How HUD's Proposed Fair Housing Rules Could Affect Your Community

To kick off the New Year, Fair Housing Coach spotlights HUD’s new proposed rules on harassment and liability for discriminatory practices—and how they may affect your community’s efforts to comply with fair housing law.

In October 2015, HUD released a proposed rule to create new fair housing regulations that would apply nationally to both private and federally assisted communities. Though released in a single proposed rule, the new regulations would cover two major issues by:

• Establishing formal standards for harassment under fair housing law. The proposed regulations make it clear that fair housing law bans not only sexual harassment, but also harassment based on any protected class, including race, national origin, disability, and family status.
• Clarifying when housing providers and other covered entities and individuals may be held liable for illegal harassment and other discriminatory housing practices. The proposed regulations would create national standards for establishing the liability of owners and managers for the acts of employees, agents, and third parties—for not only harassment, but also for any discriminatory statements or conduct that violate fair housing law.

The rules have not yet been finalized, but whatever happens, it’s essential to prevent—and promptly remedy—any complaints about harassment by applicants and residents at your community. Professor F. Willis Caruso, former head of John Marshall Law School’s fair housing program, predicts increased enforcement activity not only by HUD, but also by its counterparts on the state and local level, which may be more willing to take on harassment claims. And the stakes have never been higher, given the renewed focus on harassment claims by enforcement officials and the high price paid by community owners called to account for alleged harassment by employees and others working on their behalf.

Example: In July 2015, the Justice Department announced a $2.7 million settlement in a sexual harassment case against a North Carolina public housing agency that administers the Section 8 voucher program and two of its former employees. The settlement represents the largest amount ever recovered in a sexual harassment case filed by the Justice Department under federal fair housing law.

The lawsuit alleged that the former employees sexually harassed female voucher program participants by subjecting them to unwanted sexual comments, sexual touching, and other sexual acts; conditioning or offering housing benefits in exchange for sexual acts; and taking adverse housing actions against those who rebuffed their sexual advances. The complaint alleged that they engaged in these activities while exercising their authority as agency employees, and that the agency failed to take reasonable preventive or corrective measures.

“It is deeply offensive and illegal to sexually harass women who are seeking housing for themselves and their families,” Vanita Gupta, Principal Deputy Assistant Attorney General of the Civil Rights Division, said in a statement. “This settlement sends a strong message to those who would exploit their positions of power that their egregious conduct will not be tolerated and that the Civil Rights Division will aggressively pursue those who engage in it” [U.S. v. Wesley, July 2015].

In this lesson, we’ll review HUD’s proposed regulations on harassment and liability for fair housing violations, explain what they may mean for your community, and provide resources to help you protect your community from fair housing trouble. Then you can take the Coach’s Quiz to how much you’ve learned.

HARASSMENT

The Fair Housing Act (FHA) prohibits housing discrimination because of race, color, religion, national origin, sex, disability, or familial status. Among other things, it’s unlawful to make housing unavailable to certain people—or to treat them differently in the terms, conditions, or services associated with the tenancy—based on any of those protected characteristics. In separate provisions, the FHA also makes it unlawful to make discriminatory statements and to threaten, harass, or retaliate against anyone for exercising her rights under fair housing law.

Proposed regulations. In a nutshell, HUD’s proposed regulations on harassment do two things: (1) make it clear that fair housing law bans harassment against all protected classes, not just sexual harassment; and (2) create uniform standards for evaluating quid pro quo and hostile environment harassment claims under fair housing law.

HUD says that the proposed regulation is needed because there are no current formal standards for evaluating harassment claims under fair housing law. Both HUD and the courts have long held that the FHA prohibits harassment in housing on the basis of race, color, national origin, religion, sex, disability, and familial status, according to HUD. By establishing consistent standards for evaluating harassment claims under fair housing law, HUD says that the proposed rule would provide guidance to providers of housing or housing-related services seeking to ensure that their properties or businesses are free of unlawful harassment.

Although the FHA bans harassment based on any federally protected characteristic, HUD says that sexual harassment is the most common form of harassment complaint it receives. Low-income women, often racial and ethnic minorities and persons with disabilities, may be particularly vulnerable to sexual harassment in housing, according to HUD.

“A home should be a refuge where every woman and man deserves to live without the threat of violence or harassment. The rule HUD is proposing is designed to better protect victims of harassment by offering greater clarity for how to handle a claim against an abuser,” HUD Secretary Julián Castro said in a statement.

Absent any standards set by HUD, courts have often applied the standards used in employment discrimination cases to evaluate claims of harassment under fair housing law, according to a blog post by Gustavo Velasquez, HUD Assistant Secretary for Fair Housing and Equal Opportunity. But, he says, the workplace standards aren’t always appropriate because of differences between harassment in the workplace and in one’s home. When harassment happens in the workplace, the victim can escape to his or her home, but when it happens at home, the victim has no escape short of moving or staying away from the home—neither of which should be required, he says.

“Quid pro quo” and “hostile environment” harassment. The proposed regulations would create formal standards for evaluating the two main types of harassment claims under fair housing law:

• “Quid pro quo harassment” (in Latin, meaning “this for that”) involves subjecting a person to an unwelcome request or demand and making submission to the request or demand a condition related to the person’s housing.
• “Hostile environment harassment” involves subjecting a person to unwelcome conduct that is so severe or pervasive that it interferes with or deprives the person the right to use and enjoy the housing.

Under the proposed regulation, quid pro quo claims may be based on any protected characteristic, though claims of quid pro quo harassment are most typically associated with sexual harassment, according to HUD. For example, quid pro quo harassment occurs when a housing provider conditions a tenant’s continued housing on the tenant’s submission to unwelcome requests for sexual favors. A person’s conduct may still be considered quid pro quo harassment even where the victim submits to the unwelcome request or demand.

Hostile environment harassment may be based on race, color, national origin, religion, sex, disability, or familial status. Under the proposed regulation, hostile environment harassment refers to unwelcome conduct that is sufficiently severe or pervasive as to create an environment that unreasonably interferes with the use or enjoyment of the dwelling. Whether hostile environment harassment exists depends on a totality of the circumstances, including:

• The nature of the conduct;
• The context in which the conduct occurred;
• The severity, scope, frequency, duration, and location of the incident(s); and
• The relationships of the persons involved.

Under the proposed regulation, harassment claims may be based on written, oral, and other conduct and don’t require physical contact. Even a single incident of harassment may violate fair housing law, depending on the circumstances.

What Does It Mean for You?

No matter what happens with the proposed regulation, it’s important to take effective measures to guard against—and effectively address—any complaints of harassment. HUD says it continues to aggressively pursue claims of harassment in housing, pointing to several recent cases filed by HUD and the Justice Department against landlords and property managers for alleged harassment by employees, managers, and even other residents.

Example: In September 2015, the owner and former property manager of a 56-unit community in West Virginia agreed to a $120,000 settlement in a fair housing case alleging sexual harassment and retaliation by employees against female residents. The settlement resolves claims against the management company and community owner, but not the individual defendants.

The complaint alleged that a manager and a maintenance worker sexually harassed female residents by entering the residents’ units without permission or notice; coercing them into engaging in unwelcome sexual acts; making unwelcome sexual comments and unwelcome sexual advances to them; subjecting them to unwanted sexual touching and other unwanted sexual acts; and taking adverse actions against female residents when they refused the sexual advances or reported the unwelcome conduct. The complaint alleged that residents complained about the harassment, but the community’s site manager failed to take reasonable preventive or corrective measures.

“Women trying to provide a home for their families should not have to suffer the indignity of having to submit to unwanted sexual demands in order to keep that housing,” Gustavo Velasquez, Assistant Secretary for HUD’s Fair Housing and Equal Opportunity Office, said in a statement. “Today’s settlement sends a loud and clear message to property owners and managers that HUD and the Justice Department are committed to addressing practices that violate the rights of women” [U.S. v. Encore Management Company, 2015].

Example: In October 2015, HUD charged a South Dakota man with sexually harassing a woman who was renting a single-family house with her two children and her boyfriend. HUD alleged that the man, who had been hired to manage and make repairs to the home for its owner, made numerous sexually explicit statements to the woman, including requesting favors. He also allegedly made inappropriate physical contact with the woman and, on at least one occasion, used his key to enter the rental home while the woman was inside, without the woman’s permission. Allegedly, the woman complained to the owner about the man’s behavior, sought a court order, and filed a police report, but the harassment continued, ultimately forcing her to move out. The case will go on for administrative proceedings unless either party elects to take it to court [HUD Secretary v. Goodsell, 2015].

Though complaints for sexual harassment are most common, HUD has pursued fair housing claims against owners and managers for alleged harassment based on other protected classes—and not just by employees, but by other residents. Even in the absence of final regulations, HUD has taken the position that the FHA makes it unlawful for a housing manager or owner to fail to fulfill a duty to correct and end the harassment of one tenant by another, when that harassment is based on race, color, religion, sex, familial status, national origin, or disability.

Example: In October 2015, HUD charged the owner and managers of a 55-plus senior housing community in Wisconsin with violating fair housing law for allegedly failing to take action to stop several neighbors from harassing a resident, who has cerebral palsy, and her daughter with Down’s syndrome.

In her HUD complaint, the mother alleged that several of her neighbors subjected them to constant harassment by repeatedly following them and making offensive comments. In one exchange, a neighbor allegedly told the woman and her daughter: “You don’t belong here…You belong in an institution.” In another encounter, a resident allegedly referred to the woman’s daughter as “mentally retarded” and told her, “You shouldn’t be out of your apartment during the day.”

According to the complaint, local police warned the offending neighbors that citations might be forthcoming if more reports were made, but the harassment continued. After reporting the harassment to apartment managers, the mother said that one manager began pressuring her to move, stating that he didn’t believe the daughter was capable of living independently and that the two of them were causing too much trouble. Allegedly, they moved out after receiving notice that their lease wouldn’t be renewed. The case will go on for administrative proceedings unless either party elects to take it to court [HUD Secretary v. Applewood of Cross Plains, LLC, 2015].

“A person’s home should be where they feel the greatest level of comfort—not anguish and fear because of being subjected to humiliating and degrading comments,” Gustavo Velasquez, HUD Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement announcing the charge. “Harassing a person because of their disability is not only disturbing, it is illegal.”

Learn more: While awaiting further action by HUD on the final regulations, you can learn more to protect your community from harassment claims in the Coach’s August 2014 lesson, “How to Reduce the Risk of a Sexual Harassment Claim at Your Community.” Though its focus is on sexual harassment, the lesson should help you prevent and address claims for harassment based on any protected characteristic.

LIABILITY FOR FAIR HOUSING VIOLATIONS

Owners, managers, employees, and others face potential liability for fair housing violations. All may be held directly liable for their own fair housing violations. That means employees may be sued for making discriminatory statements or treating prospects differently based on race, color, religion, national origin, sex, disability, or familial status. Owners too may face liability for their own discriminatory conduct, such as adopting and enforcing rules that discriminate against applicants or residents on race, color, or any other protected characteristic.

As the law has developed in the courts, community owners may also face liability for the discriminatory acts of others, including employees and other agents. The law imposes this higher level of liability—in what’s known as “vicarious liability—on community owners because they are ultimately responsible for ensuring compliance with fair housing requirements.

Proposed regulations. HUD’s proposal would create new regulations to clarify when housing providers and other covered entities or individuals may be held directly or vicariously liable for illegal harassment or other discriminatory housing practices under fair housing law. Though released together with the harassment rules, the proposed regulations on liability apply to not only harassment claims, but to any discriminatory practices banned by the Fair Housing Act.

HUD says the new regulation would incorporate traditional legal standards that recognize both levels of liability—direct liability for one’s own misconduct and vicarious liability for the misconduct of others—into fair housing law. HUD says the new regulation is needed to explain how these traditional liability standards apply in the housing context because, in HUD’s experience, there is significant misunderstanding among public and private housing providers as to the circumstances under which they will be subject to liability under the Fair Housing Act for discriminatory housing practices undertaken by others. The standards for both types of liability follow well-established legal principles and don’t add any new forms of liability under fair housing law, according to HUD.

Direct liability. The proposed regulation sets out three ways in which anyone—from employees to owners—may be directly liable for a fair housing violation. The first is straightforward, providing that a person is directly liable for his own conduct that results in a discriminatory housing practice. Individual employees, managers, owners, and others all may be directly liable for their own discriminatory conduct.

The next two are of primary concern to community owners and other housing providers because they deal with direct liability not for their own misconduct, but for the misconduct of others. There are two separate provisions because there are different standards depending on whether it’s the discriminatory conduct of an employee or agent, as opposed to a third party, such as another resident.

When a claim is based on the actions of employees or agents, the proposed regulation provides that a person may be directly liable for failing to take prompt action to correct and end a discriminatory housing practice by that person’s employee or agent, where the person knew or should have known of the discriminatory conduct. That would mean that community owners are directly liable for the actions of employees and other agents when they knew or should have known about their discriminatory conduct, but didn’t do enough to stop it.

When it comes to the actions of other residents, the proposed regulations provide that a person may be directly liable for failure to fulfill a duty to take prompt action and end a discriminatory housing practice by a third party, where the person knew or should have known of the discriminatory conduct. Under the proposed regulation, the duty to take action against a third party’s discriminatory conduct may be based on obligations created by contract or lease (including bylaws and other rules of a homeowners association, condominium, or cooperative) or by federal, state, or local law.

Regardless of whether it’s discriminatory conduct of an employee or a third party, however, the regulations provide that the duty to take prompt action to correct and end the discriminatory housing practice may not include any action that penalizes or harms the aggrieved person, such as evicting a resident who makes a discrimination or harassment complaint.

Vicarious liability. In contrast to direct liability, the proposed regulation provides that a person may be vicariously liable for a discriminatory housing practice by the person’s agent or employee, regardless of whether the person knew or should have known of the conduct that resulted in a discriminatory housing practice, consistent with agency law.

Unlike direct liability, HUD explains, someone may be vicariously liable for the acts of an agent, regardless of whether the person knew of or intended the wrongful conduct, or was negligent in preventing it from occurring. The proposed regulation is intended to clarify the distinction between the two forms of liability—direct and vicarious—by providing that a person may be vicariously liable for the discriminatory acts of his or her agent.

HUD says that provision reflects current law by making it clear that the general principles of agency law apply to fair housing cases. Under well-established agency law, the vicarious liability occurs when the discriminatory actions of the agent are taken within the scope of the agency relationship, or are committed outside the scope of the agency relationship but the agent was aided in the commission of such acts by the existence of the agency relationship, according to HUD.

What Does It Mean for You?

Even without formal regulations in place, it’s important to take the necessary steps to prevent—and address—discrimination or harassment at the community. Aside from ensuring that your policies and procedures conform to fair housing law, you can reduce the likelihood of a complaint by properly training and supervising all your employees—not only managers and leasing staff, but also maintenance workers and anyone else who interacts with the public. And be particularly careful when hiring and supervising outside contractors or anyone else who could be considered your agent.

Promptly address any complaints of discrimination or harassment, whether it’s against an employee, outside contractor, or another resident. Conduct an investigation and, if warranted, take adequate steps to stop the offending conduct. Get legal advice if necessary, and be sure to document what you’ve done so you’ll be prepared to defend yourself in case a claim is filed against you.

Learn More: The full text of HUD’s proposed rule, “Quid Pro Quo and Hostile Environment Harassment and Liability for Discriminatory Housing Practices Under the Fair Housing Act” is available at https://www.federalregister.gov/articles/2015/10/21/2015-26587/quid-pro-quo-and-hostile-environment-harassment-and-liability-for-discriminatory-housing-practices.

• Fair Housing Act: 42 USC §3601 et seq.

Coach Source

F. Willis Caruso, Esq.: Chairman of the Board, Metropolitan Housing Development Corporation, 8 South Michigan Ave., Suite 3100, Chicago, IL 60603.