For Housing Developers & Providers: A Crash Course on Disparate Impact and Criminal Records

Regional Housing Legal Services Staff Attorney, Jack Stucker, provides a helpful analysis on the recent U.S. Supreme Court ruling in regards to fair housing, in particular relation to criminal background checks for potential residents. 

Almost immediately after the Supreme Court’s Ruling in Texas Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc. (“TX v. ICP”) housing providers begun to worry about disparate impact liability issues associated with criminal record screening policies. There is reason to pay attention, but no need to panic and there is no requirement to abandon criminal record screening.

Below, I provide a quick and simple approach to these issues. For further analysis, I recommend reviewing HUD’s Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions, published April 4, 2016 (“HUD Guidance”).

First we need to break down the three step process for evaluating a disparate impact claim in the criminal record context:
1) Whether the criminal record policy has a discriminatory effect.
2) Whether the policy is necessary to achieve a substantial, legitimate, nondiscriminatory interest.
3) Whether there is a less discriminatory alternative.

For this brief analysis I am going to focus exclusively on criteria 2. I will explain why: Given the overwhelming statistics that minorities face disproportionately high rates of arrest and incarceration, most plaintiffs will be able to meet criteria 1. For determining an alternative in criteria 3, that is the plaintiff’s burden. There is reason for keen housing providers to keep posted on criteria 1 and 3 as these are developing areas. Developments will stem from ongoing litigation such as in TX v. ICP, and motivated plaintiffs throughout the country.

HUD has provided rather clear and helpful guidance regarding criteria number 2. “Criminal history-based restrictions on housing opportunities violate the act if, without justification, [the burden falls on a protected class].” HUD Guidance, at Page 2 (emphasis added). HUD has provided substantial guidance as to what “without justification” means. There are a few bright line takeaways:
1) Resident safety and protection of property ARE substantial, legitimate, nondiscriminatory interests.
2) Exclusions based solely on arrest records are not a permissible reason to deny, terminate, or evict tenants from public or other federally funded housing; such exclusions violate the rules. HUD Guidance, at 5.
3) Blanket prohibitions based on any and all convictions also violate the rules. HUD Guidance, at 6.

Keeping within these bright line rules is a good idea for any housing providers concerned about liability issues related to their criminal record screening. Additionally, there is one primary area to which housing providers should pay attention. HUD has made it clear that policies will need to show a clear link between crimes and risks to resident or property safety. HUD Guidance at 6. Exclusions based on criminal history without such a direct link will violate the rules.

Crafting policies that follow the bright line rules and keep this standard in mind will help housing providers navigate the waters of disparate impact when crafting criminal record screening policy.