New guidance from HUD to Avoid Breaking Discrimination Laws for Resident Screening
The office of general counsel at the Department of Housing and Urban Development (HUD) recently published guidance on the proper application of Fair Housing Act (Act) standards related to the use of criminal records for housing providers. The Act applies to sellers and lenders for dwelling purchases, and it also applies to those who provide rental housing. Since criminal background checks are typical for those providing rental manufactured homes or lots to rent within manufactured home communities, HUD’s latest guidance deserves our attention.
As the guidance details, the Act prohibits discrimination for housing related activities on the basis of race, color, religion, sex, disability, familial status or national origin. The recent guidance focuses on the potentially discriminatory effects, and thus violations of the Act, for refusal to rent or renew a lease based on an individual’s criminal history. Clearly there are legitimate concerns and non-discriminatory practices a community owner can employ and not be in violation of the Act. However, and as the guidance points out, careful thought and practice should be utilized so as to avoid running afoul with federal discrimination law.
The basics of the guidance are:
- Statistically and disproportionately to their composition within the general population there are more members of protected classes such as race, color and national origin with criminal records.
- Overt policies to intentionally treat persons with comparable criminal histories differently is a violation of the Act.
- Policies that are less than overt and without the intent to discriminate can still be found to have violated the Act if there is a discriminatory effect against a protected class.
- Proper policies that do not violate the Act are those that serve a substantial, legitimate, nondiscriminatory interest.
- There is a three step process that is always evaluated on a fact-specific and case-by-case basis:
- Evidence must show that a policy has or predictably could have a disparate impact against a protected class, typically evaluated through the lens of statistical evidence.
- Once proven there is a disparate impact, the housing provider (community owner) then must show the policy is necessary to achieve a substantial, legitimate, nondiscriminatory interest. Ensuring resident safety and protecting property are substantial, legitimate interest, but the housing provider has to prove their policy actual serves these goals and cannot solely rely on generalizations that those persons with an arrest or conviction pose a greater risk than a person without a criminal record.
- Once a provider proves that their policy serves a legitimate nondiscriminatory interest, then HUD has the burden to prove that the interest could be served with a different practice that has a less discriminatory effect.
- This process typically looks at specific and individualized tenant screening processes of the property owner.
- Important to take away from the guidance is that a policy based on excluding those merely with arrests is not a valid policy that would pass scrutiny under the Act.
- A housing provider can prohibit persons with criminal convictions from accessing their offered housing towards a legitimate interest of safety and protection, but only so long as they evaluate those with convictions considering when the conviction occurred (i.e. how long ago did it happen), the underlying conduct that resulted in the conviction, and what the convicted person has done since they were convicted.
- A housing provider prohibiting those with specific types of convictions must be able to show their policy distinguishes between criminal conduct that, “indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not.”
- A policy must take into account the nature, severity, and recency of criminal convictions in order to be legitimate.
- There is an exclusion from the Act, meaning a property owner cannot be proven to have violated the Act, if the exclusion of an applicant is based on a conviction of a person due to illegal manufacture or distribution of a controlled substance.
- Selective use of criminal history as a pretext for unequal treatment of individuals based on race, national origin, or other protected characteristics violates the Act.