The U.S. Supreme Court today decided to uphold disparate impact liability under the Fair Housing Act, a legal theory that prohibits neutrally-applied practices with a disproportionate impact on minority groups protected by the law, even without proving an intent to discriminate. The 5-4 decision in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. also emphasized limitations on the policy, stating that neutrally-applied practices should not fail on disparate impact grounds unless they are “artificial, arbitrary and unnecessary.”

Importantly, the majority opinion highlighted limitations on disparate impact liability to allow “practical business choices and profit-related decisions that sustain the free-enterprise system.” Leeway must be given to housing providers to explain the validity of their policies. Further, a disparate impact claim is not demonstrated by statistical disparity alone.  A claim must show that a challenged practice actually caused a disparate impact on a protected group, and the availability of an “alternative practice that has less disparate impact” to serve legitimate business needs.

For a more in depth article consider this summary, Nixon-Peabody-Dispartate Impact-Analysis-Article written by Harry Kelly, an attorney from Nixon Peabody, a well respected Washington DC attorney, who specializes in fair housing and prepared the amicus brief on this case submitted by NAA, NMHC, NAHMA, the National Leased Housing Association, the Council for Affordable and Rural Housing among others in the industry.