HUD Gives Further Guidance on Criminal Background Screening

On June 10, 2022, Demetria L. McCain, Principal Deputy Assistant Secretary for Fair Housing and Equal Opportunity (“FHEO”) issued a memorandum setting out a detailed framework for the Office of FHEO, Fair Housing Assistance Programs (“FHAPs” and Fair Housing Initiatives Programs” to use in their investigation and analysis of whether criminal background screening policies comply with the requirements of the Fair Housing Act (“FHA”). The memo also suggests numerous “best practices” or “tips” for housing providers who may be concerned about potential liability under the FHA for their criminal background policies.

The memo generally reviews the three theories of liability when assessing whether criminal background tenant screening policies comply with the FHA: (1) intentional discrimination; (2) unjustified discriminatory effects; and (3) refusal to make reasonable accommodations for persons with disabilities.

For intentional discrimination claims, HUD provided several examples, including:

• A housing provider routinely advises Native American applicants about a criminal records screening policy but does not advise White applicants about the policy;
• A housing provider applied a criminal background screening policy to a Black applicant but did not apply the policy to a White applicant;
• A housing provider rejected a Hispanic applicant based on his criminal record but rented to a White applicant with a comparable criminal record;
• A property manager discouraged a Black applicant with a criminal record from applying, saying their record would likely lead to a rejection, but encouraged a White individual with a comparable criminal record to apply, saying that it was possible their record would not turn up and offering them an application form;
• A housing provider evicted a Black tenant who was convicted of a crime but did not evict a White tenant who was convicted of a similar crime;
• After learning that an applicant was previously homeless and hospitalized for treatment of a mental health condition, a management company departed from its standard procedures and conducted a criminal background screening of the applicant; and
• A locality applies a crime-free ordinance requiring the eviction of criminal involved residents in a neighborhood with a significant Black or Hispanic population but does not apply the ordinance in neighborhoods that are predominately populated by White households.

A housing provider may also face liability for a criminal background screening policy that creates an unjustified discriminatory effect, also known as a disparate impact, on protected classes. HUD reiterates that those claims should be investigated using the framework described in HUD’s 2016 Guidance on Application of Fair Housing Act Standards to the use of Criminal Records by Providers of Housing and Real Estate-Related Transactions.

In short, a complainant who challenges such a criminal background applicant screening policy under a disparate impact theory needs to both: (a) identify the offending policy of the housing provider and (2) provide statistics that support that this policy “actually or predictably” causes this discriminatory effect on a protected class under the FHA. The respondent may then raise a defense that the policy is “necessary to achieve a substantial, legitimate, and nondiscriminatory interest.” The evidence must actually support that the defense existed at the time the policy was adopted; “bald assertions” are not enough.

A common defense raised by housing providers is the policy promotes or safeguards safety of other residents.  HUD’s 2022 memorandum underscores that such an assertion would need to be corroborated by evidence or data in order to comply with the FHA. If a housing provider can provide such evidence, HUD reiterates that investigations should still consider whether the interest can be “served by another practice that has a less discriminatory effect.”

For claims for refusing to make reasonable accommodations for people with disabilities, the HUD memorandum emphasizes that, when the disability of an applicant or tenant contributed to the past criminal conduct, the applicant or tenant may ask for an exception to the criminal background screening policy as a reasonable accommodation.

If the criminal conduct at issue arguably raises concerns about risk of harm to property or other residents, HUD explains that, as part of a reasonable accommodation request, the housing provider should consider any mitigating circumstances that may reduce or eliminate the threat, such as engaging in treatment or therapy.

Finally, the HUD memorandum sets out comprehensive best practices and tips for housing providers to avoid liability over criminal background policies. For example, HUD suggests housing providers should consider not using criminal history to screen tenants because, research indicates that “[c]riminal history is not a good predicator of housing success.”  HUD suggests that HUD funded housing programs that are required by statute to exclude persons with certain criminal backgrounds consider “limiting criminal records screening to the minimum statutory requirements,” to avoid violations of the FHA. These policies may also change following HUD Secretary Fudge’s directive to HUD relevant housing programs in April 2022.

To read the full memorandum, please click here.

By: Kelly Clarke, Co-Director and Managing Attorney, Fair Housing Project, Legal Aid of North Carolina