On April 4, 2016, HUD’s (Department of Housing and Urban Development) Office of General Counsel issued guidance that will have far-reaching impact on landlords and the multi-housing and property management industries. This is a direct outcome of the Supreme Court Ruling that I wrote about in June of 2015, where the Supreme Court ruled that Disparate Impact applies to the Fair Housing Act.

Disparate Impact means a company can be held liable even if there is no intent to discriminate. Business practices that have a disproportionate effect on certain protected classes can result in disparate impact liability. This HUD Guidance cites national statistics that shows African Americans and Hispanics comprise a higher percentage of individuals with criminal records, relative to their share of the general population. Therefore, HUD has made it very clear that having a blanket policy that denies rental housing for criminal convictions will be violating the Fair Housing Act.

HUD specifically listed a three step process for determining unintentional discrimination, i.e., Disparate Impact, in the use of criminal records to make rental housing decisions. In the first step, a plaintiff must prove that the criminal history rental criteria has a disparate impact on a group based upon their race or national origin. If a blanket policy is used without regard to the severity of the crime, the length of time that has passed since the crime occurred, and the individual’s conduct since the conviction, the landlord will likely face an uphill battle defending against discrimination liability.

Disparate Impact has been used in the past in the employment arena, primarily by the EEOC (Equal Employment Opportunity Commission), but now HUD has placed this issue in the housing industry as well. It would be prudent for companies and organizations in the housing industry to immediately review their policies and procedures, especially with regard to the use of criminal records for denying rental housing.

Posted by: Rudy Troisi. President, Reliable Background Screening.