Avoid Blanket Bans of Ex-Offenders When Conducting Criminal Background Screenings

HUD’s Office of General Counsel (OGC) recently 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). 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, a housing provider violates the Fair Housing Act when the provider’s policy or practice has an unjustified discriminatory effect, even when the provider had no intent to discriminate.

The case originated when the Inclusive Communities Project, a Dallas nonprofit that tries to promote racial and socioeconomic integration, sued the Texas Department of Housing and Community Affairs in 2008 over the way it allocated low-income housing tax credits. In Texas and other states, the state housing agency chooses which projects will receive the credits through a formula called the Qualified Allocation Plan (QAP), which gives some projects more points than others. States publish their QAPs every year, and some give priority to projects that are located in high-opportunity areas, others seek projects that invest in distressed neighborhoods, while others prioritize projects that target extremely low-income individuals. The projects with the most points receive the tax credits, and are thus able to move forward.

The OGC guidance reiterates that the Supreme Court affirmed disparate impact 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.

The OGC outlines the three steps used to analyze claims that a housing provider’s use of criminal history to deny housing results violates the Fair Housing Act. This analytical framework is different from the one used to evaluate claims of intentional discrimination.

First, an applicant must prove that the policy (tenant screening, for example) has a discriminatory effect by resulting in a disparate impact on a group because of their race or national origin. Second, the housing provider gets the opportunity to prove that the policy is justified because it’s necessary to achieve a substantial, legitimate, nondiscriminatory interest. In the third step, the applicant must prove that such interest could be served by another practice that has a less discriminatory effect.

The OGC points out that national statistics provide grounds for HUD to investigate complaints challenging criminal history policies. 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.

Ultimately, 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.

The new guidance also makes clear that, in HUD’s view, so-called “one-strike” policies or blanket bans that refuse admission to anyone with a felony conviction are likely to be deemed discriminatory, and that the use of criminal records for client screening is suspect generally, unless housing providers give individualized consideration of each applicant’s circumstances such as considering the nature, severity, and timing of prior criminal conduct.