HUD Steps Back on Disparate Impact: Why Courts, Not Agencies, Should Set the Rules

The Federal Government just made a smart move in proposing to remove HUD's discrimination effect regulations in housing (under the Fair Housing Act), which now exist at 24 CFR 100.5(b). Specifically, the notice of rulemaking in the Federal Register explains that setting standards to determine if discrimination occurred is better left to the Courts, who ruled on the issue of disparate impact discrimination and set standards in the 2015 case of Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. Therefore, as HUD puts it, as to its regulations, it has "determined they are unnecessary." Not only are they unnecessary, but have regulations on top of case law is confusing where landlords and brokers must look to varying sources to know how to behave and what is disallowed. Hopefully more regulations that establish standards to determine breaches of law will be deleted and we can go back to a less regulated world with more case holdings guiding behavior based on the specific facts at hand.

Have questions about fair housing compliance, discrimination claims, or enforcement risk? Talk to a litigation team that lives in the case law. Contact Lieb at Law, P.C. 

Employment Discrimination Law Updated in NYS - Discriminatory Effect is Enough

On December 19, 2025, the New York State Human Rights Law was extended by S8338, in adding a new subdivision 5-a to Executive Law 296, which provides for proving discrimination in employment without discriminatory intent, just discriminatory effect. Under the law, a discriminatory effect means that a practice "actually or predictably results in a disparate impact on a group of persons, because of their membership in a class protected under this section."  

To prove a case under subdivision 5-a, known as disparate impact discrimination, there is now a burden shifting formula:

• First, the Complainant must prove that "a challenged practice caused or predictably will cause a discriminatory effect."
• Second, the Respondent must prove "that the challenged practice is job related for the position in question and consistent with business necessity." 
• Third, the Complaint must prove "that the business necessity could be served by another practice that has a less discriminatory effect."

If a workplace policy disproportionately harms a protected group, intent no longer matters. Talk to Lieb at Law about your exposure or your claim.

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Housing Discrimination Law Updated in NYS - Discriminatory Effect is Enough

On December 19, 2025, the New York State Human Rights Law was extended by A4040A, in adding a new subdivision 5-a to Executive Law 296, which provides for proving discrimination in housing without discriminatory intent, just discriminatory effect. Under the law, a discriminatory effect means that a practice "actually or predictably results in a disparate impact on a group of persons or creates, increases, reinforces, or perpetuates segregated housing patterns because of race, creed, color, national origin, citizenship or immigration status, sexual orientation, gender identity or expression, military status, sex, age, disability, marital status, status as a victim of domestic violence, lawful source of income or familial."

To prove a case under subdivision 5-a, known as disparate impact discrimination, there is now a burden shifting formula:

• First, the Complainant must prove that "a challenged practice caused or predictably will cause a discriminatory effect."
• Second, the Respondent must prove "that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests of the respondent."
• Third, the Complaint must prove "that the substantial, legitimate, nondiscriminatory interests supporting the challenged practice could be served by another practice that has a less discriminatory effect."

If a housing policy shuts people out without saying it outright, that can now be illegal. Talk to a fair housing litigator at Lieb at Law, P.C. 

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Trump Attempts to Eliminate Disparate Impact Discrimination, BUT Does he Have that Power?

President Trump issued Executive Order 14281, which purports to eliminate disparate impact discrimination, but can a President do that?

Disparate impact discrimination refers to discrimination that is proven by the existence of a discriminatory outcome, but instead of being based on a discriminatory act undertaken with discriminatory intent, it is based on a neutral policy that is not required to be proven to be based on discriminatory intent.

3 Takeaways from the EO:

1. Elimination of Disparate Impact: The order's primary goal is to eliminate the use of "disparate-impact liability" in federal contexts. 
2. Revocation of Regulatory Approvals: The order revokes specific presidential approvals of Department of Justice Title VI (i.e., funding recipients prohibition on discrimination based on race, color, and national origin) regulations related to disparate impact.
3. Review and Revision of Existing Regulations and Cases: Federal agencies, including the EEOC and DOJ, are tasked with reviewing and revising existing regulations, pending investigations, and consent judgments that rely on disparate-impact theory.   

However, eliminating disparate impact is a topic for Congress, not the President. 

In fact, this EO is inconsistent with Statutory/Case Law and rises the potential for lawsuits. To be clear, Title VI, which is the main thrust of this EO, can be established by disparate impact analysis based on Supreme Court precedent from Lau v. Nichols. As to Employment Discrimination (i.e., Title VII of the Civil Rights Act of 1964), disparate impact is also a valid legal theory for proving employment discrimination based on the Supreme Court in cases like Griggs v. Duke Power Co. Similarly, the Fair Housing Act and the Equal Credit Opportunity Act also recognize disparate impact. This order attempts to undermine these protections, potentially leading to increased employment, education, housing, and credit discrimination. Moreover, the Executive Order's argument that disparate-impact liability violates equal protection is flawed. Equal protection aims to prevent discriminatory outcomes, not give paths to discriminate. 

That is all not to say whether the Trump Administration is right or wrong on their policy initiative to revoke disparate impact analysis while focusing on a meritocracy. Instead, this is to say that this should not be undertaken by an ineffective Executive Order, but instead it needs to happen legislatively through Congress. By doing it this way, the Trump Administration is going to create confusion for business that results in more discriminatory lawsuits because decision-makers will trust the EO to do what it purports to do while it likely does not much of anything at all. 

Disparate Impact Discrimination Rule Adopted by HUD for Housing Discrimination

Unintentional discrimination is still discrimination and can result in serious penalties in a lawsuit so long as the effects of actions cause a discriminatory result. 

In the sale, rental, or financing of dwellings and in other housing-related activities, HUD has clarified, by 24 CFR 100, its Rule to evaluate a case, which is effective on May 1, 2023. 

The Rule sets forth how our government analyzes a Title VIII Fair Housing Act case and looks back to reinstate HUD's 2013 rule, titled "Implementation of the Fair Housing Act's Discriminatory Effects Standard." Under the rule, discrimination occurs through "facially neutral practices with an unjustified discriminatory effect." To understand whether there is an unjustified discriminatory effect, the Rule requires "a burden-shifting test," as follows:

The plaintiff or charging party is first required to prove as part of the prima facie showing that a challenged practice caused or predictably will cause a discriminatory effect;

if the plaintiff or charging party makes this prima facie showing, the defendant or respondent must then prove that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests of the defendant or respondent; and 

if the defendant or respondent meets its burden at step two, the plaintiff or charging party may still prevail by proving that the substantial, legitimate, nondiscriminatory interests supporting the challenged practice could be served by another practice that has a less discriminatory effect.

As a result, defendants now have much greater exposure to liability than they had under the 2020 Rule, which has been revoked by this new Final Rule even though it was never enforced or went into effect during the Trump era.