American Financial Services Association

HUD Finalizes New Disparate Impact Rule

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HUD Finalizes New Disparate Impact Rule

Last week, the U.S. Department of Housing and Urban Development (HUD) finalized its disparate impact rule. The final rule ensures that HUD’s 2013 disparate impact rule codifies the framework from the Supreme Court’s 2015 decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, which permitted disparate impact analysis in discrimination claims with certain limitations. The final rule mandates specific elements that plaintiffs must include when bringing discrimination claims under the Fair Housing Act (FHA).

The American Financial Services Association (AFSA) previously commented on HUD’s disparate impact standard under the FHA. In its letter to HUD, AFSA supported five elements be included in the new burden-shifting framework. These elements, which were included in the final rule, would require plaintiffs to show that the challenged policy or practice that results in a disparate impact on members of a protected class is: 1) arbitrary and unnecessary, 2) the direct cause of the discriminatory effect, 3) creates an adverse effect, 4) significant, and 5) shown to have a direct link with the complaining party’s alleged injury. In addition, AFSA wrote in support of defendants being able to rebut disparate impact claims by demonstrating that the plaintiff failed to allege sufficient facts to meet one or more of the required elements.

September 9th, 2020 by