or sale of real property expressly identify familial status as a protected category. Moreover, LAD’s definition of familial status in N.J.S.A. 10:5-5(ll):

being the natural parent of a child, the adoptive parent of a child, the foster parent of a child, having a “parent and child relationship” with a child as defined by State law, or having sole or joint legal or physical custody, care, guardianship, or visitation with a child, or any person who is pregnant or is in the process of securing legal custody of any individual who has not attained the age of 18 years,

did not include the concept of nepotism proffered by plaintiff. The Court also cited to federal case law rejecting nepotism as a basis for a claim under Title VII of the Civil Rights Act of 1964, 42 U.S.C.A. Section 2000e-2. See, e.g. , Betkerur v. Aultman Hosp. Assn., 78 F.3d 1079, 1096 (6th Cir. 1996); Holder v. City of Raleigh, 867 F.2d 823, 825-26 (4th Cir. 1989). Thus the Court concluded: [W]hile we do not endorse nepotism to the extent that it promotes hiring on a basis other than merit, the practice is clearly not prohibited by the LAD, even if plaintiff fell within the statutory definition, which he does not.”

Finally, the Court also held that New Jersey has no public policy prohibiting nepotism. Accodingly, plaintiff’s contention that his failure to be appointed violated Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58 (1980), which created a cause of action for wrongful discharge in violation of public policy was properly dismissed.

Employers are, of course free to continue or to adopt anti-nepotism policies, which are fairly common and which make good business sense. To use the Court’s phrase, the “hoary” practice of nepotism in employment does not, however, violate the LAD.