What is the standard for disparate impact under the FHA?

• A. A policy that intentionally targets a protected class.
• B. A policy that affects all classes equally.
• C. A neutral policy that disproportionately affects a protected class without a legally valid justification.
• D. A policy that benefits a protected class.

Answer: (C)

Disparate impact focuses on the effects of a policy, not the administrator’s intent. The standard is met when a policy that is neutral on its face ends up disproportionately harming a protected class and there is no legally valid justification for that disproportionate impact. In other words, even though everyone is treated the same by the policy, the outcome worsens the chances for members of a protected group. The burden then shifts to show that the impact is not justified by a legitimate business necessity, or that there is a less discriminatory way to achieve the same goal. Because intent isn’t required to prove this, a policy can be illegal under the FHA purely based on its outcome. If a valid, legally sound justification exists and no less discriminatory alternative would achieve the same objective, the policy may still be defended; otherwise, the policy should be modified or eliminated to remove the discriminatory effect.