Business Necessity

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Business Necessity

What Is Business Necessity?

Business Necessity refers to the compelling and justifiable reasons that organizations may have for making various employment-related decisions. These decisions encompass hiring, firing, promotions, and the establishment of workplace policies. Business necessity serves as a critical framework to ensure that these decisions are grounded in valid and non-discriminatory factors, aligning with an organization's operational needs and objectives.

Why Is Business Necessity Important?

Business necessity is a vital concept for several reasons:

  • Legal Compliance: Adhering to business necessity helps organizations remain compliant with various employment laws and regulations. It ensures that employment decisions are made without discrimination based on factors like race, gender, or age.
  • Operational Efficiency: By focusing on legitimate business needs, organizations can make decisions that align with their goals and objectives. This can lead to more efficient operations and improved productivity.
  • Risk Mitigation: Understanding and applying business necessity can reduce the risk of legal challenges and lawsuits related to employment decisions. It provides a defensible position in case of disputes.

How Does Business Necessity Apply to Hiring?

Business necessity plays a significant role in the hiring process. It allows employers to set job requirements and criteria that are directly related to the essential functions of a job. For example, requiring certain qualifications or skills may be justified if they are essential to perform the job effectively.

Can Business Necessity Justify Employee Terminations?

Yes, business necessity can be used to justify employee terminations. However, it's essential to show that the termination was based on legitimate business needs, such as downsizing due to economic reasons or poor job performance. Proving a business necessity for terminations is critical in defending against wrongful termination claims.

How Does Business Necessity Relate to Workplace Policies?

Business necessity also influences the creation of workplace policies. Employers must ensure that their policies, such as dress codes or safety protocols, are directly related to operational requirements and business objectives. This helps maintain fairness and compliance with employment laws.

What Are the Key Considerations for Demonstrating Business Necessity?

To demonstrate business necessity effectively, employers should:


  • Record Keeping: One of the fundamental aspects of demonstrating business necessity is maintaining thorough records of all decisions related to employment. This includes decisions about hiring, promotions, terminations, and the creation or modification of workplace policies. Detailed records should outline the factors, circumstances, and rationale behind each decision.
  • Communication: Document any communication related to these decisions, such as emails, memos, or meeting minutes. This helps establish a clear trail of decision-making and provides evidence in case of disputes or legal challenges.
  • Consistency: Consistency in documenting decisions is essential. Employers should apply the same documentation practices uniformly across all employment decisions to avoid perceptions of bias or discrimination.


  • Job-Relatedness: For employment decisions, particularly in hiring or termination cases, it's crucial to demonstrate a direct relationship between the decision and the requirements of the job or the organization's operational needs. This means that the decision should be based on factors directly related to the job's essential functions or the organization's objectives.
  • Avoiding Overreach: Employers should avoid making decisions that go beyond what is necessary for the business. Decisions that appear excessive or unrelated to the job can raise questions about their legitimacy.
  • Consider Alternative Solutions: Before making a decision based on business necessity, consider whether there are less discriminatory alternatives that could achieve the same business objectives. Exploring alternatives demonstrates a commitment to fairness and equity.


  • Non-Discrimination: It's essential to ensure that decisions are not discriminatory in nature. This means that decisions should not be based on factors such as race, gender, age, religion, or other protected characteristics. Employers should adhere to anti-discrimination laws and guidelines.
  • Objective Criteria: Whenever possible, decisions should be based on objective and quantifiable criteria rather than subjective judgments. This helps reduce the risk of arbitrariness and bias in decision-making.
  • Consistency: Consistency is key in demonstrating that decisions are not arbitrary. Employers should apply consistent criteria and processes across similar situations to avoid perceptions of favoritism or unfairness.
  • Training and Awareness: Ensure that employees involved in decision-making are trained in anti-discrimination laws and best practices. This promotes awareness and reduces the likelihood of discriminatory decisions.