Government Argues to Hold Tenant Screeners Liable Under Fair Housing Act

December 08, 2023

The U.S. Department of Justice (DOJ) and Department of Housing and Urban Development (HUD) have co-filed an amicus brief with the U.S. Court of Appeals for the Second Circuit. In the brief, they argued that the federal Fair Housing Act (FHA) could have held a background screening company liable. 

The Departments argued that a Connecticut-based court made an incorrect ruling. According to the court’s decision, the tenant screener did not make a final decision on rental decisions. The case concerns a lawsuit filed by a Connecticut-based nonprofit organization and two others against a tenant screening service. 

The Case

According to the plaintiffs, the tenant screening service violated the FHA through discriminatory use of criminal records. They also claimed it violated a Connecticut law that bars unfair competition and unfair and deceptive actions. In the litigation, the plaintiffs accused the screener of functionally making rental decisions on behalf of landlords, which adversely impacted the plaintiffs.

The case began in 2018 when the plaintiffs alleged that the defendant violated the FHA. According to the plaintiffs, a property management company denied an application from one of the plaintiffs to move into a property with his mother. This application occurred after he became disabled and lost the capacity to live on his own. He claimed that a dropped shoplifting charge from years before led to his denied application.

The plaintiff received permission to move into the property later. However, it happened after he filed a claim with the Connecticut Commission on Human Rights and Opportunities against the property manager. On July 20, 2023, a bench trial found the defendant liable for violating the Fair Credit Reporting Act (FCRA). However, it concluded that the FHA did not apply to the tenant screening service. This decision is because of the tool provided by the tenant screening service provider. This tool provided to the property management company did not make the final decision to approve or deny a housing application.

The Appeal

The plaintiffs appealed this decision to the Second Circuit, which led to the DOJ’s and HUD’s amicus brief. In this brief, they asked the court to remand the case. They also instructed the court to reconsider the defendant’s liability under the FHA. According to the brief, screeners should receive treatment similar to property insurers and appraisers. The amicus brief reminded the Second Circuit how the FHA held property insurers and appraisers liable if their decisions denied a prerequisite for housing.

It remains uncertain how this case will end. Regardless, it is a stark reminder for employers and landlords to thoroughly screen their applicants before making final decisions. One way to ensure they comply with background-checking regulations is by partnering with a trusted background screening company. The right provider will deliver accurate, timely reports to ensure companies make informed decisions.

JDP makes background checks easy and reliable. Keep your business compliant with new laws and regulations with Pre-employ’s reliable background checks. Contact a sales rep today.