The Department of Housing & Urban Development (HUD) has issued final regulations defining the standards to make a claim that a neutral policy has a disparate impact on a protected group in a manner that constitutes unlawful discrimination under the federal Fair Housing Act, 42 U.S.C. §3601 et seq. The regulations are at 24 C.F.R. 100.500 and can be found here. The rule affirms that disparate impact claims are available under the Fair Housing Act and identifies an approach to proving them to respond to the variation that exists among Circuits on what the legal test is for disparate impact in this area. Here is the test:
1. Plaintiff must show a discriminatory effect either because defendant’s policies or actions result in a disparate impact on a protected group or because those policies or actions promote segregation.
2. Defendant then has the burden to showthat its practice is necessary to achieve a substantial, legitimate, nondiscriminatory interest, and that that interest cannot be served by another practice that has a less discriminatory effect.
3. Plaintiff can rebut defendant’s argument by showing that the defendant’s interest is not substantial, legitimate, or nondiscriminatory or that defendant’s interest can be achieved by a practice that has a less discriminatory effect.