HUD has issued a final rule (Docket No. FR”“5508″“F”“02) regarding disparate impact liability under the Fair Housing Act. The final rule formalize HUD’s recognition of disparate impact liability and, for purposes of providing consistency nationwide, formalizes a burden-shifting test for determining whether a given practice has an unjustified discriminatory effect, leading to liability under the Fair Housing Act. In addition, the final rule adds to and revises illustrations of discriminatory housing practices found in HUD’s Fair Housing Act regulations.
The final HUD rule provides the plaintiff with the initial burden of showing that a challenged practice has a disproportionately adverse impact on persons in a protected class; the burden then shifts to the defendant to show a “legally sufficient justification” for the challenged practice. “Legally sufficient justification” requires that defendants show that the challenged practice is necessary to achieve a substantial, nondiscriminatory goal and that no less discriminatory alternative is available to achieve that goal. If the defendant makes that showing, the burden then shifts back to the plaintiff to show that there is, in fact, a less discriminatory alternative.