The Supreme Court recently ruled in favor of recognizing disparate-impact as valid claims for discrimination lawsuits under the Fair Housing Act. The June 2015 ruling, saw a 5-4 decision that an action can be considered discriminatory even if the intent was not.
Like all Fair Housing laws, the recent ruling is established with the intent of providing a protected class of people with an equal opportunity to housing. In the case of rental housing, a landlord or property manager could be charged with a Fair Housing claim on the grounds of disparate impact if their screening criteria or rental policies prevented a protected group from accessing housing.
Even when a rental policy has no clear discriminatory intent, if the policy adversely affects a protected group’s access to housing, that policy may violate the Fair Housing Act on disparate impact. For example, disparate impact arises when a practice produces different effects across racial groups, even if the practice wasn’t racially motivated.
According to the 2014 Fair Housing Trends report, “rental discrimination far outweighs all other types of housing discrimination reported in the United states.” With this knowledge, it is important that every landlord and property manager review their rental policies to make sure they are in compliance with the law. Landlords must be familiar with fair housing laws at the federal, state and local levels and how their rental policies may impact protected groups under those laws.
The June 2015 ruling explained that a disparate impact claim must be evidenced by a quantifiable discriminatory effect and not be supported by a rational business purpose. The court explained that housing authorities should have some ability to operate in the best interest of their business and be permitted to explain legitimate business justification when challenged. Disparate impact claims are meant to target “artificial, arbitrary and unnecessary barriers” to equal housing access.
The best bet for landlords is to become familiar with the Fair Housing Act, which prohibits discrimination on the basis of race, color, religion, sex, disability, familial status or national origin. Once Fair Housing laws are understood, screening criteria should be in place that treats every applicant the same. Legal screening criteria can be based on an applicant’s credit report and criminal background, rental history, income and employment verification, as long as the landlord can prove that every applicant was screened by the same standards and the basis for rejection was due to an applicant’s potential inability to pay rent or seen as dangerous to the property or neighborhood.
To protect oneself from disparate impact claims, a landlord must have supporting documentation that all applicants are treated exactly the same and a tenant was accepted or rejected based on legal screening criteria. By collecting all of this information, not only can landlords make an informed decision about prospective renters, but they can show in court that they had valid reasons to select one tenant over another.
Fair Housing laws change often, so it is always a good idea to reevaluate your rental business policies and seek legal counsel from someone familiar with landlord-tenant laws in your state before setting new ones in order to proactively address these potential issues before it is too late.
So whether you are advertising your property, screening new tenants or setting apartment rules, make sure that you are in compliance with the law and that any actions or policies apply to everyone (with supporting documentation), and cannot be construed as affecting some people but not others.