Posted on July 26, 2010 by Scott M. Badami

Corporate and Individual Liability Under the FHA?

One common question we get asked is:  “If one of my staff members violates the Fair Housing Act ("FHA") by discriminating against a member of a protected class, can I be held personally liable as the owner or officer of my company?”  The general answer is no as the FHA does not impose vicarious liability directly upon a corporation’s officers or owners.  The FHA, however, does impose vicarious liability directly upon the corporation, regardless of fault. The Supreme Court addressed this issue in Meyer v. Holley, 537 US 280 (2003).

In that case, the Supreme Court held that the FHA imposed vicarious liability directly upon the corporation without regard to culpability, but that it does not impose liability directly upon the corporation’s officers or owners.  The Court reasoned that Congress legislates against a legal backdrop, in this instance, the backdrop of traditional common law tort principles, which traditionally impose vicarious liability upon principals or employers when the agent or employee commits a tort while acting in the scope of their authority or employment. Typically, a corporate employee acts on behalf of the corporation that employs him, not on behalf of the officers, owners or shareholders of the corporation.  As such, the Court reasoned that Congress could not have “intended to apply any unusual modification of those rules” in the FHA because the FHA is completely silent on the issue. This notion was further strengthened through statements by HUD that ordinary vicarious liability rules apply in this area.

So what does this mean for you as an owner or officer of a business involved in the rental or sale of real estate?  First, make sure you are protected by having your business in the appropriate corporate form.  Second, draft and follow policies regarding the rental and sale of real estate.  Pay particular attention to the rules and requirements contained in the FHA and in HUD regulations.  Train your employees to follow the law and your policies.  

Just a Thought

Article by Christian Moffitt.

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Posted on July 19, 2010 by Scott M. Badami

Advertising a Housing Promotion in a Church Bulletin?

I got a call from a client asking a question related to religion and the Fair Housing Act ("FHA").  The client was looking to increase the number of residents at a particular community by advertising a promotion in a local church flyer.  In short, the ad would have offered church members a discount for renting an apartment at this community.  He wanted to know if that raised a fair housing issue.  He wanted me to tell him it was not a concern because he thought this would be a win-win for both the church and the apartment community.
 
Religion, of course, is one of the protected classes in the FHA.  I had to tell my client that management cannot offer a promotion only to members of one specific religion.  If we offer a special to rent our apartments, we must offer that rate to everyone who applies during the time of the promotion.  In this case, my client's well intentioned idea could have been viewed by some as violating the FHA because one religion would have been perceived to be favored over others as members of one church would have received a discounted rental rate.  And the FHA requires that all religions be treated the same.
 
Advertising housing in church flyers or bulletins -- something that seems exceptionally benign at first blush -- opens up a number of FHA questions that management needs to be aware of.  Or you may need to speak with a lawyer like me.
 
Just A Thought.
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Posted on July 13, 2010 by Scott M. Badami

Can A Single Reasonable Accommodation Mistake Really Cost Management?

Here at the Fair Housing Defense blog, we have regularly discussed the need for management to respond to requests for reasonable accommodations and/or reasonable modifications received from our residents. A recent court decision from California reminds us all of the importance to make sure supervisors are promptly (if not immediately) told of previous agreed-upon accommodations. The following is an employment case, but it provides a good lesson for those of us in the apartment ownership and management business as well. Particularly when management personnel change.

The case involved an employee who returned to work as a cashier after undergoing cancer treatment. Because of the side effects of the cancer treatment, the employee needed to drink plenty of water and, not surprisingly, she needed to urinate frequently. The employer agreed to allow the employee to drink at the check out counter and to provide bathroom breaks as needed. The employer successfully provided these accommodations from January 2004 until February 2005.

A new manager began working at the store in February 2005. For whatever reason, this new supervisor did not know (or was not told) about the employee's disability or the store's accommodation. The employee asked the manager for a break. At the time, the manager was the only employee on duty who could take over for his colleague. The manager asked the employee if she could wait because a delivery truck was arriving. The employee did so. Later that day, when the employee had a line of customers at her stand, she told the manager she needed to go to the bathroom. The manager was unloading merchandise and said he could not relieve the cashier. About 10 minutes later, the cashier again said she really needed to use the restroom. The manager told the employee that he was too busy to relieve her. The employee could not control herself and urinated while standing at her the checkstand.

The employee became severely distraught and developed severe anxiety and depression, including thoughts of suicide. She sued her employer for failing to accommodate her disability under the California Fair Employment and Housing Act (FEHA).  The trial court found in the employee's favor and awarded her $200,000 in damages, including $148,000 for past emotional distress.

The appellate court affirmed, holding that employers can be liable for even a single failure to provide an agreed upon reasonable accommodation. The court rejected the employer's contention that, by not informing the new manager of her disability and accommodation, the employee had failed to meet a continuing duty to communicate. The court concluded that, once the parties have identified and agreed upon an accommodation, the employee does not have a duty to inform every new supervisor of the accommodation.

We should all learn from this defendant's expensive mistake by carefully documenting all reasonable accommodation requests and ensuring that supervisors are up-to-date and that management consistently provide -- and keep track of -- agreed upon accommodations.

Just A Thought.

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Posted on July 7, 2010 by Scott M. Badami

HUD Guidance Regarding Discrimination Based on Sexual Orientation and Gender Identity

As we have discussed on numerous occasions in this blog, the Fair Housing Act ("FHA") prohibits discrimination based on race, color, national origin, religion, gender, disability, and familial status. Acknowledging that the FHA does not explicitly protect against discrimination against persons based on their sexual orientation or gender identity, HUD issued guidance on July 1 to provide its thoughts regarding potential discrimination claims that may arise based on those categories.

For example, HUD will take the position that a landlord who discriminates against a gay man because of the landlord’s belief that the prospective tenant may infect other tenants with HIV likely constitutes actionable discrimination because the landlord is discriminating based on the tenant’s perceived disability as a carrier of AIDS.  Likewise, HUD notes taht a landlord who discriminates against a transgendered person based on their non-conformity with gender stereotypes has likely violated the FHA’s ban on gender-based discrimination.  The new guidance also identifies states that prohibit sexual orientation and/or gender identity housing discrimination, along with contact information for each state’s human rights enforcement authority. Currently, nineteen states and the District of Columbia outlaw discrimination based on either sexual orientation or gender identity.

The issuance of this guidance is hardly surprising in light of the initiatives announced by HUD in October 2009. The proposed rules intended to (1) clarify that the term “family” as used to describe eligible beneficiaries of HUD’s public housing and Housing Choice Voucher programs to include otherwise eligible lesbian, gay, bisexual or transgender individuals and couples; (2) require grantees and those who participate in HUD’s programs to comply with local and state non-discrimination laws that cover sexual orientation or gender identity; and (3) specify that any FHA-insured mortgage loan must be based on the credit-worthiness of a borrower and not on unrelated factors or characteristics such as sexual orientation or gender identity. 

The bottom line is that even though sexual orientation and gender identity are not included in the FHA, many states include these as protected classes.  And as the HUD guidance makes clear, the department will attempt to use existing law to "fit" perceived discrimination against members of those classes.

Just A Thought.

Article by Christian Moffitt.

 

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