Criminal Background Checks & the 2016 HUD Guidance Presented by: Lynn N. Dover, Esq. www.kts-law.com

Overview Disparate Impact Criminal records Criminal records and fair housing HUD guidance Criminal record screening Kimball, Tirey & St. John LLP © 2017

Disparate Impact Definition Part of California fair housing law Examples Part of California fair housing law Supreme court ruling (2015) Confirms disparate impact applies to federal fair housing enforcement Kimball, Tirey & St. John LLP © 2017

Criminal Records Nationally 1 in 3 adults arrested by age 23 As many as one in 3 Americans have a criminal record Number of Americans incarcerated has quintupled in the past 30 years Kimball, Tirey & St. John LLP © 2017

Criminal Records Nationally (cont.) Disproportionate impact on certain communities Kimball, Tirey & St. John LLP © 2017

Effect of Criminal Records in Society Employment EEOC guidance (2012) Socio-economic status More likely to fall within poverty levels Drug-related felony convictions ineligible for certain types of assistance Disenfranchisement Housing Kimball, Tirey & St. John LLP © 2017

2016 HUD Guidance on Use of Criminal Records Released April 4, 2016 Applies to all housing providers Subsidized and conventional Use of criminal background checks may violate fair housing laws http://portal.hud.gov/hudportal/documents/huddoc?id=HUD_OGCGuidAppFHAStandCR.pdf Kimball, Tirey & St. John LLP © 2017

HUD Guidance (cont.) Disparate impact Burden on landlord to show When use of criminal history to deny housing negatively impacts certain races more than others Burden on landlord to show Necessary to use criminal background checks to achieve non-discriminatory business objective; and No less discriminatory alternative Kimball, Tirey & St. John LLP © 2017

HUD Guidance (cont.) Arrest records Prior convictions Should not be used as a basis for denying applicants Not evidence that applicant engaged in criminal activity Prior convictions Evidence that applicant engaged in criminal activity However, criminal standards must be narrowly tailored No blanket exclusions (e.g., any conviction; any felony) Exception: convictions for the illegal manufacture or distribution of controlled substances (exclusion from coverage under the FHA) Kimball, Tirey & St. John LLP © 2017

HUD Guidance (cont.) Narrowly tailored standards must consider: Nature & severity of crime Length of time since conviction Individualized assessment of risk to persons and/or property Kimball, Tirey & St. John LLP © 2017

HUD Guidance (cont.) Less discriminatory alternative Credit standards Rental history standards Kimball, Tirey & St. John LLP © 2017

HUD Guidance (cont.) Evidence that screening standards actually accomplish the business objective Crime at the property before/after adoption of criminal standards? Police calls to service for certain crimes before/after adoption of criminal standards? Kimball, Tirey & St. John LLP © 2017

Recommendations: Criminal Records & Applicant Screening FHA Safe Harbor Conviction for manufacture or distribution of controlled substance Other HUD mandates and permissive denials Likely requires individualized assessment Kimball, Tirey & St. John LLP © 2017

Recommendations: Criminal Records & Applicant Screening (cont.) Avoid criteria that deny for less serious crimes Infractions Misdemeanors Determine the types of serious crimes that will be considered Serious felonies against people/property? Avoid white collar crimes, motor vehicle crimes, etc. Determine the length of time that will be considered Individual analysis Kimball, Tirey & St. John LLP © 2017

Recommendations: Criminal Records & Applicant Screening (cont.) Check rental history Consider other qualifying criteria before consideration of criminal criteria Evaluation under HUD Guidance Evaluation to be done by “point person(s)” at upper management level Kimball, Tirey & St. John LLP © 2017

Thank You! Contact us at: Phone: 800-338-6039 Fax: 800-840-0357 www.kts-law.com Kimball, Tirey & St. John LLP © 2017