A5495

An Act concerning the use of automated tenant screening tools to evaluate prospective tenant applications and supplementing Title 46 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. As used in in P.L. , c. (C. ) (pending before the Legislature as this bill):

“Automated tenant screening tool” means a machine-based system that, for a set of human-defined objectives provided by a landlord or individual acting on behalf of a landlord, has been developed as a tool to evaluate a prospective tenant’s rental application.

“Bias audit” means an impartial evaluation conducted by an independent auditor, including but not limited to:

- rigorous assessment of an automated tenant screening tool to determine its impact on persons of any category;

- identification and documentation of any biases, risks, or potential discriminatory outcomes that arise from the automated tenant screening tool’s design, implementation, or use; and

- clear, actionable recommendations to avoid, manage, or mitigate, identified biases and risks.

“Landlord” means a person or persons, who, as an individual, or through a partnership, corporation, limited liability company, or trust, or through an affiliate, subsidiary, or holding company of a partnership, corporation, limited liability company, or trust, owns or purports to own, a building in which there is rented, or offered for rent, a residential rental unit under either a written or oral lease.

2. a. It shall be unlawful to sell, develop, deploy, use, or offer for sale in the State an automated tenant screening tool unless:

(1) the automated tenant screening tool is the subject of a bias audit conducted in the past year prior to selling or offering the automated tenant screening tool for sale;

(2) the sale of the automated tenant screening tool includes, at no additional cost, an annual bias audit service that provides the results of that audit to the purchaser and a written plan to monitor the implementation of the recommendations in the audit report;

(3) the automated tenant screening tool is sold, developed, deployed, used, or offered for sale with a notice stating that the automated tenant screening tool is subject to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill); and

(4) the developer of the automated employment decision tool has implemented the recommendations of the most recent bias audit conducted and issued a press release announcing how the recommendations have been implemented.

b. A landlord who uses an automated tenant screening tool to screen a prospective tenant shall notify in writing each prospective tenant that an automated tenant screening tool will be used in connection with the prospective tenant’s application.

c. A developer of an automated tenant screening tool, offered for use to a landlord in this State, that is found to violate P.L. , c. (C. ) (pending before the Legislature as this bill) shall be liable for a civil penalty of not more than $1,500 for the developer’s first violation. Such civil penalty shall increase by two percent for each subsequent day the developer remains in violation of P.L. , c. (C. ) (pending before the Legislature as this bill).

d. A landlord who violates a provision of P.L. , c. (C. ) (pending before the Legislature as this bill), or any rule or regulation adopted pursuant thereto, shall be subject to a civil penalty of $500 for the first offense and up to $1,000 for the second and each subsequent offense.

e. All penalties assessed under this section shall be collected in a civil action by a summary proceeding under the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). The Superior Court and the municipal court shall have jurisdiction to enforce the provisions of the "Penalty Enforcement Law of 1999" pursuant to this subsection.

3. In using an automated tenant screening tool in accordance with subsection a. of section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill), a landlord shall only use quantifiable metrics, such as income and credit score, to evaluate a prospective tenant and shall be prohibited from using race, creed, color, national origin, ancestry, sex, gender identity or expression, nationality, disability, or age in the automated tenant screening process as part of the decision process.

4. The Commissioner of Community Affairs may adopt, pursuant to the "Administrative Procedure Act," P.L. 1968, c. 410 (C. 52:14B-1 et seq.), any rules and regulations as are necessary to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

5. This act shall take effect on the first day of the third month next following enactment except that the Commissioner of Community Affairs may take anticipatory action as may be necessary.

STATEMENT

This bill regulates the use of automated tenant screening tools during the rental application process to minimize tenant discrimination that may result from the use of the tools.

Under the bill, an automated tenant screening tool means a machine-based system that, for a set of human-defined objectives provided by a landlord or individual acting on behalf of a landlord, has been developed as a tool to evaluate a prospective tenant’s rental application.

The bill prohibits the sale, development, deployment, use, or offer for sale unless:

(1) the automated tenant screening tool is the subject of a bias audit conducted in the past year prior to selling or offering the automated tenant screening tool for sale;

(3) the automated tenant screening tool is sold, developed, deployed, used, or offered for sale with a notice stating that the AEDT is subject to the provisions of this bill; and

(4) the developer of the automated tenant screening tool has implemented the recommendations of the most recent bias audit conducted and issued a press release announcing how the recommendations have been implemented.

The bill prohibits a landlord from inputting non-quantifiable metrics into the automated screening tool, such as race, gender, age, or disability.

The bill provides that any landlord who uses an automated tenant screening tool for the evaluation of rental applications is required to notify each prospective tenant in writing of the automated tenant screening tool’s use in the evaluation process.

The bill establishes civil penalties for certain developers and landlords that do not comply with the provisions of the bill.

The bill intends to increase transparency and promote non-discriminatory practices in the tenant screening process.