Disparate Impact, Algorithmic Bias and Fair Housing.

In the multifamily industry, we have all received an ample amount of Fair Housing Training. We have secret shops and surveys. Apartment associations even provide in-person and virtual training at training centers, like the ones we’ve provided across the Carolinas to train every management team member on Fair Housing and how ignoring its precepts can impact us all. But what if a Fair Housing violation slipped under the radar? What if you didn’t know it even existed? How could you plan for it or prepare your staff? You can’t. Managing Principal and Founder Chris Loebsack sat down with Manager of Digital Media Liz Newkirk to discuss disparate impact, algorithms, and their impact on providing Fair Housing. Visit our YouTube to listen in on the full discussion. 


What is Disparate Impact?

According to NationalFairHousingOrg. Disparate Impact is a legal doctrine under the Fair Housing Act which states that a policy may be considered discriminatory if it has a disproportionate “adverse impact” against any group based on the seven protected classes when there is no legitimate, non-discriminatory business need for the policy.

What are some examples of Disparate Impact in housing?

  • Only allowing people who are able to prove they work a full-time job to apply. This discriminates against people with disabilities and veterans who may not be able to work full-time but can afford the apartment.
  • Rejecting tenants on the basis of criminal history, particularly without explanation.
  • Zoning restrictions that eliminate affordable housing in a certain area.

Often the third-party software and market data that we use can assist us in creating policies or help adopt practices like the ones mentioned above that disproportionately impact marginalized groups – the BIPOC community and those in the seven protected classes. Take accepting a tenant based on criminal history, for an example. We know that the BIPOC community is convicted at a higher rate than the majority, and while landlords have the responsibility to keep tenants safe, having a blanket rejection based on criminal history has a direct effect on the BIPOC community and inclusive housing. The opportunity to live on your property and provide a safe community for them and/or their families are removed.

In October of 2020, HUD implemented a new rule which added to this already complex situation, moving the burden of proof to the plaintiff in disparate impact cases. Under this new rule, the plaintiff(s)  “are required to show significant evidence in order for their claim to be sustained. The evidence includes proof that the policy in question is both arbitrary and unnecessary for doing business.” This new rule provides a level of complexity that we do not advise you to navigate by yourself. We advise you to seek legal counsel and we encourage you to use this as an opportunity to reach out to your Employee Resource Group or DE&I team to ensure that the policies you create do not disproportionately impact marginalized communities.

How can your ERG (Employee Resource Group) or DE&I council help?

Two heads are better than one, and three heads are better than two. Those heads are even better than they come from different backgrounds, religions, abilities, incomes, and perspectives. When you use your ERG or DE&I councils, you can potentially avoid discriminatory practices making their way into your policies and procedures for your property. However, they can’t do all the heavy lifting. Cultural, unconscious and implicit bias training are great ways to educate teams on the property and in the C-suite. This can also help you avoid legal ramifications altogether. They can test biased technology, collect data, and examine change over time. Studies show that Executive leadership teams are 21% more likely to be profitable and 27% better at creating value when implementing this type of training, according to McKinsey & Company.

We hope that this blog and Q&A help you understand the complexities of disparate impact, and hopefully encourage you to get started with the creation of incorporating DE&I practices into your organization.

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