HUD's Criminal Background Screening Guidelines May Limit Tenant Screening Policies
In April, HUD’s Office of General Counsel (OGC) issued guidance addressing how refusing to rent or renew a lease based on an individual’s criminal history could violate the Fair Housing Act (FHA). Although the guidance does not have the force of law, it shows how HUD intends to interpret and enforce the Fair Housing Act.
Last year, in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., the U.S. Supreme Court upheld “disparate impact” liability under the FHA. Under this theory, an owner violates the Fair Housing Act when the owner’s policy or practice has an unjustified discriminatory effect, even when an owner had no intent to discriminate. The OGC guidance reiterates this type of liability. That is, because minorities are arrested and convicted in disproportionate numbers compared to the general population, the use of crime records to screen prospective tenants has a harsher impact on minorities and, as a result, may violate the FHA.
Three-Step Analysis
The OGC outlined three steps used to analyze claims that a housing provider’s use of criminal history to deny housing violates the Fair Housing Act. This analytical framework is different from the one used to evaluate claims of intentional discrimination.
Step 1: Does an owner’s policy of criminal background checks have a disparate discriminatory impact on a group because of their race or national origin? The guidance indicates a strong likelihood of disparate impact based on statistics. Nationally, racial and ethnic minorities face disproportionately high rates of arrest and incarceration. For example, in 2013, African Americans were arrested at a rate more than double their proportion of the general population. Moreover, in 2014, African Americans comprised approximately 36 percent of the total prison population in the United States, but only about 12 percent of the country’s total population. In other words, African Americans were incarcerated at a rate nearly three times their proportion of the general population. Hispanics were similarly incarcerated at a rate disproportionate to their share of the general population, with Hispanic individuals comprising approximately 22 percent of the prison population, but only about 17 percent of the total U.S. population.
In contrast, non-Hispanic whites comprised approximately 62 percent of the total U.S. population but only about 34 percent of the prison population in 2014. Across all age groups, the imprisonment rates for African-American males is almost six times greater than for white males, and for Hispanic males, it’s over twice that for non-Hispanic white males.
Step 2: Does an owner’s criminal background checks achieve a substantial, legitimate, nondiscriminatory interest? At this stage, the analysis looks to whether an owner can prove that the policy is justified because it’s necessary to achieve a substantial, legitimate, nondiscriminatory interest. The guidance indicates that a history of arrests only (with no convictions) is to be completely disregarded, and a housing determination based on arrest records only is, on its face, in violation of the FHA.
The guidance also points out that even if an applicant’s rejection is based on the individual’s history of one or more convictions, “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 . . . a policy or practice that fails to consider the nature, severity, and recency of criminal conduct is unlikely to be proven necessary to serve a ‘substantial, legitimate, nondiscriminatory interest’ of the provider.”
In other words, the guidance says you must differentiate between different types of crimes. It urges owners to distinguish on the basis of the nature, severity, and “recency” of criminal conduct, and to make an “individualized assessment” of each applicant’s criminal history, including the age of the applicant when the crime was committed and subsequent criminal and tenant history. An owner must be able to show that its criminal screening policy accurately distinguishes between criminal conduct that indicates a demonstrable risk to the health and safety of residents or staff and criminal conduct that does not.
Step 3: Can HUD or the plaintiff prove that the owner’s legitimate and nondiscriminatory interest could be served by another practice that has a less discriminatory effect? The third step of the discriminatory effects analysis is applicable only if an owner successfully proves that its criminal history policy or practice is necessary to achieve its substantial, legitimate, nondiscriminatory interest. In the third step, the burden shifts back to the plaintiff or HUD to show that such interest could be served by another practice that has a less discriminatory effect.
Although the identification of a less discriminatory alternative will depend on the particulars of the criminal history policy or practice under challenge, OGC says individualized assessment of relevant mitigating information beyond that contained in an individual’s criminal record is likely to have a less discriminatory effect than blanket exclusions that do not take such additional information into account. Relevant individualized evidence might include: the facts or circumstances surrounding the criminal conduct; the age of the individual at the time of the conduct; evidence that the individual has maintained a good tenant history before and/or after the conviction or conduct; and evidence of rehabilitation efforts.
By delaying consideration of criminal history until after an individual’s financial and other qualifications are verified, a housing provider may be able to minimize any additional costs that such individualized assessment might add to the applicant screening process.
Avoid Blanket Bans of Ex-Offenders
Ultimately, to avoid facing discrimination charges for merely performing criminal background checks, owners should avoid blanket bans of ex-offenders when conducting criminal background screenings. The OGC guidance concludes that arrest records cannot be justified as a screening device, because an arrest without a conviction doesn’t prove unlawful conduct. But conviction records are also suspect, according to OGC, especially when used with strict policies that exclude anyone ever convicted of a felony.
OGC urges owners to distinguish on the basis of the nature, severity, and “recency” of criminal conduct, and to make an “individualized assessment” of each applicant’s criminal history, including the age of the applicant when the crime was committed and subsequent criminal and tenant history. In other words, an owner must be able to show that its criminal screening policy accurately distinguishes between criminal conduct that indicates a demonstrable risk to the health and safety of residents or staff and criminal conduct that does not.
Further information: To learn more about tenant screening best practices in light of this new HUD guidance, you can download the recent webinar, “Applicant Screening and Criminal Histories: Addressing Disparate Impact Liability Under the Fair Housing Act.” This one-hour program, presented by attorney Kathelene Williams and tenant screening expert Linda Richer, is available here.