Two recent lawsuits by the Equal Employment Opportunity Commission have caught the attention of many people in the multi-housing industry, because the outcome has the potential to affect how landlords can utilize criminal background checks when screening tenants.
In the lawsuits, the EEOC is challenging how Dollar General Stores and BMW’s South Carolina manufacturing plant were utilizing criminal background checks in employment screening.
In both cases, the agency claims that the practice utilized by the employers causes “disparate impact” because it discriminates against African-Americans, who generally have higher arrest and conviction rates than whites.
In the case of BMW, the employees were already working at the plant where a contractor’s policy was not to employ anyone with a criminal record within the past seven years. But when a new contractor took over, BMW ordered a new round of criminal background checks and fired anyone who had a criminal record.
The problem was that 70 of the 88 people fired were black. Some of the fired employees had been with BMW for more than a decade.
In the case of Dollar General Stores, one applicant was offered employment even though she disclosed a conviction for a controlled substance that happened six years ago. But her job offer was ultimately revoked because it violated Dollar’s to disqualify anyone who had that type of conviction within the last 10 years. Another applicant was fired by Dollar General despite proving that a report showing that she had a felony conviction was wrong.
While these lawsuits are focused on employment background checks, and they are far outside the multi-housing industry, they’re important for landlords to note because of the underlying theme they represent: disparate impact.
Earlier this year, HUD — the Fair Housing watchdog — clarified its rules concerning disparate impact and reaffirmed its commitment to prosecute all types of housing discrimination claims. Disparate impact can occur even where there is no overt intent to discriminate against a protected class of people — such as ethnic minorities, if leasing policies still result in harm. If the EEOC prevails by proving that blanket criminal background checks may harm minority applicants, it is easy to see how rental applicants could ask HUD to adopt a similar stance with respect to tenant screening.
It could take years before any rulings on the EEOC’s claims, and it is highly unlikely that landlords will someday have to forgo running criminal background checks on rental applicants. However, there could come a day when landlords will need to prove a nexus between the applicant’s criminal record and the risks to the landlord before rejecting an applicant for criminal history.
It’s worth noting that the EEOC reports that it reached out to these employers in an effort to resolve the cases before filing the claims. HUD may also show some mercy when in comes to pointing out the more subtle forms of discrimination like disparate impact. Both agencies say their priority is in preventing discrimination, not punishing those who do discriminate.
Disparate impact discrimination can occur from other leasing policies outside of tenant screening. For instance, the places a landlord chooses to advertise a vacancy, the methods used in showing a property, and even rental collection policies can adversely impact one class of tenants over another. Ideally, the population of rental applicants and tenants will naturally mirror the larger demographic of the surrounding area.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
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Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.
