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Establishing "Business Necessity" For A PERM Application: What Can Be Learned From The "Business Necessity" Defense To A Title VII Disparate Impact Claim?

by James D. Eiss and Danielle Rizzo

The new PERM regulations [1] retain "business necessity" as the only available justification for job requirements exceeding those "normally required for the occupation," [2] and as one of three possible justifications for requiring a combination of occupations. [3] "Business necessity" is a term of art in both the labor certification context and in the context of Title VII of the Civil Rights Act, and as such has two distinct applications embedded in decades of case law and agency guidance in the business immigration and employment discrimination law contexts. While the use of the term in one context cannot simply be borrowed for application in the other, an analysis of the use of "business necessity" in the Title VII context yields helpful insights to the immigration practitioner, both in terms of understanding the presumption which must be overcome in order to prevail on a business necessity argument, and in considering the type of evidence that is most persuasive in overcoming that presumption.

Background: "Business Necessity" as a Justification for "Excessive" Job Requirements in the Labor Certification Context

In 1965, § 212 of the Immigration and Nationality Act was amended to require aliens seeking admission as employment-based immigrants to receive certification from the Secretary of Labor that U.S. workers were not available to perform the job, and that employment of the alien would not adversely affect the wages and working conditions of U.S. workers. This section of the Act, which is still in effect, places the burden on the U.S. employer to establish these facts on behalf of the alien, to the satisfaction of the Secretary of Labor. 

In 20 C.F.R. § 656, the Department of Labor (DOL) established procedures by which an employer could establish the factors required for certification. Former regulations [4] required the employer to prove that the job opportunity is being described without "unduly restrictive job requirements," unless "adequately documented as arising from business necessity." This requirement is retained in the new PERM regulations, which state that the Standard Vocational Preparation (SVP) level assigned to the occupation by the O*NET determines the normal job requirements. Any employer who submits a labor certification with job requirements exceeding the SVP must be prepared to provide documentation, in the event of an audit, that the excessive requirements arise out of business necessity. The regulations state that to establish business necessity, "an employer must demonstrate the job duties and requirements bear a reasonable relationship to the occupation in the context of the employer’s business and are essential to perform the job in a reasonable manner." [5] 

Background: "Business Necessity" as a Defense to a Title VII Disparate Impact Claim

Title VII of the Civil Rights Acts of 1964 makes it unlawful for an employer to make adverse employment decisions against any individual based on race, color, religion, sex, or national origin. Early cases applying Title VII developed a framework of analysis that would winnow out employers’ unlawful discriminatory motives. In McDonnell Douglas Corp. v. Green,[6] a case that came up the day after the Civil Rights Act went into effect, the Supreme Court adopted a burden-shifting scheme wherein a plaintiff must establish a prima facie case of discriminatory failure to hire by showing that he is a member of a minority; that he applied and was qualified for a job for which the employer was seeking applicants; that despite his qualifications, he was not hired; and that the position remained open and the employer continued to seek applicants after denying the plaintiff the job opportunity. The burden would then shift to the employer to demonstrate a lawful, nondiscriminatory reason for the prospective employee’s rejection. If the employer could satisfy this burden, the burden would shift back to the plaintiff to prove that the employer’s stated reason for failure to hire was in fact pretext for discrimination.

The assumption underlying the McDonnell Douglas, "disparate treatment" analysis was that discrimination is a conscious motivating factor in employer decisions that adversely affect minorities, and the burden shifting scheme worked to smoke out that motive if it existed. But a subtler and more troubling issue presents itself in cases where an employer’s decisions are facially nondiscriminatory, but nevertheless have a disproportionate impact on minorities. In Griggs v. Duke Power Co., [7] the Supreme Court adopted an alternative framework for analysis of "disparate impact" claims. In Griggs, the employer had a history of assigning workers to company departments on the basis of race. The less desirable jobs were reserved for racial minorities. Upon the signing of the Civil Rights Act in 1964, the company swiftly ended this overtly discriminatory practice, and replaced it with placement system based on applicants’ performance on standardized aptitude tests. While this practice was not facially discriminatory, it had the effect of maintaining the same racial composition in the company that existed prior to passage of the Civil Rights Act.

      The Supreme Court clarified that Title VII was passed to remove "artificial, arbitrary, and unnecessary barriers to employment when the barriers operate invidiously to discriminate on the basis of racial or other impermissible classifications." Id. at 434. According to Griggs, an employer’s only available defense to a disparate impact claim is business necessity:

The [Civil Rights] Act proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation. The touchstone is business necessity. If an employment practice which operates to exclude Negroes cannot be shown to be related to job performance, the practice is prohibited. [8]

Because the aptitude tests were shown to disproportionately impact minority workers, the employer was required to prove that the tests were aimed at measuring, "the person for the job and not the person in the abstract." [9] Even if an employer proved business necessity, however, it was not necessarily off the hook. If the plaintiff could then demonstrate that alternative job requirements would test equally well for the job duties, and have less of a disparate impact on minorities, the employer would be required to adopt those job requirements.

What Can Be Learned From Title VII Cases About Application of the "Business Necessity" Justification in PERM Applications?

1. Understanding the presumption.

The Supreme Court has adopted a burden shifting analysis in Title VII cases to sort out lawful from unlawful employer practices. This analysis is designed to balance employers’ need to make hiring decisions consistent with business necessity, against employees’ rights to not be discriminated against. Each time the burden is shifted from one party to the other, a presumption is also shifted. For example, in disparate impact cases, once a plaintiff has made a prima facie case of disparate impact, an employer must overcome the presumption that its hiring criteria are irrelevant to the job offered. (Or, that it has established hiring criteria that select not for the best applicant, but for an applicant who meets a certain racial, color, religious, sex, or national origin profile). This presumption can only be overcome by establishing that the hiring criteria are job-related and consistent with business necessity.

Similarly, the Board of Alien Labor Certification Appeals (BALCA) has recognized that, "consideration must be given both to the preference system which recognizes that the United States can benefit from alien labor, and to the purpose of labor certification, i.e., the protection of the American worker." [10] It would not be possible for BALCA to establish a burden shifting scheme to balance these interests, because it is an administrative court and does not hear adversarial litigation between two parties with opposing interests. Nevertheless, every employer who submits a labor certification application must overcome a presumption similar to the one that defendant/ employers must overcome in a Title VII disparate impact claim: the employer must establish that its hiring criteria are not impermissibly tailored to select for a particular alien. The presumption is that American workers are available for the job, and that if the employer’s requirements exceed the SVP established by the Department of Labor, it is because the employer is tailoring the labor certification to accommodate a particular alien’s qualifications. This presumption can only be overcome by establishing that the hiring criteria are consistent with business necessity.

2. Overcoming the presumption.

To defend against a Title VII claim that its hiring practices have a disparate impact on racial minorities, an employer must draw clear connections between its job requirements and the position offered. In Griggs, supra, for example, the employer had to have its standardized tests professionally validated in order to prove that they accurately selected for employee traits that were needed to perform job duties. The Court specifically stated that it was irrelevant whether the employer intended for its job requirements to disparately impact minority workers; it mattered only that the employer’s practice was discriminatory in effect.

So too, in the labor certification context, is employer intent irrelevant to establishing business necessity. The business necessity standard articulated in Matter of Information Industries and retained in the PERM regulations requires a direct correlation between job requirements and job duties. Subjective statements about employer intentions or preferences are irrelevant to making this correlation. The best evidence of business necessity in the labor certification context is documentation of concrete job duties and an explanation of how each job requirement listed in the labor certification application matches up to a particular job duty. Focusing on subjective elements of employers’ decision-making processes is detrimental to this argument.

An additional business necessity argument can be borrowed from the Title VII context for use in labor certifications. That is, in disparate impact cases, an employer is required to adopt alternative job requirements if the plaintiff can prove that alternative requirements are available that would be less discriminatory and still adequately measure applicants for the job offered. In a business necessity argument for a labor certification, an employer could argue not only that each of its job requirements is directly related to performance of specific job duties; it could also argue that there are no alternative job requirements available that would adequately measure an applicant’s ability to perform the job duties. This argument is subtly different from the straightforward correlation of job requirements and job duties, but is a more powerfully persuasive assertion that the job requirements truly are "necessary."


1 69 FR 77325 (December 27, 2004), effective March 28, 2005.

2 20 C.F.R. 656.17(h)(1).

3 20 C.F.R. 656.17(h)(3).

4 20 C.F.R. §656.21(b)(2).

5 20 C.F.R. 656.17(h)(1). This language comes directly from Matter of Information Industries, Inc., 88-INA-82 (BALCA 1989) (en banc), establishing "business necessity" standard.

6 411 U.S. 792 (1973).

7 401 U.S. 424 (1971).

8 Id. at 431. 

9 Id. at 436. 

10 Matter of Information Industries, Inc., 88-INA-82 (BALCA 1989) (en banc).

About The Author

James D. Eiss is a former INS officer who has been practicing immigration law in the Buffalo, NY area for the past 16 years.

Danielle Rizzo is a third year law student and has been a paralegal at the Law Offices of James D. Eiss for the past 4 years.

The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.

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