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Young Hawaii Homes, Inc.
2011 President, Oahu Chapter
National Association of Residential Property Managers

Q. I’ve been hearing about something called disparate impact. What is that and is it something I should be worried about?

A. As you know, you cannot discriminate against anyone based on certain protected classes, specifically race, sex, color, religion, familial status, national origin, and disability (physical and mental). Hawaii includes age, marital status, ancestry, HIV infection, gender identification or expression, and sexual orientation. I hope that most people are pretty good about this and try not to discriminate based on these protected classes. However, housing discrimination does not need to be intentional in order to be illegal.

Disparate impact is not a new theory but has gotten more attention lately as there have been more cases brought against landlords and other businesses based on this principal. Your policy should not result in an unjustified, disproportionate negative impact on a protected class compared to non-members of a protected class.

One of the areas where there seems to be a great deal of problems is in criminal background checks. If you disqualify everyone who has a criminal background, you can be found guilty of discrimination. Just as an example, let’s say that there is a protected group (let’s call them Zelbins – a made up word) that is overrepresented in the local prison population compared to non-Zel-bins. Ms. Z, who is a Zelbin, comes into your office to apply for a rental. Her income qualifies her, her job situation is stable and she meets all your other criteria. You do a criminal background check and discover that she was arrested for drug possession 10 years ago and you have a zero policy regarding criminal records. You deny her based on the fact that she has a criminal background. However, Ms. Z can claim that you denied her based on the fact that she is a Zelbin. Her drug possession 10 years ago does not have any bearing on whether or not she will be a good tenant today. If you deny her based solely on her drug possession from 10 years ago, she may have a legitimate case for discrimination based on disparate impact.

Of course not all criminal backgrounds are equal. If someone had a conviction for a violent crime a year ago, you may not want that person living in your multi-unit apartment building. Do not make a generalization about everyone with a criminal record. Your policy should take into account the fact that, even though you want to protect others from a violent or unruly tenant, you have to make sure that you are not unduly penalizing someone for a past transgression that has no bearing on their ability to be a good tenant now.

You are allowed to have criteria to make a decision on who to rent to, and you should. Your policy should have a justified effect that is not discriminatory. It should also be pertinent to your rental business. You want to make sure that the tenants are able to afford the rent, so you need a policy about income. However, asking that the tenants collectively make “x” times the rental amount is better than requiring that every tenant make $400,000 a year and have a college degree. That criteria may have a disparate impact on another protected group, the Griftles (another made up name).

There are words or phrases that you should avoid in your ads and dealing with tenants. If you had a studio apartment, you could not state in your ad that it would be perfect for a single adult or a couple. That would seem to be discriminating against children. Don’t use words/phrases such as “executive”, “exclusive”, “professional”, “able-bodied”, “not handicapped accessible”, “near a church”, “perfect for runners/joggers”, etc. Also be careful of what is shown in your pictures – i.e. only one ethnic group lounging around the pool. Do not advertise in only one publication which is limited to a specific geographic area and targets only a certain segment of the community.

Check with your attorney if you have any questions about your rental criteria and policy. Your policy should not be based on stereotypes or generalizations or require more than is reasonable to enable you to find the best tenant possible.

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