How to Perform Criminal Records Checks Without Committing Discrimination

January 20, 2021

The last thing you or your residents would ever want is to have murderers, rapists, drug dealers, arsonists, and other dangerous criminals in your community. And because “criminals” aren’t among the people that fair housing laws protect, it’s okay to refuse to rent to persons who have a record of committing these crimes.

Right?

Wrong! Denying housing to a person on the basis of a criminal record potentially is a form of illegal discrimination. But since the fair housing laws don’t expressly say this, too many owners and property managers fail to recognize the existence of this liability risk, let alone take steps to manage it.

So, this month’s lesson deals with the thorny and frequently misunderstood issue of criminal record discrimination in the rental process. First, we’ll explain the legal basis for holding owners liable for a form of discrimination that the fair housing laws don’t even mention. We’ll then set out eight rules to help you carry out criminal background screening of rental applicants, regardless of whether the housing property is private, government-assisted, or public, without committing discrimination. At the end of the lesson, you can take the Coach’s Quiz to see how much you’ve learned.

WHAT DOES THE LAW SAY?

The federal Fair Housing Act (FHA) makes it illegal to refuse to rent or deny a person housing because of his or her race, color, religion, sex, handicap (disability), familial status, or national origin. Although many states also ban discrimination on the basis of a person’s criminal record, this isn’t one of the protected grounds listed in the FHA.

Question: How can criminal record discrimination be illegal if the FHA doesn’t mention it?

Answer: Refusing to rent to people with a criminal record may be an indirect form of racial, national origin, and other forms of discrimination the FHA does prohibit.

Explanation: The reason for this has to do with the so-called rule of “disparate impact” discrimination that holds that policies and practices that are neutral on their face may still be illegal if they have the effect of discriminating against a group the law protects. This is true even if there was no intent to discriminate.

Example: A fire department policy bans any persons from being promoted to the position of chief unless they have at least 10 years of service in the department. On its face, this seems like a perfectly neutral, legitimate, and nondiscriminatory policy. The problem is that the department began hiring women only five years ago. Before that, it was exclusively male. As a result, the 10-years’ service policy has the effect of excluding women from being promoted to chief and is thus a form of illegal sex discrimination.

Although the potential of disparate impact liability for criminal history restrictions began as an employment principle, the U.S. Supreme Court and HUD have made it clear that it also applies to fair housing. In 2016, HUD published guidance to address the issue. Citing the widespread racial and ethnic differences in the U.S. criminal justice system and statistics showing that across the nation, African Americans and Hispanics are arrested, convicted, and incarcerated at disproportionately higher rates than whites with respect to their share of the general population, the guidance states that barriers to housing based on criminal records are likely to have disproportionate impact on minority home seekers.

The HUD guidance also explains what owners can do to avoid disparate impact liability when carrying out criminal history screening. The eight rules below come from the guidance and later court cases applying them to actual situations.

8 RULES FOR AVOIDING DISCRIMINATION

WHEN SCREENING APPLICANTS’ CRIMINAL BACKGROUNDS

Rule #1: Continue Performing Criminal Background Checks

The starting point is to understand that nobody is saying that you must stop performing criminal background checks on applicants. On the contrary, apartment communities have every right to establish their own policies governing who may live there, as long as their standards are fair, reasonable, and nondiscriminatory—that is, that they apply equally to all applicants regardless of race, color, religion, sex, familial status, national origin, disability—or any other personal characteristic protected under state and local fair housing laws. The FHA also specifically excludes individuals who pose a direct threat to the health or safety of other individuals or whose tenancy would result in substantial physical damage to the property of others.

Moreover, courts and HUD have long recognized owners’ rights to perform background screening to ensure applicants meet their legitimate rental criteria. That includes criminal background checks to the extent that they serve the owner’s legitimate business interest in:

Protecting their property and the safety and property of their residents;
Ensuring that applicants can pay the rent; and
Retaining other residents who may be fearful and leave the community if a person with a criminal record is allowed to live there.

Bottom line: The liability risk stems not from performing criminal records screening but how you perform it, including not only your screening criteria but how you use the results to make decisions about applicants.

Rule #2: Don’t Do Criminal Checks Until You Determine the Applicant Is Otherwise Qualified

Don’t perform criminal background checks unless and until you complete the credit, rental history, and other necessary checks and determine the applicant is qualified. This rule is based not so much on law as practical considerations. In addition to the legal complications, criminal checks costs time, money, and administrative effort. So, saving them for the end of the process pending the results of the other checks will enable you to avoid having to do them for applicants who aren’t qualified anyway.

Example: Texas fair housing consultant Ann Sadovsky relays the story of an owner/client facing an applicant who wanted to share the apartment with an unusual and highly undesirable pet, a 500-pound hog. “The poor client was all upset about a messy fight over the community’s no-pets policy,” Sadovsky relates. “I told him not to sweat it until after the applicant got a clear credit and rental history report.” In fact, he didn’t—and the hog issue became completely moot.

“Not that I’m comparing a hog to a person with a criminal record, but the principle of not bothering to engage with an applicant on an issue until verifying that he or she’s qualified to rent from you applies to criminal background checks,” notes Sadovsky.

Rule #3: Establish Clear, Nondiscriminatory Guidelines for Criminal Record Checks

Relying on third-party screening companies to perform actual criminal record checks the way most owners do will spare you the headaches of gathering the data yourself. But it’s how you use that data that will determine your liability. Specifically, you must make consistent, reasonable, and nondiscriminatory decisions about whether to reject applicants because they have a criminal background. The remaining rules in this lesson are designed to help you create and implement rental policies enabling you to meet that crucial compliance challenge.

Let’s start with the general rules governing when denying housing opportunities to people with a criminal record runs afoul of the FHA. The HUD guidance sets out three key questions owners should ask to evaluate whether their criminal record check policies are legally sound:

1. Does the policy have a discriminatory effect? As we explained above, excluding applicants for having a criminal record may have the effect of discriminating. But in a court or HUD administrative proceeding, the person claiming discrimination has the burden of proving that the policy under question actually does cross the line.

The most common way to show discriminatory effect is by using national, state, and/or local statistics showing that African Americans, Hispanics, and other minorities have disproportionately high arrest and conviction rates, as compared to white persons. While it doesn’t necessarily prove that a particular policy had a discriminatory effect, the HUD guidance suggests that such statistical evidence is generally enough to deny an owner’s motion to dismiss and allow the case to go to trial. And that’s crucial because it changes the negotiating leverage and pressures the owner to shell out a substantial sum of money to settle the case.

By the Numbers:

Using Statistics to Prove Discriminatory Effect

HUD cautions owners to be aware of the discrimination risks associated with rental policies that exclude applicants because they have a criminal background. The guidance cites national statistics showing that racial and ethnic minorities face disproportionately higher rates of arrest and incarceration. According to those statistics, African Americans and Hispanics are arrested at a rate of more than double and incarcerated at a rate of nearly three times their proportion of the general population. Imprisonment rates for African-American males is almost six times greater than for white males, and for Hispanic males, it’s over twice that for non-Hispanic males.

Keep in mind that these are just national statistics. State and local statistics exhibiting similar patterns may be even more compelling in demonstrating that criminal record exclusion has a disproportionate and discriminatory effect on minorities. And, of course, most devastating of all to an owner is statistical evidence showing that the particular community’s policies had the effect of excluding minorities.

2. Is the policy necessary to achieve a substantial, legitimate, and nondiscriminatory interest? The second crucial question is whether a policy of denying housing to people with a criminal record is necessary to achieve what HUD refers to as a “substantial, legitimate, and nondiscriminatory interest” (which we’ll refer to as the “substantial interest standard”). Explanation: As noted above, it’s legitimate for owners to want to keep dangerous people out of their community. But, the guidance warns, this general interest and bald assertions based on stereotypes that individuals with criminal arrests and convictions pose a greater risk than people without criminal records isn’t enough. To justify exclusion on the basis of a criminal record, the owner must be able to prove that the policy actually does assist in protecting resident safety and property. Accordingly, blanket policies won’t work, and owners must make decisions based on the particular circumstances of the case, including how long ago the crime happened and what kind of conduct it involved. We’ll delve into these crucial details below.

3. Is there a less discriminatory alternative available? Even if the owner can show that its criminal record policy meets the substantial interest standard, it may still be unlawful if the person complaining can prove that the owner could have served that interest by adopting another policy or practice that has a less discriminatory effect. As we’ll discuss in Rule #7, such alternatives may include performing an individualized assessment of applicants found to have a criminal record.

Rule #4: Don’t Impose a Blanket Ban on Applicants with a Criminal Record

Now let’s talk about the specific things you can do to ensure that your own policy meets the criteria we explained in Rule #3. First rule of thumb: Don’t implement predetermined, blanket rules, such as automatically rejecting any applicant with a criminal record.

Remember that all forms of criminal conduct won’t satisfy the substantial interest standard justifying denying a person housing because of their criminal records. Thus, blanket policies that treat all criminal conduct the same way are highly problematic. They also make you a sitting duck for a statistical analysis showing that minorities are more apt than white persons to get arrested or convicted of a crime as compared to their percentage of the general population.

Example: A New York City community rejected an African-American applicant after learning of his felony conviction. The community claimed that its policy of automatically rejecting anyone with a felony conviction was nondiscriminatory because it applied to all applicants regardless of race, etc. The applicant conceded that the policy was neutral on its face but contended that it had the effect of racial discrimination, citing “empirical evidence showing that nationally, and in New York State, blanket bans on eligibility, based on criminal history, result in the denial of housing opportunities at a disproportionate rate for African Americans and minorities.” Although the applicant would still have to prove his claim at trial, the court found that the statistical evidence was enough to warrant holding a trial and dismissed the owner’s motion to dismiss [Jackson v. Tryon Park Apartments, Inc. et al, No. 6:2018cv06238 - Document 17 (W.D.N.Y. 2019)].

Rule #5: Reject on the Basis of Criminal Convictions, Not Arrests

While you must make decisions about whether to rent to applicants with criminal records on a case-by-case basis, there are a few bright line rules. One of them is that rejection is justified only when applicants have actually been convicted of a crime; merely being arrested isn’t enough.

Explanation: As the HUD guidance explains, an arrest, on its own, is merely an accusation and doesn’t prove that the person actually did anything wrong. Under our justice system, defendants are presumed innocent. To establish guilt, the criminal prosecutor must persuade the court or jury to convict by proving the charge beyond a reasonable doubt. Many people who get arrested are acquitted; others get their charges dropped and don’t even go to trial.

The problem with arrest records is that they often don’t show how the case was decided and whether the individual was prosecuted, convicted, or acquitted of the charges. As a result, the guidance clearly states that an arrest is not a reliable basis for determining whether a particular individual poses a potential risk to safety or property in applying the substantial interest standard.

Exception: There’s some wiggle room for eviction when a criminal background screening reveals an arrest. What you can do, according to legal experts, is ask about the underlying facts of the case. And even if the arrest hasn’t yet resulted in a conviction or conclusive and final finding of guilt, you may still be able to reject the applicant if:

The applicant admits to committing a crime; or
The police or other witnesses provide reliable and legally admissible information showing that a crime was committed.

Rule #6: Distinguish Between Dangerous and Non-Dangerous Convictions

The mere existence of a conviction isn’t enough to get you over the substantial interest hurdle. That’s because all crimes aren’t the same. The owner’s responsibility, the guidance clarifies, is to distinguish between criminal conduct that does indicate a risk to resident safety or property, and criminal conduct that doesn’t rise to that level. The good news is that the guidance sets out clear criteria for making such determinations:

Felonies vs. misdemeanors. The crime must be serious. And while the guidance doesn’t expressly say this, the consensus is that the conviction must be for a felony rather than a misdemeanor. But, as the NYC owner learned in the Jackson v. Tryon Parks Apartments case discussed in Rule #4 above, a blanket rule excluding any person with a felony conviction doesn’t work. The owner must take other factors into consideration.

Type of felony. The next factor to consider in applying the substantial interest standard is the nature of the felony a person was convicted of committing. Although the guidance doesn’t specify the types of felonies that owners may reasonably consider as posing a danger to safety and property, legal experts and case law suggest that the list includes convictions for:

Illegal manufacture or distribution (but not mere possession) of drugs and other specified controlled substances;
Sexual assaults;
Other violent crimes like homicide, assault and battery, domestic violence, robbery, and false imprisonment; and
Arson, vandalism, and other crimes causing significant damage to property.

How long ago the person committed the felony. The other key factor is how much time has passed. The more recent the conviction, the greater the justification for considering the person who committed it as posing a risk of danger to safety and property. Based on court cases, the unofficial window is seven years. Exception: Sexual assault convictions don’t have a shelf life. In other words, they may be grounds for denying an applicant housing regardless of how long ago they occurred.

Rule #7: Assess Each Felony Conviction Case Individually

Following Rules #4, #5, and #6 should enable you to ensure that your criminal background screening policy meets the first two of the three HUD standards, namely, the discriminatory effects and substantial interest standards. But the HUD guidance says there’s one more thing you should do to meet the third standard—that is, lack of less discriminatory alternatives: Incorporate a process for assessing each case individually that takes into account mitigating factors explaining why the person has a criminal record, such as:

The circumstances surrounding the criminal conduct;
How old the person was when he or she engaged in the conduct;
Evidence that the individual has maintained a good tenant history before or after the conviction or conduct; and
Evidence of rehabilitation efforts.

Example: A Pennsylvania public housing authority rejected an African-American applicant after the criminal records check revealed that he had pleaded guilty to involuntary manslaughter under its policy calling for mandatory denial of persons convicted of homicide offenses. The applicant claimed that the policy discriminated on the basis of race, applying the same basic logic that the applicant in the Jackson v. Tryon Parks Apartments case used to beat back the owner’s motion to dismiss. But this time the argument didn’t work.

The difference: The PHA gave rejected applicants 30 days to dispute the accuracy and relevancy of the information on which a mandatory denial was based. During the hearing, the applicant clarified that the conviction was for a misdemeanor rather than a felony. As a result, the PHA reversed its decision on the criminal conviction rejection. The problem for the applicant was that the PHA had a second reason for rejecting him, namely, a judgment awarding his previous landlord $871 in unpaid rent. And since the applicant didn’t present any evidence or mitigating information about the nonpayment judgment, the court found that the PHA had a legitimate, nondiscriminatory reason to reject the applicant and tossed his discrimination claim [Hall v. Philadelphia Housing Authority, Civil Action No. 17-5753, U.S. District Court, E.D. Pennsylvania, April 5, 2019].

Rule #8: Apply Your Screening Policy Consistently

So far, we’ve been talking about unintentional discrimination on the basis of discriminatory impact. But be aware that rejecting applicants because they have a criminal record may also constitute intentional discrimination. This can happen if you apply your policy inconsistently to people with comparable criminal histories differently based on their race, national origin, etc.

Example: A federal court ordered a Tennessee community and its property management company to pay $42,250 in damages for selectively applying its policy of disqualifying people with felony convictions to minority applicants. The evidence showed that the defendants denied an African-American applicant because of his criminal record while approving the applications of two white applicants with similar, and what should have been disqualifying, felony convictions [U.S. v. Dyersburg Apartments, Ltd., (W.D. Tenn.), Aug. 13, 2019].

The guidance lists other examples of inconsistent application of criminal records policies and practices showing intentional discrimination:

A community has a policy against renting to people with certain convictions, but makes an exception for white, but not African-American, applicants; and
A leasing agent helps a white applicant get his application approved despite his potentially disqualifying criminal record, but doesn’t provide the same assistance to an African-American applicant.

For further information: In November, we presented a five-question, 15-minute webinar “quiz” on screening applicants for criminal records, with fair housing expert Anne Sadovsky. Although you can’t participate in the interactive quiz on the recording, you can view it here: https://www.youtube.com/channel/UCiu1Glvk5vy_GeY-rx54U9A.