On Thursday, June 25, 2015, the U.S. Supreme Court ruled in favor of a civil rights group, determining that lending, zoning, sales, or rental practices would be considered discrimination if proven to have a disparate impact on racial minorities, whether that impact was intentional or not.
The 5-4 decision was the result of a case in which a Texas nonprofit, Inclusive Communities Project, Inc., sued the Texas Department of Housing for disproportionately awarding low-income housing tax credits to developers with properties in poor, minority dominated neighborhoods. The Inclusive Communities Project is an organization that seeks to place low-income tenants in wealthier Texas suburbs.
The case hinged on whether the Fair Housing Act allows for disparate impact claims. In a disparate impact claim, the plaintiff must only show evidence of the discriminatory effect of a practice, regardless of whether discriminatory intent was present. The Obama Administration issued new Housing and Urban Development Department rules in 2013 stating that the Fair Housing Act’s definition of discrimination covers disparate-impact situations.
This decision is expected to have wide-reaching effects on the lending, insurance, and other industries. More information about the Fair Housing Act can be found here. To read the full Supreme Court decision, click here.