Disparate Impact Reinterpreted: Fair Housing Under Threat

With the current administration’s emphasis on deregulation, the number of housing discrimination complaints have skyrocketed to 31,202 complaints in 2018 alone, a twenty-four year high. [1] This number is likely to rise even higher in the near future as a key tool in the fight against housing discrimination comes under threat. Recently, the Trump Administration’s Department of Housing and Urban Development (HUD) has made attempts to re-interpret the disparate impact standard by making this legal principle increasingly difficult for victims to prove and utilize in cases of housing discrimination. [2]

In its original application, disparate impact is a “theory of liability” that prevents the use of “facially neutral employment practices,” or policies without a clear intention to discriminate, that adversely affect a protected employment class such as one based on race, gender, or religion. [3] The recent development is particularly concerning because the disparate impact standard is not only integral in proving cases of employment discrimination, but it is also essential in combatting discrimination in areas ranging from education to housing. [4] 

Disparate impact’s history of legal versatility and expansive applicability traces its roots back to the late sixties. Following the passage of the Civil Rights Act of 1968, advocates for racial equality soon realized that many corporate and government policies that end up being discriminatory rarely had the intention of being discriminatory. Concerns regarding the gap between the intent of these policies and their outcomes were soon addressed by disparate impact theory. 

The first use of disparate impact argumentation was in the landmark case Griggs v. Duke Power Co. (1971) in which the U.S. Supreme Court found that the use of high school diplomas and intelligence test scores as employment prerequisites was unconstitutional, given that there was no demonstrable association between the score on the intelligence tests and job performance indication. [5] In fact, Duke Power’s standardized testing requirement discriminated against primarily African-American employees, making it particularly difficult for them to be hired or promoted. [6] While Duke Power was ultimately not found guilty of the intent to discriminate, Duke Power’s execution had unintended discriminatory consequences in solidifying a predominantly white-male dominated workforce. [7] 

Through Griggs v. Duke Power Co., the Supreme Court concluded that Title VII of the Civil Rights Act of 1968 “proscribes not only overt discrimination, but also practices that are fair in form, but discriminatory in operation.” [8] Therefore, the Court deemed disparate impact a logical extension of Title VII of the Civil Rights Act of 1968 which stated that it was unlawful for employers to “limit, segregate, or classify” an employee on the basis of “race, color, religion, sex, or national origin.” [9] The ruling made clear that employers must be mindful of not only discriminatory intentions but also the discriminatory consequences of their practices.

While Griggs v. Duke Power Co. established the principle of disparate impact in employment, Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc. (2015) extended this principle to fair housing law. [10] In his majority opinion, Justice Anthony Kennedy stated that disparate impact liability is incorporated into any and all anti-discrimination laws that “refers to the consequence of actions and not just the mindset of actors.” [11] By these standards, the Court found that disparate impact claims are cognizable under the Fair Housing Act of 1968, solidifying the principle as a legally viable tool to combat housing discrimination. [12] Since the ruling, disparate impact theory has been an important component of combating housing discrimination and promoting housing equity. Its primary applications range from issues of rental practice and lending to property insurance and zoning, playing a critical role in protecting individuals during the roughly four million instances of housing discrimination that occur per year. [13] 

Although the current standard for presentation of evidence at the prima facie stage of a housing discrimination lawsuit is broad and favorable to the plaintiff, the proposed change introduced by HUD would shift the burden of proof towards the plaintiff. [14] This change would require that the victims of discrimination provide explicit evidence demonstrating that the challenged practice is “arbitrary, artificial and unnecessary.” [15] This is made especially difficult because plaintiffs are also required by HUD to prove that there is a “robust causal link” between practice and disparate impact, a discriminatory effect on a protected class, a significant impact not driven by chance, and a form of discrimination directly caused by the practice. [16] All of the above must be proved by a preponderance of the evidence; there must be higher than a 50% chance that each of the four standards described above is true as determined by the case’s fact finder. [17] Through these changes, advocates of racial justice and housing equality indicate how HUD has raised the bar for proving disparate impact to a near-unattainable standard. In essence, this new interpretation effectively discourages the use of disparate theory as a means to prove housing discrimination. [18] 

HUD insists that the proposed reinterpretation would “provide more appropriate guidance on what constitutes unlawful disparate impact to better reflect the Supreme Court’s 2015 ruling in Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc.” [19] It also argues that the rule change on disparate impact would increase legal clarity and prevent the pervasive use of race in disparate impact liability. [20] The alleged constitutional concern by HUD is that this focus on race would inevitably lead to the government and other private entities establishing race-based quotas. [21] Nevertheless, many proponents and primary actors behind this rule change have demonstrated opposition to disparate impact liability in the past. In fact, critics of disparate impact claim that it often restricts the free market and unfairly holds businesses liable for discriminatory practices that executives neither intended to happen nor predicted to occur. [22]

The legal issue that is raised in particular ultimately comes down to the conflict between a policy’s intent and a policy’s effect. Proponents of HUD’s rule change insist that both companies and governmental institutions should have the ability to experiment with these facially neutral policies without facing repercussions. However, by raising the standards to prove disparate impact in housing, the Department of Housing and Urban Development may set a dangerous precedent, eroding the protections disparate impact already provides in education, healthcare, and employment. Under these conditions, institutions that engage in housing discrimination will not be held accountable for the tangible discrimination they cause. As this development continues, it is critical to maintain a close eye in order to ensure that foundational civil rights and the tools for their protection remain intact and resilient. 

[1] Cromwell, Charlene. “Cromwell: 'Housing discrimination complaints reach 24-year high'.” The Atlanta Voice, November 24, 2019. https://www.theatlantavoice.com/articles/cromwell-housing-discrimination-complaints-reach-24-year-high/.

[2] Jan, Tracy. “HUD raises the bar for bringing discrimination claims.” The Washington Post, August 17, 2019. https://www.washingtonpost.com/business/2019/08/16/hud-raises-bar-bringing-discrimination-claims/.

[3] Guerin, Losa. “Disparate Impact Discrimination.” Nolo, June 25, 2013. https://www.nolo.com/legal-encyclopedia/disparate-impact-discrimination.html.

[4] “The Facts.” Defend Civil Rights. https://www.defendcivilrights.org/facts.

[5] North Carolina History Project. “Griggs v. Duke Power.” John Locke Foundation. https://northcarolinahistory.org/encyclopedia/griggs-v-duke-power/.

[6] “Griggs v. Duke Power Company.” Oyez. https://www.oyez.org/cases/1970/124.

[7] North Carolina History Project. “Griggs v. Duke Power.” John Locke Foundation. https://northcarolinahistory.org/encyclopedia/griggs-v-duke-power/.

[8] Legal Defense and Educational Fund. “Case: Griggs v Duke Power.” NAACP. https://www.naacpldf.org/case-issue/griggs-v-duke-power-co/.

[9] Civil Rights Act of 1964 § 7, 42 U.S.C. § 2000e et seq (1964).

[10] The Editorial Board. “Affordable Housing, Racial Isolation.” The New York Times, June 29, 2015. https://www.nytimes.com/2015/06/29/opinion/affordable-housing-racial-isolation.html?_r=0.

[11] “Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc.” Constitutional Accountability Center. https://www.theusconstitution.org/litigation/texas-department-of-housing-and-community-affairs-v-the-inclusive-communities-project-inc-u-s-sup-ct/.

[12] Merrefield, Clark. “How a proposed HUD rule would make it harder to file some housing discrimination claims.” Journalist’s Resource, October 25, 2019 https://journalistsresource.org/studies/society/housing/proposed-hud-rule-disparate-impact-housing-discrimination/.

[13] “The Facts.” Defend Civil Rights. https://www.defendcivilrights.org/facts.

[14] Merrefield, Clark. “How a proposed HUD rule would make it harder to file some housing discrimination claims.” Journalist’s Resource, October 25, 2019 https://journalistsresource.org/studies/society/housing/proposed-hud-rule-disparate-impact-housing-discrimination/.

[15] “HUD’s Implementation of the Fair Housing Act’s Disparate Impact Standard; Proposed Rule,” 84 Federal Register 160 (18 October 2019), pp 42856-42858.

[16] Id.

[17] Merrefield, Clark. “How a proposed HUD rule would make it harder to file some housing discrimination claims.” Journalist’s Resource, October 25, 2019 https://journalistsresource.org/studies/society/housing/proposed-hud-rule-disparate-impact-housing-discrimination/.

[18] The Times Editorial Board. “Editorial: The Trump administration is trying to make it harder to fight housing discrimination.” The LA Times, August 24, 2019. https://www.latimes.com/opinion/story/2019-08-23/trump-hud-disparate-impact-housing-discrimination.

[19] HUD Public Affairs. “HUD PROPOSES REVISED 'DISPARATE IMPACT' RULE.” HUD, August 16, 2019. https://www.hud.gov/press/press_releases_media_advisories/HUD_No_19_122.

[20] Id.

[21] “HUD’s Implementation of the Fair Housing Act’s Disparate Impact Standard; Proposed Rule,” 84 Federal Register 160 (18 October 2019), pp 42858.

[22] Vadum, Matthew. “Ben Carson Seeks Fairer, More Efficient Disparate Impact Rule.” The Epoch Times, October 30, 2019. https://www.theepochtimes.com/ben-carson-seeks-fairer-more-efficient-disparate-impact-rule_3132184.html.