Complying with Fair Housing Rules Banning Sex Discrimination

This month's issue reviews the fair housing provisions banning discrimination based on sex. The law, originally aimed at practices that foreclosed opportunities for women to buy or rent homes, has evolved to encompass a broad array of discriminatory practices. For example, courts have recognized that the rules protect men, as well as women, in finding owners liable for denying housing to male applicants on the assumption that they were more likely to damage the property or host loud parties than female residents.

More recently, the focus has shifted to sexual harassment as a form of sex discrimination. In most cases, the perpetrators are property managers, employees, or contractors, but federal enforcement officials and the courts have come down hard on community owners if they knew about sexual harassment perpetrated by their agents, but failed to do anything to stop it.

Meanwhile, the sex discrimination provisions may be expanded to cover individuals with characteristics not otherwise protected under federal fair housing law. Earlier this year, HUD acknowledged that housing discrimination claims by domestic violence victims may fall within federal housing provisions based on sex and, in some cases, race or national origin. And last year, HUD suggested that the federal sex discrimination provisions may be broad enough to cover some claims of discrimination based on sexual orientation or gender identity.

In this issue, we'll review the fair housing provisions banning sex discrimination, in all its forms. Then, we'll offer six rules to help you recognize and head off potential problems that might otherwise inadvertently trigger a fair housing complaint. Finally, you can take the COACH's Quiz to see how much you've learned.

WHAT DOES THE LAW SAY?

The Fair Housing Act (FHA) prohibits discrimination in housing because of race, color, religion, sex, national origin, familial status, or disability.

The sex discrimination provisions, added to the law in 1974, were designed to end housing practices based on “sexual stereotypes—that is, the assumption that men could perform tasks related to the ownership or rental of housing better than women could. Nevertheless, the law applies equally to discrimination against men as well as against women.

Courts have interpreted the sex discrimination provisions to ban “disparate treatment—that is, offering to one gender opportunities or benefits that are less valuable or more restricted than those offered to the other. When it comes to housing, the FHA makes it unlawful to treat men and women differently because of their gender. Examples include favoring one sex over another, subjecting either sex to more rigorous screening criteria, offering either sex more favorable rental terms, or holding either sex to more stringent application of community rules.

Sexual harassment. Sexual harassment—that is, unwelcome sexual conduct—is a form of sex discrimination that violates the FHA. Courts generally recognize two forms of sexual harassment, though both may be present in a particular case. The first, “quid pro quo” (a Latin phrase meaning “one thing for another”) harassment, occurs when an agent of the housing provider coerces applicants or residents to submit to sexual favors as a condition of getting or keeping their housing. Claims may be pursued, regardless of whether the victim submitted to the sexual conduct or lost a housing opportunity for refusing to do so.

The second form is creating a “hostile environment” of sexual harassment, which occurs when the community or its agents engage in behavior of such severity and pervasiveness that it alters the terms or conditions of the tenancy and results in an environment that's intimidating, hostile, offensive, or otherwise less desirable.

Both men and women may engage in sexual harassment. The key is that the unwelcome sexual conduct is directed at a particular individual because of his or her gender. And whether motivated by sexual desire or by hostility toward a particular gender, the law applies—even if the harasser and the victim are of the same sex.

Property owners may be liable for sexual harassment, even if they didn't personally engage in the sexual harassment of their applicants, residents, or their guests. Owners may be liable if they knew or should have known about sexual harassment committed by their employees or agents, but failed to do anything to stop it.

HUD takes an even stronger stance, asserting that owners or managers may be liable for the acts of employees or agents—regardless of whether they knew or intended the wrongful conduct or were negligent in failing to prevent it from occurring. HUD explains that the law generally holds owners and managers accountable for acts committed by employees or agents within the scope of their work. For example, HUD says, if a manager authorizes a maintenance worker to enter a resident's unit to make repairs, and the worker sexually harasses the resident, then the management company is legally responsible for the discriminatory actions of the maintenance worker.

6 RULES FOR COMPLYING WITH THE FAIR HOUSING ACT'S BAN ON SEX DISCRIMINATION

Rule #1: Don't Screen Out Applicants Based on Their Gender

Under the FHA, it's unlawful to discriminate against applicants based on their sex. That means it's unlawful to reject applicants—of either sex—based on preconceived notions that applicants of the other sex would make better residents.

Example: An Ohio landlord was required to pay damages and civil penalties for sex discrimination when he refused to show a four-bedroom home to a male prospect who planned to live there with three male roommates. Allegedly, the house was one of 80 properties that the landlord owned and rented on an integrated basis to both males and females, but he personally screened prospects for this location because he had difficulty with damages caused by previous male residents of the house. When the prospect called about the vacancy, the landlord allegedly responded, “I'm not interested in renting to males. My past experience has been that males are messy and unclean.” Eventually, the home was rented to a female applicant with children. After a hearing, a HUD administrative law judge found the landlord was liable, but a federal court later reduced the amount of the damages and penalties stemming from the incident [Baumgardner v. U.S., March 1992].

Making decisions to accept or reject applications based on sexual stereotypes can also lead to costly fair housing litigation, particularly when combined with allegations of discrimination based on race or other protected characteristics.

Example: In 2001, the owner of a 60-unit Wisconsin community agreed to pay $25,000 to resolve a fair housing case based on sex and race discrimination. The owner allegedly rejected a rental application because the applicant was both black and male. According to the complaint, the owner's rental agent made statements to a white female tester that indicated a preference for female residents. Without admitting to liability, the owner resolved the case by agreeing to the cash settlement and hiring a management company to oversee operations [U.S. v. Roddis, April 2001].

Finally, it's important to remember that motives are largely irrelevant if communities exclude applicants because of their sex. Courts have recognized that a violation of the FHA can be proved without establishing a malevolent or unlawful intent. That means that you can't exclude either male or female applicants based on their gender, even if you believe you have legitimate reasons for doing so.

Example: In 2003, a Montana landlord agreed to pay $18,000 to resolve allegations of sex discrimination for refusing to rent a unit to a male applicant. Allegedly, the community didn't rent units in a particular building to males for single occupancy, but the landlord explained that she had a good reason to do so: It was a reasonable accommodation for a female resident with a disability, which caused her to have “a great fear of adult males in a residential setting.” Apparently, the Justice Department didn't accept the excuse, and the landlord agreed to the settlement, which banned future discrimination on the basis of sex and required her to obtain fair housing training [U.S. v. Schaberg, February 2003].

Rule #2: Apply Reasonable Screening Criteria to Applicants, Regardless of Their Gender

A more subtle form of sex discrimination is to apply different screening criteria to male and female applicants. The law allows communities to investigate the background, financial ability, and general responsibility of applicants, but it's unlawful to subject applicants to more stringent rental requirements because of their gender.

Example: A Montana landlord was found liable for engaging in a pattern or practice of sex discrimination by refusing to rent apartments to single women unless they had cars. The landlord said she had a good reason for the requirement—the neighborhood where the units were located was poorly lit and dangerous for women walking alone. The court rejected the landlord's argument, ruling that an allegedly benign motivation—especially one as paternalistic and overbroad as that expressed by the landlord—was no excuse for violating the FHA [U.S. v. Reece, April 1978].

Also, take care to avoid applying different rental criteria to pregnant women—or those who are on maternity leave—who may claim discrimination based on sex as well as familial status, which protects both pregnant women and those with children under 18.

Example: This summer, the Justice Department filed a fair housing complaint against the nation's largest mortgage insurance company and two of its underwriters. The complaint accused the defendants of discriminating on the basis of sex and familial status by requiring women on paid maternity leave to return to work before the company would insure their mortgages. According to the department, most mortgage lenders require applicants seeking to borrow more than 80 percent of their home's value to obtain mortgage insurance, meaning the denials to women on maternity leave could cost those women the opportunity to obtain a home loan.

“No woman should be denied the opportunity to receive a mortgage loan simply because she has just given birth,” Thomas E. Perez, Assistant Attorney General for the Justice Department's Civil Rights Division, said in a statement. “Our nation's fair housing laws prohibit this kind of discrimination, and the Justice Department is committed to aggressive enforcement of those laws” [U.S. v. Mortgage Guaranty Insurance Corp., July 2011].

Although that case involves allegedly discriminatory lending practices, communities must avoid similar allegations while applying financial screening criteria to women based on whether they are pregnant or on maternity leave.

Example: The owner of a New York duplex was ordered to pay $20,000 for sex discrimination under state law because of his refusal to rent a unit to an applicant after learning that she was pregnant [Woehrling v. New York State Division of Human Rights, November 2008].

Communities may also be liable for housing discrimination against divorced women by discounting alimony or child support in determining whether they can meet the community's income requirements. Since most recipients of alimony and child support are women, such a policy would unfairly discriminate against applicants because they are women. And in some states, the law specifically bans housing discrimination based on lawful source of income, including alimony and child support.

Rule #3: Don't Express Preference For or Against Applicants Based on Gender

Be careful about what your staff says—over the phone, during office visits, or while showing units—to ensure that they do not express or imply a preference for or against applicants of either sex.

It's a separate violation of the FHA to make, print, or publish statements or advertisements that express a preference, limitation, or discrimination based on sex or other protected characteristics. Furthermore, comments intended to discourage applicants from living in your community or from living in certain parts of the community based on their sex is a form of unlawful steering under fair housing law. Furthermore, comments indicating that you hold men and women to different standards when it comes to matters of personal appearance or lifestyle may lead to a sex discrimination complaint.

Example: In 2002, the owner of a California community was ordered to pay more than $30,000 in damages for sex discrimination because of derogatory statements he made about a female prospect because she had tattoos. Allegedly, the landlord showed the unit to a couple, but left a message on the man's answering machine at work indicating that he rented the unit to another couple. He also allegedly said that the woman, who had a tattoo on her ankle, was an unacceptable tenant because: “Men wear tattoos different but when women do it, it could be an indication of not as high standards per se.” When the landlord didn't appear in court, the court awarded the couple damages to compensate them for mental anguish and punitive damages because the owner's conduct was reckless and in blatant disregard of the couple's rights [Mairs v. Gilbreath, October 2002].

The same rules apply to your advertising and marketing materials. Simply put, advertisements—whether in print or online—should not state or imply a preference, limitation, or discrimination based on sex, according to HUD advertising regulations (which have since been rescinded but continue to be a useful resource). Those regulations provided that advertisements may not state or imply that housing “is available to persons of only one sex and not the other, though there are exceptions involving shared living space and dormitories in educational institutions.”

Fair housing experts warn against using particular words or phrases that imply a preference based on sex and other protected characteristics. While it's certainly unlawful to advertise “No Men” or “Female Applicants Preferred,” in a 1995 memo, a HUD official stated that the use of terms, such as “bachelor apartment,” are commonly used as physical descriptions of the unit and do not violate the FHA. Nevertheless, communities should carefully consider use of such terms, since the high incidence of discriminatory online advertising has led to increased scrutiny by fair housing organizations and enforcement agencies.

Example: This summer, a court ruled that further proceedings were necessary to determine whether the owner of an Ohio community violated fair housing law for posting several online ads, including one for a “Great Bachelor Pad,” ideal for “any single man looking to hook up.” A fair housing group sued, alleging that the comments indicated a preference for single people and those of a particular gender and against families with children.

The court ruled that an ordinary reader would not necessarily conclude that the ad indicated an unlawful preference or limitation based on sex or family status. The court said that the use of the word “bachelor” in the ad's headline might not grab a woman's attention, but that if she opened the ad, she could very well decide that the one-bedroom unit with a washer-dryer hookup could suit her needs and nothing in the ad required the conclusion that women were unwelcome at the community. The court also added, “Common sense dictates that an apartment complex that advertises that it is a great place for any single man ‘looking to hook up’ would seek to attract both men and women.”

In cases like this, the court said it was necessary to view the ads as part of the entire advertising campaign to determine whether there was an FHA violation. The court noted that owner had more than 1,900 units in the area and that the ads in question were among thousands posted in a 10-month period, many of which tended to show the communities were family-friendly. Consequently, further proceedings were required to resolve the matter [Miami Valley Fair Housing Center, Inc. v. The Connor Group, July 2011].

Rule #4: Enforce Zero-Tolerance Policy Against Sexual Harassment

Federal enforcement agencies and the courts have taken a hard line to hold the perpetrators of sexual harassment accountable for sexual harassment against prospects, applicants, and residents. According to HUD guidelines, owners and managers who engage in sexual harassment are directly liable for harm caused by their own conduct—or for the conduct of their agents or employees, if they knew about the sexual harassment, but did nothing to stop it.

Example: In March, a federal court ordered a Michigan owner and a former manager to pay a combined $82,500 in civil penalties—on top of $115,000 awarded by a jury last summer—in a sexual harassment case. During last year's trial, the government presented evidence that the employee subjected six women to severe and pervasive sexual harassment, ranging from unwelcome sexual comments and sexual advances, to requiring sexual favors in exchange for their tenancy. One woman testified that the employee refused to give her keys to her apartment until she agreed to have sex with him. Another woman testified that she had sex with the employee at least 20 times because he threatened that the owner would evict her if she did not. The court found that the manager's behavior “was egregious and interfered with the women's peaceful enjoyment of their homes, which should have been the one place where they could turn for refuge.” The court also observed that the owner hadn't taken any corrective action after two residents complained to him about the manager [U.S. v. Peterson, March 2011].

To ward off such claims, develop a clear, written policy expressing zero tolerance for sexual harassment at your community by anyone working at your community—whether employed by you or performing services on your behalf.

Thoroughly explain that sexual harassment consists of unwelcome sexual conduct—through words or actions—toward prospects, applicants, residents, guests, and other visitors, regardless of their gender. Make it clear that it is unlawful to coerce residents into providing sexual favors in exchange for getting or keeping their housing, receiving maintenance or other services, or obtaining special treatment, such as reduced rent or other benefits. Moreover, warn staff to refrain from sharing dirty jokes, making suggestive remarks, or engaging in other sexually charged conduct with prospects or residents.

The policy should encourage anyone who believes they have been subjected to sexual harassment to file a complaint, and it should identify to whom the complaint should be addressed. Spell out how sexual harassment complaints will be handled, such as where they go, how they are investigated, and how they are to be resolved. It should also state that sexual harassment by employees will not be tolerated and is grounds for discipline, including dismissal.

Rule #5: Avoid Discrimination Complaints from Domestic Violence Survivors

In some cases, domestic violence survivors may pursue claims of sex discrimination under the FHA. In a recent analysis, HUD explained that survivors of domestic violence often face housing discrimination because of their history or the acts of their abusers. Federally assisted housing communities are subject to the Violence Against Women Act (VAWA), which bars discrimination against victims of domestic violence.

Meanwhile, HUD suggests that domestic violence victims may be entitled to protection under the FHA's ban on sex discrimination. Since statistics show that women are overwhelmingly the victims of domestic violence, HUD has reasoned that discrimination against domestic violence survivors is almost always discrimination against women. Consequently, HUD notes that domestic violence survivors who are denied housing, evicted, or deprived of assistance based on the violence in their homes may be entitled to protection under the FHA provisions banning sex discrimination.

COACH'S TIP: Check whether your community is subject to state and local laws aimed at protecting domestic violence victims. Some states and cities have special laws, for example, to prevent eviction or other adverse action against domestic violence victims because of the conduct of their abusers. Meanwhile, a handful of states have—or are considering—measures to add domestic violence victims to their lists of protected characteristics under fair housing law.

Rule #6: Avoid Discrimination Based on Sexual Orientation and Gender Identity

The FHA doesn't specifically prohibit discrimination based on sexual orientation or gender identity, but HUD has identified certain circumstances in which such cases may give rise to sex discrimination under federal law, depending on the circumstances.

In general, the courts have ruled against advocates who claim that federal law prohibits individuals from discrimination because of sexual orientation. Although most, if not all, of those cases involved discrimination in employment, not housing, courts often look to the employment law cases to interpret the FHA. Consequently, HUD has acknowledged that courts would be likely to apply the same rules to federal fair housing cases—that claims for discrimination because of a person's sexual orientation or transgender status would not be covered as a form of sex discrimination under federal law.

Nevertheless, HUD has noted that courts have been more open to employment discrimination claims based on sexual stereotyping or gender nonconformity—that is, when the discrimination is motivated because the perpetrator believed the victim failed to act in the way expected of a man or woman. HUD notes that the cases become more difficult when the victim is gay, lesbian, or transgender, because the law doesn't cover discrimination based on those characteristics.

Using the same logic, HUD says that similar claims may be actionable under the FHA if the discriminatory actions were motivated by the victim's nonconformance with gender stereotypes. For example, HUD says, if a female prospect claims that she was subjected to discrimination by a landlord because she wears masculine clothes and engages in other physical expressions that are stereotypically male, then she may pursue a claim under the FHA for sex discrimination.

COACH'S TIP: Note that nearly half the states and numerous local governments have enacted fair housing laws banning discrimination based on sexual orientation. And a growing number have included—or added—protections based on gender identity or expression. And several states have recognized same-sex marriage and other forms of civil unions or domestic partnerships.

Fair Housing Act: 42 USC §3601 et seq.

24 C.F.R. 100.65(a)(5): Discrimination in terms, conditions and privileges and services and facilities.

Memo, Questions and Answers on Sexual Harassment under the Fair Housing Act; Nov. 17, 2008: http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_7782.pdf.

Memo, Assessing Claims of Housing Discrimination Against Victims of Domestic Violence under the Fair Housing Act and the Violence Against Women Act; Feb. 9, 2011: http://www.hud.gov/offices/fheo/library/11-domestic-violence-memo-with-attachment.pdf.