WASHINGTON—The Department of Housing and Urban Development (HUD) has issued its final rule to amend the Fair Housing Act's disparate impact standard.
The final rule aligns standards for disparate impact claims more closely with a 2015 Supreme Court decision, reported NAFCU.
Of note, the final rule outlines five elements that must be demonstrated at the pleading stage in a disparate impact case:
- The challenged policy or practice is arbitrary, artificial, and unnecessary to achieve a valid interest or legitimate objective such as a practical business, profit, policy consideration, or requirement of law
- The challenged policy or practice has a disproportionately adverse effect on members of a protected class
- There is a robust causal link between the challenged policy or practice and the adverse effect on members of a protected class, meaning that the specific policy or practice is the direct cause of the discriminatory effect
- The alleged disparity caused by the policy or practice is significant
- There is a direct relation between the injury asserted and the injurious conduct alleged
While the final rule included these standards, it does not implement proposed revisions that would have codified specific defenses, NAFCU noted.