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HUD Issues Final Rule on Unlawful Hostile Environment and Quid Pro Quo Harassment

On September 14, 2016, the Department of Housing and Urban Development ("HUD") issued a final rule, "Quid Pro Quo and Hostile Environment Harassment and Liability for Discriminatory Housing Practices under the Fair Housing Act." This final rule defines "hostile environment" and "quid pro quo" harassment as unlawful, discriminatory practices under the Fair Housing Act, Title VIII of the Civil Rights Act of 1968, as amended (42 U.S.C. 3601 et seq., the "Fair Housing Act"), and sets forth standards for evaluating such claims.

This final rule brings HUD regulations in line with longstanding interpretations of the Fair Housing Act and applications of Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2003 et seq., "Title VII"). Title VII provides that hostile environment harassment, based on an individual's race, color, religion, sex, national origin, disability or familial status, and quid pro quo harassment are unlawful in the employment setting. Courts have long interpreted such discriminatory practices as also being unlawful under the Fair Housing Act. However, prior to this final rule, Courts applied general principles under Title VII to evaluate housing claims. 

By explicitly incorporating hostile environment and quid pro quo harassment into the Fair Housing Act, HUD's final rule addresses nuances and differences specific to housing discrimination. The final rule does not create any new rights or claims. Rather, it clarifies existing rights and claims under the Fair Housing Act. HUD's standards in the final rule apply in administrative, state court and federal proceedings.

The final rule defines a "hostile environment" under the Fair Housing Act as: "unwelcome conduct that is sufficiently severe or pervasive as to interfere" with the sale, rental or use of a dwelling. Under the final rule, "quid pro quo" harassment is defined as "an unwelcome request or demand to engage in conduct where submission to the request or demand, either explicitly or implicitly," is made a condition related to the sale, rental or use of a dwelling. An unwelcome request or demand may be quid pro quo harassment, even if the subject acquiesces to the unwelcome request or demand.

Pursuant to HUD's final rule, a hostile environment claim is evaluated from the perspective of "a reasonable person in the aggrieved person's position." It is not absolutely necessary that a claimant prove that they suffered psychological harm in order to recover on a hostile environment claim, however psychological harm is a factor that may be considered in determining whether an environment is hostile. 

The final rule also sets forth standards for vicarious liability and explains that a person is liable for (1) their own conduct which results in a discriminatory housing practice, (2) discriminatory practices by the person's employee or agent, when the person should have known of the conduct, and (3) discriminatory housing practices by a third party, when the person knew of the discriminatory conduct and had the power to correct it.

Landlords are especially at risk for claims of vicarious liability under this final rule. While landlords generally already know not to engage in discriminatory practices, HUD's final rule makes clear that they can be held responsible for discriminatory conduct by their subordinates and also their tenants. It is imperative for a landlord to have a workable policy in place to combat discrimination. A policy should ensure that (1) tenants are aware of their Fair Housing Act rights, (2) the landlord has documented its compliance with the policy, and (3) that tenants have a reasonable ability to seek redress under the policy.

There are many options for enacting such a policy. One option is to make a complaint form available at the rental property's front desk or conspicuously available on the landlord's website, if the landlord routinely communicates with tenants online. Another option is to provide every tenant with a written copy of the discrimination policy at the time of lease signing and have the tenant sign a receipt for that policy. This will create a record that the policy is in place and also that the tenant has notice of it.

Many hostile environment cases will stem from the harassing actions of tenants, rather than employees. To minimize risk to landlords, all leases should make clear that creating a hostile environment for another resident due to race, color, sex, national origin, disability or familial status will not be tolerated and will be an event of default under the lease. Landlords should also be vigilant in investigating and responding to complaints of harassment, and enforcing the policy against tenants or other persons creating the hostile environment.

Quid pro quo harassment cases will likely stem from the actions of employees or representatives of the landlord. Landlords should already have a policy in place against such harassment, but landlords must further guarantee that tenants have a safe means for lodging complaints without facing retaliation. A landlord should have a responsible representative on-site who can be trusted to prevent discriminatory practices. It is also important to provide tenants with an avenue to go "over the head" of the on-site representative, so tenants may safely report such conduct if the representative is the offender, or if the representative is failing to respond to such complaints. Landlords should consider providing contact information directly to the landlord (e.g. at corporate headquarters), or engaging a third-party complaint hotline service, where tenants may lodge such complaints. Such contact information should be provided in tenant lease packets, posted at the property leasing office and should be conspicuously posted on the landlord's website. 

HUD's final rule reaffirms the importance of enacting and adhering to policies to avoid civil rights violations and to act proactively in response to any allegation of violation.

If you have any questions regarding the final rule, please contact Elizabeth F. Collura at (412) 394-2328 | ecollura@clarkhill.com, Matthew J. Rippin at (412) 394-2310 | mrippin@clarkhill.com, Joshua M. Farber at (412) 394-7720 | jfarber@clarkhill.com, or another member of Clark Hill's Real Estate or Litigation Practice Groups.