How to Avoid Discrimination Claims (without it hurting too much)

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Harry J. Kelly, Nixon Peabody LLP

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How to Avoid Discrimination Claims (without it hurting too much)

  1. 1. IREM Building Operations Symposium By Harry J. Kelly Nixon Peabody LLP Washington, D.C. OfficeHow to Avoid Discrimination Claims (without it hurting too much)
  2. 2. Avoiding Discrimination Claims • Avoiding Claims: The Property Manager’s Role › Property managers stand at a critical point in most claims arising under anti-discrimination laws. › Interaction with tenants and other persons can mean the difference between a happy resolution and a lawsuit. › Like it or not, property managers are on the line in these moments, and they need to take steps in advance to maximize the chances of handing these situations properly › Good news: there are several strategies to pursue to successfully avoid discrimination claims2
  3. 3. Avoiding Discrimination Claims Rule 1: Know The Law › The first step in avoiding liability is to understand the laws that apply › In property management context, these are the chief federal laws: – Fair Housing Act – Americans with Disabilities Act – Section 504 of the Rehabilitation Act of 1973 (only for multifamily housing that receives Federal financial assistance › May be other state/local laws, but these Federal laws lay out the principal concepts3
  4. 4. Avoiding Discrimination Claims Fair Housing Act Section 504 Americans With Disabilities Act Applies to Sales and Rentals Multifamily Housing Places of Public (including Multifamily that receives Accommodation Housing) Federal financial assistance Provides • Bans discrimination in • Bans discrimination • Imposes accessible rental, sales of housing on basis of design stds. re protected classes disability • Requires removal • Imposes accessible • Imposes accessible of barriers design requirements design stds. • Reasonable • Reasonable • Reasonable accommodations accommodations/ accommodations reasonable modifications4
  5. 5. Avoiding Discrimination Claims Know the Law: Recent Legal Developments › Multifamily Housing: HUD adopts final rules on “disparate impact” discrimination › Commercial Properties: Justice Department adopts/implements new 2010 ADA accessible design standards › Reasonable Accommodations › Let’s take a detailed look at each of these rules5
  6. 6. Avoiding Discrimination Claims • HUD’s Final Disparate Impact Rules › What is disparate impact liability? – Two types of liability in discrimination cases: • Disparate Treatment: where someone in a protected class is singled out for adverse treatment • Disparate Impact: A policy that appears neutral on its face but that, as applied, has a harsher impact on someone in a protected class than on general public6
  7. 7. Avoiding Discrimination Claims • HUD’s Final Disparate Impact Rules › Why is it important? – Allows liability without finding of actual intent to discriminate • Liability is based on effects of a policy or practice, not on whether there was an intent to discriminate • In other words, “clean heart” is not necessarily a defense – Importantto understand HUD’s rule, because disparate impact is used in many areas of anti-discrimination law. • So even if you are not in the housing area, you need to understand this principal because it may affect you • Courts will look at HUD view because it is “expert”7
  8. 8. Avoiding Discrimination Claims • HUD’s Final Disparate Impact Rule › Uses a balance-shifting test to determine whether a violation has occurred – Plaintiff bears initial burden of showing if the policy or practice has a disparate impact on someone in a protected class – If so, burden shifts to defendant to show if there is a legally sufficient justification for the challenged practice • Must show substantial, legitimate, nondiscriminatory interest and • No less discriminatory alternative – Burden shifts to Plaintiff to show no less discriminatory alternative8
  9. 9. Avoiding Discrimination Claims • What is the Impact of Disparate Impact? › Inclusive Communities case (Texas) shows problems posed by disparate impact analysis – Plaintiff wanted to develop LIHTC properties in non- minority areas – Texas agency allocates LIHTCs using Federal standards, resulting in more LIHTC housing in minority areas. – Court ruled: • Plaintiff showed disparate impact on minorities • Defendant showed legitimate justification, but did not show that no less discriminatory alternative available • Plaintiff won9
  10. 10. Avoiding Discrimination Claims • Disparate Impact can apply in many contexts › Lenders, insurers objected to proposed HUD rule – Theyfeared liability if general policies inadvertently had harsher impact on protected classes • Lenders: stricter post-recession underwriting practices may result in less credit offered to protected classes, which could result in disparate impact claims › Disparate impact does not require “macro” impacts – Absolutelypossible to be liable for adopting a policy at a single property that has a disparate impact on protected classes – E.g., firm 2 persons per bedroom rule (impacts families)10
  11. 11. Avoiding Discrimination Claims • Future of Disparate Impact › If this rule is so important, why did HUD just adopt it? – While courts have applied disparate impact in housing cases for many years, it remains controversial • Typically, we do not impose liability without intent or at least violation of some well-established duty • Supreme Court has been critical of fault without intent in discrimination cases • Last term and this term, cases on docket raised question whether FHAct actually does allow disparate impact – Will be interesting to see what Supreme Court does11
  12. 12. Avoiding Discrimination Claims • Lessons to Learn: › Before adopting any policy or practice, you need to ask: • Isit likely that policy or practice will have a harsher impact on persons in a protected class? • Is there a legally sufficient justification for the policy or practice? • Is there a less discriminatory alternative that would meet the same practical goals?12
  13. 13. Avoiding Discrimination Claims • DOJ’s 2010 ADA Standards › ADA imposes accessible design duties on owners of “places of public accommodations,” such as offices, retail stores, theaters, restaurants, sports venues, etc. › For many years, DOJ has imposed accessible design rules (US ADA Guidelines)13
  14. 14. Avoiding Discrimination Claims • DOJ’s 2010 ADA Standards › After many years of review, study and testing, DOJ published new design rules – 2010 ADA Standards – to replace earlier rules – New scoping requirements • Changes in slopes, number of accessible entrances, clarification of accessible routes – Expands rules intended to assure access to public accommodations, including hotel reservation systems, sports venues (including swimming pools) – New definitions for wheelchairs (may not include golf carts) – “Service animals” limited to trained dogs (and horses!) • Cannot ask if disabled, but can ask if animal is trained14
  15. 15. Avoiding Discrimination Claims • DOJ’s 2010 ADA Standards › Lessons to Learn – Most of the ADA design issues are literally cast in concrete – Butproperty managers should be award of these rules and understand how accessible design issues can impact tenants, employees and members of the public – Again, property managers are often at the critical juncture between owners and the public – Theirresponses often can make difference between successful management of a stressful situation and active legal dispute • And typically, manager is in the middle15
  16. 16. Avoiding Discrimination Claims • Reasonable Accommodations › Generally, biggest impact of anti-discrimination rules is duty to make reasonable accommodations › The ADA, the FHAct and Section 504 all impose a duty to provide reasonable accommodations to persons with disabilities. › Property managers may be subject to requests for reasonable accommodation in two contexts: – Under the FHAct and Section 504, they may be required to make reasonable accommodations/reasonable modifications to tenants and applicants – UnderADA, they may be required to make reasonable accommodations to employees and tenants16
  17. 17. Avoiding Discrimination Claims • Reasonable Accommodations under the ADA › Title I: “Discrimination” includes – Not making reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual . . . unless such covered entity can demonstrate that the accommodation would impose an undue hardship on the operation of such covered entity . . . . Source: 42 USC sec. 12112(b)(5)(A) › Title II and Title III both contain reasonable accommodation rules › Similar concepts apply under FHAct and Section 50417
  18. 18. Avoiding Discrimination Claims • Reasonable Accommodations › To be entitled to a reasonable accommodation, requestor must demonstrate: 1. He/she is a person with a disability 2. There is a reasonable “nexus” between the disability claimed and the accommodation requested › Concept is to provide “meaningful access” under ADA – Compare to concept of “equal opportunity” under FHAct – US Supreme Court: “equal opportunity” may mean extending greater benefits to disabled persons than to non-disabled persons.18
  19. 19. Avoiding Discrimination Claims • Reasonable Accommodation: Examples › Waiver of lease terms that allow eviction upon occurrence of crime/act of violence where tenant is mentally disabled Boston Hous. Auth. v. Bridgewaters, 898 N.E.2d 848, 859 (Mass. 2009) - Tenant had history of mental illness and violence to others – PHA attempted to evict; tenant asked PHA to halt eviction as a reasonable accommodation to his disability – Mass Court: PHA had to demonstrate an individualized assessment of tenant’s likelihood of committing future injuries (i.e., consulting with advocacy organizations, contacting family members or case workers, etc.); could not rely on stereotypes about potential threats19
  20. 20. Avoiding Discrimination Claims • Reasonable Accommodations › Lesson To Learn – Have a published reasonable accommodation policy that staff and tenants understand – If a request is made • DO NOT ASK IF REQUESTOR IS DISABLED • If requestor is obviously disabled and there is a “nexus” between request and disability, request normally should be granted • If requestor is not obviously impaired, you have right to obtain sufficient information to determine if there is a nexus between claimed disability and request.20
  21. 21. Avoiding Discrimination Claims • Rule 2: Educate and Communicate › Make sure that you communicate with owner and that you are on the same page about what law requires and how you will handle › Make sure your staff is familiar with these rules and understands how to respond if a question arises21
  22. 22. Avoiding Discrimination Claims • Rule 3: Formalize processes › Develop and update manuals that set out policies for the staff › Keep records of reasonable accommodation requests and responses › Appoint someone in your organization to be the point person on anti-discrimination issues, to develop expertise and effective management – This is especially true if you receive Federal financial aid › Inform tenants, employees, public about the policies – Tends to be less controversy and fewer charges of mistreatment if everyone knows upfront what their rights are and how claims will be handled22
  23. 23. Avoiding Discrimination Claims • Rule 4: Handle claims smartly › Make sure that staff understands potential situations that may raise discrimination concerns, especially reasonable accommodation requests › If a complaint is filed, have policies that assure anti- discrimination officer promptly receives the complaint and provides notice to other relevant persons, including owner › Preserve all documents and email messages that may relate to discrimination claim › Contact legal advisor before responding to any court or enforcement agency with respect to the claim › Confirm extent of insurance coverage, if any23
  24. 24. Avoiding Discrimination Claims • Contact Information: Harry J. Kelly, Esq. Nixon Peabody LLP 401 Ninth Street, N.W., #900 Washington, D.C. 2004 Phone: 202-585-8712 Email: hkelly@nixonpeabody.com24

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