Dr. Ben Carson, former Republican Presidential Candidate and Neurosurgeon, has been confirmed as the new Housing and Urban Development Secretary (HUD).

HUD, formed by an act of Congress in 1965, is tasked with implementing federal policies directed at the housing market.

As Secretary, Dr. Carson will have vast power in regards to the organization and structure of the agency, specifically the field structure at the local level. Nonetheless, Dr. Carson’s discretion is bound by the confines of federal mandates.

As real estate industry professionals, we wish Dr. Ben Carson much success in his new role. 

Last year, the Supreme Court ruled that disparate impact discrimination claims are cognizable under the Fair Housing Act. For a refresher, read my blog post about the decision here. In sum, landlords may be liable for discrimination if the effect of a facially neutral housing action has a disproportionate impact on a protected class.

Today, the office of general counsel to the U.S. Department of Housing and Urban Development issued a memorandum offering guidance regarding the potential discriminatory effects of taking an adverse housing action against a tenant based upon their criminal history. A link to the memorandum can be found here. The logline for this memorandum is that HUD believes taking an adverse housing action based upon criminal history may constitute discrimination on the basis of race or national origin because of its disparate impact on those protected classes.

The memorandum examines the three-step burden-shifting test a court would analyze in a claim brought by a tenant who alleges they were discriminated based upon their criminal history. The stated purpose of the memorandum is facially neutral, addressing “how the discriminatory effects and disparate treatment methods of proof apply in Fair Housing Act cases in which a housing provider justifies an adverse housing action… based on an individual’s criminal history.” The practical effect of the memorandum, however, is that HUD has armed plaintiff’s attorneys with a new theory of liability that all landlord’s should understand.

The three-step burden-shifting test requires that a plaintiff first prove that the complained of practice has a discriminatory effect. If the plaintiff is successful, the defendant must then prove that the challenged practice has a legally sufficient justification. Finally, if the defendant proves a legally sufficient justification, a plaintiff must then prove that there is a less discriminatory alternative available. The HUD memorandum examines each question and attempts to offer guidance in turn.

Discriminatory Effect

HUD submits that national statistics stand for the conclusion that “[n]ationally, racial and ethnic minorities face disproportionately high rates of arrest and incarceration. Without drawing its own conclusion, HUD posits that these statistics, along with other evidence, could provide sufficient proof for the legal position that taking an adverse housing action, such as refusing to enter or renew a lease based upon criminal history, has a disparate impact on African Americans or Hispanics.

Legally Sufficient Justification

If a plaintiff is successful in proving that an adverse housing action on the basis of criminal history has a discriminatory effect on racial or ethnic minorities, a defendant would then be compelled to provide a legally sufficient justification for the action. In analyzing this factor, HUD acknowledges that “resident safety and protecting property are often considered to be among the fundamental responsibilities of a housing provider”. However, HUD does push back by requiring that a defendant submit evidence supporting the conclusion that a policy of discriminating on the basis of criminal history furthers the stated purpose of protecting residents and property. That is, a landlord cannot blindly rely upon this justification in every situation. HUD suggests that landlords consider each potential tenant on a case by case basis instead of having a blanket policy of refusing to lease to anyone with a criminal history

For example, HUD submits that the existence of a prior arrest, which does not carry a subsequent conviction, “has very little, if any, probative value in showing that he has engaged in any misconduct. An arrest shows nothing more than that someone probably suspected the person apprehended of an offense.” HUD concludes that “because arrest records do not constitute proof of past unlawful conduct… the fact of an arrest is not a reliable basis upon which to assess the potential risk to resident safety or property posed by a particular individual.”

Moving further, HUD submits that even a criminal conviction does not automatically create a legally sufficient justification. “A housing provider that imposes a blanket prohibition on any person with any conviction record – no matter when the conviction occurred, what the underlying conduct entailed, or what the convicted person has done since then – will be unable to meet this burden [of proving a legally sufficient justification].” HUD suggests that a “housing provider must show that its policy accurately distinguishes between criminal conduct that indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not.”

Less Discriminatory Alternative

If a landlord proves a legally sufficient justification for the challenged policy or act, the plaintiff may still prevail by proving that a less discriminatory alternative exists. Here, HUD offers no substantiated guidance but submits that the analysis must be performed on a case by case basis. The only suggestion proffered by HUD is that a landlord may consider delaying a criminal history investigation until after a tenant has already qualified financially.

Conclusion

In the end, HUD has taken an aggressive position that all landlords must remain cognizant of when making housing decisions. When forming a policy of utilizing criminal background checks, a landlord should ensure that their policy is “tailored to serve the housing provider’s substantial, legitimate, nondiscriminatory interest and take[s] into consideration such factors as the type of the crime and the length of the time since conviction.” A landlord who has no evidence that its policy or action is grounded in nondiscriminatory justification will be vulnerable to complaints. 

At the very least, HUD has made it clear that blanket prohibitions on any person with a criminal history will face legal challenges based upon the Supreme Court’s upholding of the disparate impact theory of discrimination.

The Department of Housing and Urban Development (HUD) is proposing a ban on smoking in public housing units nationwide to protect residents from the dangers of secondhand smoke. Citing to the higher risks of cancer and other diseases associated with secondhand smoking, HUD Secretary Julian Castro stated that this policy would protect millions of Americans from preventable diseases every year. Additionally, it would save public housing agencies millions of dollars in repairs from fire and smoke damage caused by lit tobacco products.

The “castle doctrine” is a long-standing legal doctrine allowing individuals certain protections in his or own home. However, if HUD’s proposed ban is enacted, public housing will no longer be a castle for those residents who want to smoke in the privacy of their own homes. By conducting public health studies and hearing public comments, HUD is within its rights to create such a ban.

Many public housing agencies across the country have already implemented anti-smoking policies due to the HUD’s vigorous campaign to adopt such policies since 2009. However, this proposed ban would require all public housing agencies to conform to a non-smoking policy in not only the residences but also the indoor common areas, administrative offices, and within 25 feet outdoors of these units.

It is unclear how the rule will be enforced and what kinds of accommodations will be offered to smokers who already reside in these public housing units. Though the act of smoking lit tobacco products does not fall under a protected class, this policy may have a disparate impact on elderly and disabled smokers who cannot easily leave their homes every time they want a cigarette. If the elderly and disabled are unable to conform to the rule, they be forced out of their residences without any other place to go.

Secondhand smoke is a public health issue, but HUD must tread lightly to offer reasonable accommodations to those who already reside in public housing and who may not be able to abide by the new rule.  Otherwise, HUD may face a flood of discrimination lawsuits.