What is disparate impact and its relevance to housing discrimination?

• A. A policy that intentionally discriminates against a protected class.
• B. A neutral policy that has a disproportionate adverse effect on a protected class and may violate FHA unless justified by business necessity.
• C. A policy that benefits a protected class.
• D. A policy that excludes all applicants with low income.

Answer: (B)

Disparate impact focuses on neutral policies that still harm members of protected classes. Under the Fair Housing Act, a policy that appears neutral but produces a disproportionate adverse effect on protected classes can be unlawful unless there’s a strong, legitimate business justification for it and a less discriminatory way to achieve the same result exists. In practice, a housing policy with a widespread negative impact on, say, racial or national origin groups would be scrutinized to see if it’s truly necessary for the business purpose or if there’s a way to meet that goal without excluding or disadvantaging protected groups. This distinction helps ensure that discrimination isn’t wrapped in a neutral-looking rule.

So the best answer describes a neutral policy that has a disproportionate adverse effect on a protected class and may violate the FHA unless justified by a substantial business necessity (or legitimate objective with no better alternative).