Follow Five Rules to Avoid Source-of-Income Discrimination

In New York City, the NYC Commission on Human Rights is charged with enforcing local fair housing laws. The New York City Human Rights Law is one of the most comprehensive civil rights laws in the nation. The law prohibits discrimination in housing based on race, color, creed, age, national origin, alienage or citizenship status, gender (including gender identity and sexual harassment), sexual orientation, disability, marital status, and partnership status. In addition, the law affords additional protections based on lawful occupation, family status, and any lawful source of income.

Generally speaking, the city’s ban on discrimination based on source of income means that you can’t exclude or otherwise discriminate against applicants and tenants because of where they get their money or financial support. Lawful sources of income include wages, retirement benefits, child support, public assistance, and housing subsidies.

In February 2014, the law enforcement bureau of the NYC Commission on Human Rights reported a settlement made with an owner. The commission ordered the owner to pay a civil penalty of $2,500 for posting a discriminatory advertisement refusing to accept Section 8 vouchers as a lawful source of income, as well as undergo antidiscrimination training. To help you avoid similar trouble with NYC Human Rights Commission investigators, follow these five rules to ensure you comply with fair housing law.

Rule #1: Don’t Reject Applicants Based on Source of Income

To comply with the NYC Human Rights Law banning discrimination based on source of income, make sure that you don’t turn away applicants simply because they’re unemployed or receive financial assistance, such as rental assistance or disability benefits. Otherwise, you could trigger a fair housing complaint—win or lose, it still can be costly to resolve. According to the law, if your apartment building has six or more units, you cannot:

• Refuse to rent an apartment to an applicant because the applicant receives federal, state, or local public or housing assistance, including Section 8.
• Refuse to accept federal, state, or local public or housing assistance, including Section 8, towards the payment of rent, whether or not the tenant is a new tenant or an existing one.
• Post advertisements, including online or newspaper advertisements, and billboards that indicate a refusal to accept these programs.

In addition, regardless of the number of units in the building, an owner must accept a rental subsidy if the apartment is rent controlled and the tenant lived there when the law took effect in March 2008 or the owner has another building in NYC that has six or more units.

Rule #2: Watch Your Language

Make sure that your compliance efforts extend to what you say in your advertising—and how you respond to telephone or online inquiries—about your willingness to accept Section 8 housing vouchers or other forms of public assistance. The wrong message may trigger a fair housing complaint—or draw the attention of NYC Human Rights Commission investigators.

It’s unlawful to make statements or disseminate advertising that indicates a preference or limitation based on a prospect’s source of income. For example, you may not publish advertisements that say, “No Section 8,” or tell prospects over the phone that you don’t accept Section 8 housing vouchers. If you do, you may trigger a fair housing complaint because you’re effectively screening out all Section 8 prospects before they even apply.

In addition, it’s unlawful to provide inaccurate or untrue information about the availability of units for discriminatory reasons. Such prohibited conduct includes indicating, through words or conduct, that an available unit has been rented, or limiting information about suitably priced available units, because of the prospect’s source of income.

Rule #3: Follow Standard Procedures Regardless of Source of Income

Follow standard policies and procedures when dealing with prospects and applicants to ensure that every prospect visiting your office is treated the same way, regardless of her source of income. For example, you should offer every prospect—regardless of her source of income—a rental application and invite her to fill it out. Be consistent in applying your screening criteria—including credit history, rental history, criminal background, and the like—to all applicants, regardless of the source of funds used to pay rent.

It’s unlawful to refuse to allow a prospect to apply to live in the building—or to impose procedural hurdles that make it more difficult for prospects with housing assistance to get through the application process. Fair housing organizations are taking notice, and acting on complaints of discriminatory treatment during the application process.

For example, in April 2013, the Fair Housing Justice Center (FHJC) filed a lawsuit on behalf of a woman living with AIDS, who claimed that she had been denied a unit in a 5,000-unit site in New York City because she intended to pay her rent using a housing subsidy for people with HIV/AIDS issued by a city agency (HASA).

Based on the complaint, the FHJC conducted an investigation, which allegedly revealed systemic discrimination based on source of income and disability at all the owner’s rental buildings in New York City.

The lawsuit accused the owners and its rental management company of treating applicants with rental assistance of any kind, including persons with a HASA housing subsidy, differently and less favorably than applicants with income from employment. For example, the complaint alleged that applicants who were employed were allowed to go directly to a convenient on-site leasing office, meet with a leasing agent, obtain floor plans, and view available apartments before having any income verified or completing a rental application.

In contrast, the complaint alleged that applicants with any type of rental assistance, including persons with a HASA rental subsidy, were required to go to a separate off-site leasing office, speak with employees behind a glass window, complete a rental application, submit to a credit and criminal background check, and provide other documentation just to be placed on a waiting list and before any information would be provided about apartments for rent or available apartments would be shown. The lawsuit claimed that this different treatment constitutes intentional source-of-income discrimination under the New York City Human Rights Law.

The complaint is the latest of a series of lawsuits filed by the FHJC on behalf of prospects attempting to rent a unit with a HASA housing subsidy in New York City. In March 2013, a large realty company agreed to pay $212,500 to settle a lawsuit involving the city’s ban on discrimination based on source of income.

And in December 2012, a court ordered two New York City real estate firms to pay $25,000 in damages for source-of-income discrimination against a HASA client and others using government subsidies. According to the court, one of the brokers refused to assist HASA clients altogether. Although the other worked with HASA clients, it refused to show them properties whose owners didn’t accept HASA subsidies.

The court rejected the brokers’ claim of a legitimate business justification based on delays in the approval process and payment of deposits. Although there could be circumstances when an owner or realtor might prefer a so-called market-rate client over a HASA client or a person receiving a governmental rental subsidy, that wasn’t the case here. The court noted that the broker who worked with the prospect didn’t tell him that he was ineligible for certain apartments because they were available immediately and that HASA applications would take too long to process. Rather, the broker indicated that certain apartments didn’t accept programs under any circumstances because they were only for working people [Short v. Manhattan Apartments, December 2012].

Rule #4: Apply Standard Screening Policies

Source-of-income laws ban discrimination against applicants because of where they get their income—not the amount of their income. You may ask about the source of the applicant’s income, as long as you don’t discriminate based on that information.

Owners have the right to rent only to applicants they believe to be responsible and who will pay the rent. You may require applicants to satisfy your screening criteria—such as credit checks, criminal background checks, and rental history—as long as you apply the same standards to all your applicants, regardless of their source of income.

For example, you don’t have to accept an applicant who receives financial assistance if you have other nondiscriminatory reasons for rejecting him, such as a criminal record, as long as you apply that policy consistently to all applicants. Other legitimate, nondiscriminatory reasons for rejecting an applicant might be a bad credit history or prior evictions for nonpayment of rent or damage to the apartment.

Regardless of the applicant’s source of income, you don’t have to accept individuals who can’t demonstrate their ability to pay their rent. You may require all applicants to satisfy minimum income requirements, such as two or three times the rent, and may verify that the applicant can satisfy that standard. Doing so doesn’t violate state or local laws banning discrimination based on source of income—as long as you apply the same income criteria (taking into account their financial assistance) to all applicants.

For example, if you require applicants to earn at least three times the rent to live there, you may impose the same requirement on applicants who get Section 8 vouchers or other financial assistance. But you must take into account the amount of their financial assistance to determine whether they meet this requirement, for example, by requiring that they make three times the amount of their portion of rent.

Rule #5: Apply the Same Terms and Conditions, Regardless of Source of Income

To comply with laws protecting source of income, you must treat all applicants and tenants equally in the terms, conditions, or privileges of the tenancy, regardless of their source of income. It would be unlawful to require Section 8 voucher holders to pay a larger security deposit or higher rent than required of other tenants.

It would also be unlawful to treat tenants differently or enforce building rules and policies more strictly against them based on their source of income. You could face a discrimination claim, for example, if maintenance requests by individuals using Section 8 housing vouchers are ignored or put at the bottom of the list. The same would be true if you singled out tenants receiving housing assistance for rules violations, while ignoring similar infractions by people who don’t receive such assistance.

To avoid a potential violation, provide fair housing training to all employees, stressing the need to treat all your tenants in the same professional manner—regardless of their source of income or any other protected characteristic.