Supreme Court rules that Disparate Impact can apply to the Fair Housing Act

Jun 30, 2015

On June 25, 2015, the Supreme Court in a 5-4 ruling upheld a Court of Appeals decision that Disparate Impact is applicable under the Fair Housing Act.  Justice Anthony Kennedy wrote the opinion for the majority in the case of Texas Department of Housing & Community Affairs v. The Inclusive Communities Project, Inc.

According to Justice Kennedy, "the underlying dispute in this case concerns where housing for low-income persons should be constructed in Dallas, Texas — that is, whether the housing should be built in the inner city or in the suburbs."  It was argued that federal tax credits issued to developers to build affordable housing resulted in a pattern of segregated housing, due to this Texas agency issuing most of these credits in predominantly inner-city black areas, and relatively few of these credits in suburban, primarily white neighborhoods.

In a Disparate Impact case, an organization or company can be held liable even if there was no intent to discriminate... simply having business practices that have a disproportionate effect on certain protected classes, e.g., minorities, can result in a disparate impact liability.  This Supreme Court decision means that in the future, plaintiffs in housing discrimination lawsuits will not be forced to demonstrate an intent to discriminate, but can simply show evidence of disparate impact policies.

It is expected that the U.S. Department of Justice (DOJ) will increase its enforcement under the Fair Housing Act, based upon this Supreme Court decision, and the subsequent statement by Loretta Lynch, U.S. Attorney General that the DOJ will continue to enforce the Fair Housing Act, including using challenges based upon discriminatory effects.

Disparate Impact has been used in the past in the employment arena, primarily by the EEOC (Equal Employment Opportunity Commission), but this decision clearly puts this theory in the housing industry as well.  It may be prudent for companies and organizations in the housing industry to proactively review their policies and procedures to uncover and modify any of their practices that might negatively impact any protected class.

Posted by: Rudy Troisi.  President, Reliable Background Screening.




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