Tenants with Criminal Records and Disparate Impact

In recent history the rising concern over disparate impact in the tenant screening arena within the housing market is causing the re-evaluation of the tenant selection process.  In many cases where a facially neutral housing policy is used it often times negatively affects minorities, particularly those with a criminal record.  Having a seemingly non-discriminatory tenant screening policy is not enough anymore.  It now also has to be non-discriminatory on the aggregate level for all classes of people which is called disparate impact.  At this point in time where ban-the-box laws and the efforts of the EEOC have made it easier for those with a criminal past to achieve gainful employment, it now is going further by making landlords, property managers and owners also responsible for the negative effects that come from disparate impact.

In recent years a wide variety of laws have been enacted to protect individuals from potential disparate impact.  Additionally ban-the-box laws have eliminated the use of the question of past criminal history on the employment application and also dictates when criminal background checks can be conducted.

The FHA is a legal act that protects individuals from discrimination in housing and HUD is tasked with protection.  Recently, HUD released updated guidelines on how to protect against disparate impact in housing during the application process.

From the Village News, (Mar. 31, 17):

Disparate impact theory is when the housing provider has a facially neutral policy and applies it uniformly, but it impacts a group in one of the protected classes disproportionately than the other groups. Using the same policy as above, a housing provider may have a blanket policy of not allowing people who have been convicted of a felony and applies it uniformly to everyone who applies for housing. On its face, this does not seem like discrimination because the housing provider applies it to everyone and people who have been convicted of a felony are not a listed protected class in the Fair Housing Act. However, it could be discrimination under the disparate impact theory.  villagenews.com/realestate/impact-excluding-tenants-prior-convictions/

In the USA today landlords must utilize policies that allow an individual the opportunity to rent in a fair, equal, and uniform manner.  To treat a potential tenant differently from an existing policy would be discrimination.  In recent history disparate impact cases have been successful proving that if discovered could lead to legal action against the landlord.

Disparate impact has been proven time and time again, and a recent test by the Equal Rights Center has shown its impact.

Conducted by Kate Scott and staff of the ERC findings provided profound results:

From howhousingmatters.org (Mar. 30, 17):

  • Housing providers exhibited more favorable treatment for the white female tester than the black female tester in 47 percent of the tests conducted.
  • The black tester was only favored in 11 percent of the tests, while 42 percent of tests revealed no differential treatment.
  • Twenty-eight percent of the screening policies for criminal records used by local housing providers may illegally cause a disparate impact based on race.
  • Local housing providers should evaluate, revise, and increase the transparency of their criminal-record screening processes.  howhousingmatters.org/articles/racial-discrimination-can-yield-differential-treatment-among-potential-renters-criminal-records/

A well-qualified third-party tenant screening agency should be able to assist any and all landlords and property managers in the creation and maintenance of a fully compliant tenant screening policy.  One that can gather all the pertinent information required to make a well informed decision on a potential tenant as well as one that does not discriminate.

Tenant background checks can provide a landlord or property manager with the verification of information provided by an applicant.  This information includes:

  • Consumer Credit Reports
  • Eviction Information
  • Sex Offender Data
  • SSN Validation w/Address History Trace
  • And Criminal Background History

At the end of the day Criminal Background Records should remain an essential part of the tenant screening process but there are strict laws governing when a criminal record report can be pulled as well as for what purpose.  A solid tenant screening policy should include the exact reason information is retrieved and how information is pulled in a uniform non-discriminatory manner for all applicants even in the aggregate view such as disparate impact reveals.

To learn more about disparate impact and the effect it is having on the apartment industry and how this leads to tenant screening policy changes read recent TenantScreeningUSA.com press release: http://tenantscreeningusa.com/tenant-screening-news/tenants-with-criminal-records-a-continuing-evolution/