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. 

DEI, the False Claims Act, and the New Enforcement Reality for Employers

National Law Review article published this week highlights a significant shift in federal enforcement strategy: the U.S. Department of Justice is now actively using the False Claims Act (FCA) to scrutinize workplace DEI initiatives at companies that receive federal funds or hold government contracts.

Read the article here:
https://lnkd.in/ee_mvzCg

According to the article, DOJ is issuing civil investigative demands to major employers and treating DEI-related inquiries as potential fraud investigations, not policy disagreements. The focus is no longer limited to what a DEI policy says on paper, but how it operates in practice.

For employers and the attorneys, this represents a material change in exposure.

The FCA has traditionally been used to police false billing and fraudulent payment claims. DOJ is now advancing a novel theory: that maintaining certain DEI practices while certifying compliance with federal anti-discrimination laws can constitute a false or misleading claim for payment. This approach has been reinforced by executive orders, DOJ guidance, and public statements from senior DOJ leadership.

Whether courts ultimately endorse this theory remains to be seen. In the meantime, investigations are underway, and the cost of responding to a CID alone can be significant. Documentation, internal decision-making, and how DEI concepts are operationalized are now front and center.

This is exactly why Attorney Andrew Lieb recently served as a featured instructor for a New York State Bar Association CLE titled Risk-Informed DEI: Balancing Legal Exposure and Organizational Culture. The program was designed to address the reality employers and counsel are facing now.

The CLE focuses on practical, defensible frameworks for advising employers in this environment. That includes identifying where FCA risk may arise, understanding how regulators evaluate DEI implementation rather than labels, and developing documentation and compliance strategies that align with both legal obligations and organizational goals.

For attorneys advising employers, and for organizations that contract with or receive funding from the federal government, DEI is no longer a purely cultural initiative. It is a legal risk management issue that requires careful, informed handling.

Details on the NYSBA CLE, including registration and CLE credit information, are available here:
https://lnkd.in/eHK9FHfk

As enforcement continues to evolve, employers should not assume that rebranding or surface-level changes are sufficient. The question regulators are asking is how programs actually function, how decisions are made, and what representations are being made to the government. Getting that analysis right now can make the difference later.

NYS' Deceptive Acts and Practices Law Expanded and the AG will be Coming for Business

NYS' Deceptive Acts and Practices Law has been expanded to include "Unfair, Deceptive, or Abusive Acts and Practices" and it is now called the FAIR Act - "fostering affordability and integrity through reasonable (FAIR) business practices act" - with the changes being effective on February 17, 2026. The biggest change being that the law's, GBL 349, consumer-oriented requirement has been dropped as a requisite for the Attorney General to bring a claim, but not for private claims. Under the amended law, a business' act is now also violated for being "unfair" and "abusive." 

Unfair means that the act "causes or is likely to cause substantial injury which is not reasonably avoidable and is not outweighed by countervailing benefits to consumers or to competition." 

Abusive means if: 

"(i) "it materially interferes with the ability of a person to understand a term or condition of a product or service; or

(ii) it takes unreasonable advantage of:

(A) a lack of understanding on the part of a person of the material risk, costs, or conditions of a product or service;

(B) the inability of a person to protect such person's interests in selecting or using a product or service; or

(C) the reasonable reliance by a person on a person engaging in the act or practice to act in the relying person's interests." 

Businesses hit with claims under this amended law, remember YOU HAVE FIVE BUSINESS DAYS after receipt of a certified mail from the attorney general to advise as to why an action or proceeding should not be instituted. 

If you receive a certified letter from the NY Attorney General under the FAIR Act, you have five business days. Call Lieb at Law immediately.

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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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Is McDonnell Douglas Dead in NYS' Human Rights Law?

On December 19, 2025, NYS enacted A4040A and S8338, which defines standards for disparate impact discrimination claims in housing and employment respectively, but each also slipped in an easter egg, at new Executive Law 296(5-a)(e), which dramatically changes how disparate treatment discrimination claims will be defended under state law. Specifically, the subsection provides that "[a] demonstration that a practice is supported by a legally sufficient justification, as defined in paragraph (c) of this subdivision, may not be used as a defense against a claim of intentional discrimination." To be certain, under McDonnell Douglas Burden Shifting, which has been utilized to prove intentional discrimination since 1973, the defense of a case was the submission of proof of a non-discriminatory reason for the challenged act. It appears that defense is now dead in NYS - this is a seismic change in NYS discrimination law with ripples unknown. 

If you’re bringing or defending a discrimination case in New York, the rules just changed. Speak with Lieb at Law before you rely on outdated defenses.

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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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