New York City is taking aim at both blatant and subtle racial discrimination based on natural hairstyles such as braids and cornrows that are common in the African-American community.

The city’s move is expected to spread to other jurisdictions across the United States, and employers would be wise to take the opportunity now to review their grooming and appearance policies and handbooks to ensure they are not facially discriminatory or applied in a discriminatory manner, experts say.

In February, the New York City Commission on Human Rights became the first U.S. agency to issue legal enforcement guidance outlining that appearance and grooming policies that ban natural hair or hairstyle are unlawful discriminatory treatment under the New York City Human Rights Law. The guidance states that employers and providers of public accommodation such as fitness clubs and schools cannot force black people to change their natural hair as a requirement to be admitted in or retain affiliation or employment.

Such discrimination has occurred against individuals of other racial, religious, gender and disability communities, and the protections extend to them as well, but the commission intentionally focused on black communities “because they’re disproportionately impacted,” said Gurjot Kaur, agency attorney, law enforcement bureau for the commission. The guidance “affirmatively makes this connection … that

when an employer refuses to let a black person have hairstyles that are closely affiliated with their culture and racial identity, it’s a form of race discrimination,” she said.

The guidance is “aimed at eliminating blatant discrimination, which we don’t see a lot of, but also eliminating the latent discrimination, which might fall into the disparate impact stage where you have a policy that is neutral on its face, it does not seek to discriminate against those with natural hair and definitely not African Americans, but in its practice it might be discriminating against them,” said Loren Lee Forrest Jr., a New York-based partner with Holland & Knight LLP’s labor, employment and benefits group.

Grooming or appearance policies are relatively common in certain industries such as service and hospitality, experts say.

“For those companies that have appearance or grooming policies, they need to make sure they’re looking at them right away,” said Wendy Johnson Lario, chair of the New Jersey labor and employment practice and a shareholder with Greenberg Traurig LLP in Florham Park, New Jersey. “If there’s anything that facially violates this (guidance) … they need to be withdrawing those policies. For (policies) that refer generally to neat appearance or professional appearance, they need to make sure that the enforcement of those policies does not violate New York City law and amend those policies to ensure there is a disclaimer so employees know that they can request accommodation and exceptions to those policies if they have a racial or cultural or religious or disability-related reason for their hairstyle.”

There is an exception if there is a legitimate health or safety concern, but alternatives must be offered, such as hair nets for food service employees, Ms. Kaur said.

“Unless there is a safety or a business-based reason why you are dictating to your employees the way in which they appear … it might be wise to do away with that policy if it’s not necessary because of the increasing risk,” said Kelly Thoerig, Richmond, Virginia-based U.S. employment practices liability product leader for Marsh LLC. “It’s the first, it’s the broadest, but it might just be the tip of the iceberg in terms of other types of guidance and ordinances and laws that we see other states pass.”

In January, a bill was introduced to amend the California Fair Employment and Housing Act, which makes it illegal to engage in discriminatory employment practices, to specify that the definition of race includes traits historically associated with race such as hair texture.

“New York and California usually are the first, and then it hits the other states,” said Lori Bauer, New York office managing principal for Jackson Lewis P.C. “I wouldn’t be surprised to see it elsewhere.” The costs of fines, penalties or damages could start as low as $1,000, but tend to rise very quickly, particularly if an employer fires an employee and is found liable for back pay or damages, Mr. Forrest said.

However, the reputational damages can be even more costly, he said, citing the December 2018 incident in which a high school wrestler in New Jersey was forced to cut off his locs — a term used to replace the name dreadlocks, which has negative connotations — or risk forfeiting a match.

“Your good name as an employer could be lost very quickly in today’s viral world,” Mr. Forrest said.

Marsh clients have asked how such changes affect their employment practices liability and whether they need to change their insurance programs. “By and large, the answer is no,” Ms. Thoerig said.

“I do think, given the attention that the New York City guidance has received in recent months, it is likely to drive future claims activity,” Ms. Thoerig added. “I don’t suspect this issue alone will give rise to a material increase in claims payments. Unless and until that does happen, I think (insurers are) not likely to pull back on coverage or put more restrictive terms on the policies because it’s a new twist on a core peril that EPL policies are designed to respond to: discrimination.”