HUD Releases Guidance on Criminal Background Checks by Housing Providers

HIGHLIGHTS:

• The U.S. Department of Housing and Urban Development (HUD) has issued guidance addressing Fair Housing Act liability regarding the use of criminal background checks or screenings in housing determinations.
• HUD's guidance, based on its 2013 disparate impact regulations, asserts there is a three-step, burden-shifting standard for analyzing claims that criminal history screening violates the Fair Housing Act because it results in a discriminatory effect.
• HUD's release of this guidance and the positions that HUD takes throughout the document suggest that the agency is focused on this issue and will likely investigate and bring enforcement actions for certain uses of criminal background screenings.

The U.S. Department of Housing and Urban Development (HUD) on April 4, 2016, issued guidance addressing Fair Housing Act liability regarding the use of criminal background checks or screenings in housing determinations.

But for several statements of agency policy discussed below, for the most part, the guidance tracks the Supreme Court's 2015 decision (see Holland & Knight's alert, "Fair Housing Act Prohibits Policies and Practices Causing a Disparate Impact," June 25, 2015) holding that individuals and groups can challenge housing policies or practices that have a disproportionate adverse effect on protected classes (i.e., a disparate impact) – even if there is no discriminatory intent behind them.

Burden-Shifting Standard

HUD's guidance, based on its 2013 disparate impact regulations, asserts there is a three-step, burden-shifting standard for analyzing claims that criminal history screening violates the Fair Housing Act because it results in a discriminatory effect. Specifically:

• A court should analyze whether a criminal history policy results in a disparate impact on a group of persons because of their inclusion in a protected class (i.e., on the basis of race, color, religion, sex, handicap, familial status, national origin). If a plaintiff or HUD can show a disparate impact, it should be considered to have satisfied its initial burden, and the burden would then shift to the housing provider to defend its policies.
• If a plaintiff or HUD meets its initial burden showing that a policy has a disparate impact, under HUD's framework, "the burden shifts to the housing provider to prove that the challenged policy is justified – that is, that it is necessary to achieve a substantial, legitimate, nondiscriminatory interest of the housing provider." This means that the housing provider would need to prove that 1) it has a substantial, legitimate, nondiscriminatory interest and 2) the challenged policy actually achieves that interest.
• Once a housing provider demonstrates that a challenged policy is necessary to achieve a substantial, legitimate, nondiscriminatory interest, the burden would then shift back to the plaintiff or HUD to demonstrate that interest could be served by another practice that has a less discriminatory effect.

Additional HUD Positions

In its guidance, HUD advances the following additional policy positions:

• A housing provider with a policy or practice of excluding individuals because of one or more prior arrests (without any conviction) cannot satisfy its burden of showing that the policy is necessary to achieve a substantial, legitimate, nondiscriminatory interest.
• Although criminal background screenings based on criminal convictions may be necessary to serve a substantial, legitimate, nondiscriminatory interest, the burden is on the housing provider to prove that the specific policy adopted is necessary to serve that substantial, legitimate, nondiscriminatory interest.
• A housing provider that imposes a blanket prohibition on any person with a conviction record without regard to when the conviction occurred, what the underlying conduct entailed or what has happened since the conviction will not be able to meet this burden.
• A policy must "accurately distinguish[] between criminal conduct that indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not."
• The nature and severity of an individual's conviction and the amount of time that has passed since the criminal conduct occurred should also be taken into account.
• An "individualized assessment of relevant mitigating information beyond that contained in an individual's criminal record is likely to have a less discriminatory effect than categorical exclusions that do not take such additional information into account."

Considerations for Housing Providers

Although the above policy positions have, for the most part, not yet been tested in court, HUD's release of this guidance and the positions that HUD takes throughout the document suggest that the agency is focused on this issue and will likely investigate and bring enforcement actions for certain uses of criminal background screenings. Accordingly, housing providers should consider their policies in light of the recent Supreme Court decision, HUD's regulation and this guidance on criminal background screenings.

Holland & Knight lawyers have extensive experience in defending and settling these types of suits as well as providing comprehensive guidance in all Fair Housing Act matters.    

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.