In Practice
Disparate impact is a way fair housing law can be violated without any bad intent. If a rule looks neutral but falls much harder on a protected class, and it is not necessary to serve a real business need, or the same goal could be met in a less harmful way, it may be unlawful. The Supreme Court recognized this theory under the Fair Housing Act in 2015.
In daily operations, it matters most in policies you apply to everyone: blanket criminal history bans, strict credit cutoffs, minimum income rules, occupancy limits, English-only requirements, and guest or parking restrictions. Ask a simple question about any rule you write: what problem does it solve, and is there a narrower way to solve it?
Example: a community has a policy that rejects any applicant with any arrest or conviction, ever. It looks even-handed, but it may screen out some groups at much higher rates. A more targeted policy, such as looking at the type of offense, how long ago it happened and whether it relates to safety, is easier to defend.
The mistake is stopping at 'we treat everyone the same.' Equal treatment of a rule can still cause unequal results. Write your reasons down, review the numbers on who applies and who is approved, and update policies that cannot be justified. HUD's rules on how to apply this theory have changed over time, so check current guidance and ask counsel when you set or change a policy.
Not to Be Confused With
Disparate impact is about neutral policies with unequal results. Steering is intentionally guiding people toward or away from housing because of who they are.
Disparate Impact: Common Questions
What is the difference between disparate impact and disparate treatment?
Disparate treatment is intentionally treating people differently because of a protected class. Disparate impact is a neutral rule that has an outsized effect on a protected group.
Do you have to intend to discriminate for disparate impact?
No. Intent is not required, which is why reviewing the effect of your policies matters.
What are examples of disparate impact in housing?
Blanket bans based on criminal history, rigid occupancy limits, or credit and income rules that cut out a protected group without a strong justification.
