Disparate Impact

Disparate Impact 

We all instinctively understand that it is illegal to intentionally discriminate against someone (based on protected classes) under the Fair Housing Act.  This obvious illegal discrimination is called “disparate treatment” – meaning we cannot intentionally be “disparate,” meaning “different,” in the way we treat people.

But many Fair Housing claims are based on a policy or conduct which, even unintentionally, results in a different (disparate) effect (impact) on some people (protected class).  This theory is called “disparate impact.”  The theory is that if a protected class of people is disproportionately affected, even unintentionally, then you have violated Fair Housing laws.

Courts have generally said unintentional disparate impact is a legitimate theory.  The United States Supreme Court has never decided the issue but was going to hear oral arguments on the issue December 4.  The case, however, just settled and is no longer before the Supreme Court.  Another Supreme Court disparate impact case settled a couple of years ago so we are still without a Supreme Court ruling.

While the most recent Supreme Court case was pending, HUD issued a Rule which it states simply provides consistency and clarifies its long standing interpretation.  HUD’s Rule is a three test:  First, the person claiming you have violated Fair Housing has the burden of proving with evidence that your practice does, or would predictably result in a discriminatory effect.  If they cannot, then their claim fails.  Second, if they meet their burden, then it is your burden to prove that your practice is necessary to achieve a substantial, legitimate, nondiscriminatory interest.  If you do not, then you lose. Third, if you prove that legitimate interest, then they have the burden of proving that your interests can be served by another practice that has a less discriminatory effect.

Practices that are receiving some challenges include criminal background criteria, domestic violence victim treatment and in some jurisdictions source of income such as housing choice vouchers.

So beyond the obvious prohibition to not intentionally discriminate, you must be careful also to not establish or continue any policy or conduct which could unintentionally have a disparate impact on those in a protected class.

Knowing the law helps you Play To Win !