Conducting Criminal Background Checks: Further FAQs & Follow-up
In this Special Issue, we’re following up on the Coach’s June 2016 lesson on HUD’s new guidance on criminal background checks with highlights from our recent webinar.
At the webinar, our experts, fair housing attorney Kathelene Williams and Linda Richer, vice president for AmRent, Inc., addressed legal and practical considerations for housing providers when developing a criminal history screening policy.
Williams said that it’s very important for all housing providers to review and consider whether your current criminal screening policy should be revised to avoid a successful challenge in a fair housing case based on its disparate impact on minority applicants. “There are fair housing advocacy agencies that are actively searching for companies with simplistic and generalized criminal history policies to challenge. We don’t want your companies to be those test cases,” she said.
In this Special Issue, the Coach presents highlights from the webinar presentation, along with FAQs about complying with fair housing law when screening applicants based on criminal history.
WHAT DOES THE LAW SAY?
The Fair Housing Act (FHA) bans housing discrimination based on race, color, religion, sex, national origin, disability, and familial status.
There are two ways to prove a fair housing violation, Williams explained. The first and most common is to show intentional discrimination—what’s known as disparate treatment. In these cases, the issue is whether people in similar situations were treated differently, and if so, whether that different treatment was due to that person’s protected category.
The second is what’s known as disparate impact. It’s used to challenge a housing policy that on its face is neutral—that is, it doesn’t appear to favor one protected category over another—but when the policy is applied, it has a significantly negative impact or effect on one protected category. These cases are always based on statistical analyses using either national or local data, Williams said. It’s this second category that was the focus of HUD’s new guidelines on criminal background checks.
To illustrate why the use of criminal screening policies have been causing such concern, Williams cited a recent study showing racial disparities in the criminal justice system. According to the study, one in every three black males born today can expect to go to prison at some point in their lives; this compares with one in every six Latino males, and one in every 17 white males. “Racial minorities are more likely than white Americans to be arrested,” according to the report. “Once arrested, they are more likely to be convicted; and once convicted, they are more likely to face stiff sentences.” The conclusions of this and other similar studies have resulted in a bipartisan effort to improve the criminal justice system to remove this apparent racial bias.
Overview: HUD General Counsel Announcement
In a nutshell, HUD’s new guidelines explain how the agency will evaluate fair housing claims based on the disparate impact that criminal background screening policies may have on racial and ethnic minorities. Williams explained the three-step process:
Step 1: The plaintiff must prove that a community’s neutral criminal history screening process has a significant disparate impact on African Americans and Hispanics. The plaintiff could be an individual, an advocacy agency, a testing agency, or an enforcement agency like HUD or the Justice Department. To satisfy this step, the plaintiff needs statistics showing that African Americans are arrested and convicted of crimes at a significantly higher rate than whites using local or national statistics. In most cases, it’s not difficult to provide these statistics. If the evidence ends, the plaintiff wins.
Step 2: Then it’s up to the housing provider to identify a substantial, legitimate, nondiscriminatory business interest accomplished by the policy. One obvious reason is to improve safety and security, but HUD warns that bald assertions based on generalizations and stereotypes aren’t enough. It takes more than a personal preference to screen out all ex-offenders to justify a criminal screening policy—you’ll need some statistical support for your policy. If the evidence ends, the housing provider wins.
Step 3: In the final step, the plaintiff gets another chance to win the case with proof that a different policy would meet the interests of the housing provider but do so with a much less discriminatory impact. This is where the content of your criminal history screening policy can be challenged unless the policy is narrowly tailored to meet the ultimate purpose of the policy—to protect safety, for example—without denying housing to many applicants with a criminal record who may not actually pose a risk to your property.
The bottom line: To defend your policy, you’ll need to show that it accurately distinguishes between criminal conduct that indicates a demonstrable risk to residents’ safety—and conduct that does not. For that, you’ll need to consider statistics about recidivism—that is, the likelihood that a person convicted of a particular crime in the past is likely to be re-arrested for another crime in the future.
As an example, Williams cited a study showing that the likelihood of re-arrest following release from prison goes down over time. Although nearly half of the subjects were rearrested, it was much more likely to happen during the first few years after release. By the end of the eight-year study, arrest incidents dropped down to the point where the percentage of those re-arrested was close to anyone else—including those without a past criminal record.
Another example was a report on the kinds of crimes most often committed after release from prison. In that study, the most common felony resulting in a re-arrest was assault—at 24 percent—and the least were rape and homicide, at less than 2 percent each.
You don’t have to become a criminal justice expert as long as you understand that disparate impact cases rise and fall on statistics, Williams said. These and many more studies are available to plaintiffs when challenging criminal history policies, so you should take them into account when reviewing your own policies.
Statutory Exemptions from Fair Housing Liability
When evaluating your criminal background screening criteria, consider the “statutory exemptions” from fair housing liability:
Manufacturing and distribution of drugs: Applicants with criminal convictions related to manufacturing and distribution of controlled substances as defined in Section 102 of the Controlled Substances Act can be excluded. Keep in mind, however, that a large percentage (30 percent of the entire U.S. prison population, according to FBI reports) has some type of criminal history based on drug offenses, so you should be careful when it comes to convictions for less serious offenses, such as drug possession.
Sex offender registries—lifetime registrants: Rejecting a registered sex offender (especially those who are required to register for life) is stated as a statutory exemption under the HUD tenant selection plan, Richer said. Many market-rate communities also accept this practice since there is a significant financial, safety, and reputational risk.
But beware: Sex offender registry websites in California, Nevada, and New Jersey have clauses prohibiting use of the sex offender registry information for housing eligibility. Even in those states, Richer believes that federally funded housing under HUD programs would probably still be eligible to use state registry information, but you should check with your attorney to confirm your company’s position.
CRIMINAL HISTORY SELECTION CRITERIA BEST PRACTICES
What should you do in light of HUD’s guidance? The first thing to realize is that the HUD guidance isn’t intended only for HUD program housing providers, explained Richer.
Industry experts agree that the guidance provided by HUD applies to all housing providers, not just those receiving federal funding. The best practices are being recommended, so that any housing provider that uses criminal histories in its applicant screening process will consider disparate impact and review its criteria, adjusting as necessary, she said.
It’s also important to realize that there isn’t one source for information on all federal and state criminal records, said Richer, explaining what she considers to be the “biggest myth in resident screening.” There is no single “national” database of criminal records available to screening company providers. In fact, even the FBI database doesn’t contain all criminal records from every court or state criminal repository in the country.
The way most professional screeners obtain data is either to use a third party or gather their own criminal records from state, county, and local sources, Richer explained. Either way, there are states that restrict the release of electronic criminal records, and some that omit personal identifiers, like full name or date of birth, which makes the process of matching records impossible.
The bottom line: It’s difficult to gather criminal records because each source has a different way of cataloguing records. Those differences can make it challenging for both screening and housing providers to conduct criminal records screening.
Understand Key Terminology
Before getting started, you should understand some key terms used in criminal record screening. If you review criminal records as part of your application process, being able to clearly understand the disposition of the record is critical in how you evaluate prospects for housing, Richer said.
Arrest: This word can be confusing or misinterpreted in the context of resident screening. Records of “arrest” refer to when a person is “picked up” or “cuffed” for a criminal event. He or she may be taken into custody (typically to a local police station), but a case has yet to be filed in a court. Richer said that most screening companies don’t include records of arrest in their criminal background service.
Pending case: Once sufficient evidence has been presented, typically the prosecutor will file charges. The charge filed opens a case at the appropriate court and the case remains pending until a final disposition, such as guilty or dismissed, has been rendered. HUD’s new guidelines warn against making housing decisions based on arrests, so it’s important to distinguish between arrests and charges filed (that is, pending cases).
Disposition: Disposition refers to how the case was resolved in the criminal justice system. Any criminal record that isn’t pending would have some type of disposition.
Deferred adjudication: Some states use the term “deferred adjudication,” which is a criminal record showing conviction status, but the court had “deferred” the conviction to allow the offender to participate in some type of community service program. If completed, the conviction status would be removed; if not, the conviction status would stand.
Conviction: A record of conviction means the case resulted in the offender either pleading guilty or being found guilty.
Look-back period: This refers to the amount of time a company will consider when evaluating criminal histories. You may have different look-back periods, depending on the nature and seriousness of the crime.
Exit from incarceration: The date of exit from incarceration, parole, or release date if the sentence included jail time.
What You Should Know about the FCRA
The Fair Credit Reporting Act (FCRA) is the main compliance law for all screening providers (known as consumer reporting agencies), Richer explained. This federal law provides guidance and obligations for screening providers, users of consumer reports (including housing providers), and consumers (including housing applicants).
Once the criminal records are obtained, screening providers can only deliver the information in accordance with FCRA requirements. Here are some key things to keep in mind about the FCRA:
Permissible purpose: To gain access to any consumer report (including criminal records), companies must certify a permissible purpose under the FCRA. For housing providers, the one that typically applies is “a legitimate business transaction initiated by the consumer.” You also may have the written consent of the consumer.
Obsolescence reporting standards: The FCRA defines how long a record can be delivered on a consumer report. The federal FCRA allows for records of conviction to display indefinitely; records of non-conviction (pending, deferred adjudications, and the like) are limited to seven years.
State law limitations: There are 11 states with different reporting standards from the federal FCRA. Most limit records of conviction to seven years, but some have different rules. For example, Kentucky limits records to only convictions, but keeps the time frame the same as the federal FCRA. And California, New Mexico, and New York only allow for records of conviction and limit the time to display to seven years.
Accuracy requirement: Consumer reporting agencies must have reasonable procedures to ensure maximum possible accuracy. For example, if a criminal record does not contain enough information to match to an appropriate consumer (typically full name and full date of birth), then it shouldn’t be delivered in a consumer report.
Adverse action: If you determine that an applicant isn’t suitable for housing, or you decide to offer housing with a conditional offer, based on the consumer report, then a “statement of adverse action” is required under the FCRA.
Disclosure and dispute: The statement of adverse action directs the applicant (the consumer) to the “source” of the consumer report (the screening company) to find out what information was delivered to the housing provider (the user) and dispute any inaccurate or non-updated information. This is a free service to consumers and is required under the FCRA.
Review Your Criminal Screening Criteria
If you haven’t done so already, pull out your resident selection criteria and take a close look at the evaluation standards for applicants with criminal records. Depending on what it says, you may need to make some changes right away. Then review it in detail—and get help from your attorney, resident screening company, and other advisors to ensure that it complies with HUD guidelines. Richer offered some key best practices:
Remove any ban based on arrests. The first thing to do is to check whether your policy includes any ban based on arrest records, Richer said. HUD’s guidance clearly states that records of arrest should not be used to deny housing or terminate a lease. There may be circumstances where a criminal event has occurred and the arrest record might justify further research into the behavior, but an arrest alone can’t be used to deny housing eligibility.
Include statement of the purpose served by criminal screening. When documenting your resident selection policies, include a statement that the policies serve to reduce risk to your communities and residents. As you review your policies and make adjustments, be prepared to show that your policies are set to improve your communities’ and residents’ safety, and that the policy is substantial, legitimate, and has no discriminatory interest.
Remove blanket/generalized felony bans. Check whether your policy includes any “blanket” exclusions for all convictions or all felonies. Those policies are likely to be challenged by disparate impact claims.
Determine most serious and violent crimes. Replace any generalized felony or conviction bans with only the most serious or violent crimes that accomplish your goal of reducing risk. These may include both felony and misdemeanor crimes as long as consideration has been given to the nature of the crime.
Include look-back periods and exit from incarceration. Keep recidivism rates in mind when setting look-back periods. Look-back periods may be based on the conviction date or the date of exit from incarceration.
Address applicants with multiple unrelated violent and nonviolent felony convictions. A pattern of criminal activity may present a risk to your community (especially if it’s recent), so you may want to consider the number of criminal events within a period of time. The events may be unrelated, but a pattern of crimes may show a propensity toward risky behaviors over a short period of time or within a recent period of time.
Remember the FCRA. dd language that informs applicants that when criminal records are found, they may have an opportunity to appeal and provide circumstances surrounding the criminal events.
As you review your policies and make adjustments, keep in the back of your mind the goal you have—to demonstrate that your policies are set to improve your community’s and resident’s safety, and that the policy is substantial, legitimate, and has no discriminatory interests, Richer says. You will also want to consider if there is any less discriminatory practice that could achieve the same goal.
And don’t forget, your policies may come under scrutiny from testers, she warned. Take the time to train your staff properly, and for them to properly communicate your policy regarding criminal records. You want to be sure your policy isn’t being communicated in an abbreviated fashion, and that your staffers aren’t discouraging applicants with criminal histories from applying to your communities.
Appeals of Rejections/Individualized Assessments
In addition to developing a complex policy that includes a graduated tier of look-back periods that relate to the seriousness of the crimes, Williams said that another way to defend your criminal history policy is to include in the policy a description of an applicant’s right to appeal a rejection.
Each rejection should inform the applicant that she has a right to obtain a copy of the criminal record on which the rejection is based. If you use a third-party screening company, these records should be provided by your screening company.
Decide who in your company will conduct these appeals, Williams suggested. It often proves useful to assign appeals to the same person or persons so they can develop some expertise in how to conduct these hearings, including the factors that prove to be the strongest to indicate a rejection should be maintained or reversed.
Williams often uses the term “individualized assessment” when reviewing whether an applicant is able to explain mitigating circumstances that may change the original determination to reject an application due to a criminal record. There are a number of factors that can be considered during the appeal, including:
- The seriousness of the criminal offense;
- The relationship between the criminal offense and the safety and security of residents, staff, or property;
- The length of time since the offense, with particular weight being given to significant periods of good behavior;
- The age of the household member at the time of the offense;
- The number and nature of any other criminal convictions; and
- Evidence of rehabilitation.
If you are holding an apartment, this process obviously needs to be completed as soon as possible, so it’s a good idea to put time limits on all aspects of an appeal, Williams said. In conventional housing, if it is going to take more than a week or two for the hearing and decision to occur, Williams said it makes sense to move forward with leasing the apartment to another applicant. In federally funded housing, the result may be different due to HUD’s appeal requirements.
There has not been a defined time frame by HUD, so Richer said it will depend on your housing availability and the length of the waiting list. In some cases, it may make sense to hold the apartment for a few days. If the time period expires, the apartment becomes available to another qualified applicant. You could set a reasonable time frame for the applicant to provide the necessary information for your appeal and provide him with the “next available” apartment in the event that the initial time frame expired.
During the presentation, Williams was asked whether this process was taking the housing industry back to a subjective review of the applicant. Those concerns were legitimate, she said. The federal government is asking housing providers to consider whether their criminal history policies reflect a genuine concern for safety or are merely based on generalized stereotypes of the dangers posed by ex-offenders.
While the country works to address difficult problems with the criminal justice system, Williams said that housing providers are tasked to treat applicants with criminal records somewhat similarly to residents who request reasonable accommodations. As you know, these are decided on a case-by-case basis, and companies are developing employees with expertise to make these decisions. Due to the seriousness of this issue, Williams suggested that housing providers devote a similar commitment to administering criminal history screening policies and give applicants an opportunity to explain their individual situations.
9 FAQS ON CRIMINAL SCREENING POLICIES
FAQ: Reviewing Policy
Question: How urgent is this? How soon do you recommend that we review and revise our criminal history policies?
Answer: Time is of the essence, said Williams, who believes that anyone with a broad generalized policy is at high risk for challenge. Certainly the larger your company, the more chance there will be that you could be challenged, so she believes it’s a very smart practice for everyone—all companies—to take another look at their criminal screening policy to determine if it needs to be revised, and if so, to immediately go about taking the steps to do so.
Question: What happens if a community denies housing based on a screening report that contains inaccurate information about an applicant’s criminal history?
Answer: When the denial takes place, Richer explained that it’s the community’s responsibility as a user of consumer reports under the FCRA to provide the applicant with an “adverse action" notice, which would direct him to the screening company that provided the information to the housing provider.
The applicant has the right to a free disclosure of the contents of the report and to dispute any inaccurate and non-updated information found within the report. The screening company then has 30 days to verify that the information is accurate and belongs to that consumer. If the information can’t be verified, it would be removed from the report. The applicant would get a corrected copy of that report and could also request that a corrected version of the report be sent to the original inquirer (the community).
This is one reason for having a very active appeal process, Williams said. If you get the wrong person’s record, which does happen occasionally, the appeals process allows the person to come forward and show that that is not his record and it was a mistake, and allow you to undo the rejection immediately.
FAQs: Look-Back Period
Question: How far back should we go in considering criminal convictions? When should the look-back period start—on the date of conviction or the date the applicants left incarceration?
Answer: Depending on the status of the record (conviction, pending case, etc.), the look-back period date may vary, Richer said. The look-back period could start on the date of release from incarceration, but remember: That information may not be readily available in some states, so it can be challenging to base your look-back period on that particular date. You may want to craft a policy that includes multiple types of dates based on the information available from the criminal source, Richer said.
Every company needs to decide this for itself, Williams said, but you could include the date of conviction, and also the date of release—with the same or lower look-back period. For example, you could set the look-back period to be seven years from conviction of the crime, and three or four years from release from incarceration (or whatever number of years you choose). In states where you may have difficulty getting that data, Williams said that it will be something to work out with your screening company.
Question: How do we determine what is considered a reasonable look-back period?
Answer: To determine a reasonable look-back period for your community, Richer recommends consulting with your legal counsel, your resident screening provider, and perhaps peer communities. Some of the recommended best practices include longer look-back periods for more serious crimes (that would include incarceration) and shorter look-back periods for less serious crimes or misdemeanors. Several AmRent customers have selected up to 20-year look-back periods for very serious crimes, seven to 10 years for serious crimes, and three to five years for less serious crimes.
Question: How would you handle convictions for serious crimes, such as murder or rape, when the recidivism rate is so low, but the danger posed of that low percentage of offenders is extremely high?
Answer: Many housing providers are considering the safety, reputational, and financial risk when making these decisions, Richer said. Although the recidivism rates for murder and rape may be lower than other crimes (according to some statistics), you’ll have to determine what legitimate, substantial, and non-discriminatory interest would be achieved with a policy that restricts housing based on the reputational risk of admitting a person with one of these crimes in his past.
It may be prudent to apply a reasonable look-back period that includes incarceration time, Richer suggested. In addition, your individualized assessment process might consider the amount of time since release from incarceration, evidence of criminal events since release, housing and employment history, as well as rehabilitation programs. This particular category has been challenging for many communities to reconcile.
FAQ: Pending Charges
Question: What should we do if the criminal record shows there are pending charges against an applicant?
Answer: Pending charges are different from records of arrest, but Richer and Williams warned that they still should be handled carefully with respect to the new HUD policy guidance. One option would be to treat applicants with pending charges somewhat similar to the way you would treat them if they had a conviction on those charges. Serious consideration should be given to the risk associated with the criminal offense and the impact to the community. It can get tricky when the charges are not severe, so you should consult with your legal counsel.
FAQ: Rehabilitation Program
Question: If an individual has completed a rehabilitation program, should we allow residency?
Answer: Your company policy might consider rehabilitation program completion as one factor in your individualized assessment process, Richer explained. The completion of a rehabilitation program alone might not be sufficient to mitigate all the risk associated with a particular crime. You might also consider how long ago the crime occurred and if the applicant has committed other related or non-related crimes since the original crime or after the rehabilitation program.
FAQ: Conditional Approval
Question: Can a criminal background check be approved with conditions—for example, accepting the application, but with a condition that the applicant can’t be arrested for that offense during the calendar year?
Answer: Accepting an applicant with conditions is one of the best practices suggested under the HUD policy guidance, Richer said. When considering whether to do so, you’ll need to consider how you’ll monitor future criminal activity and complete the eviction process once the applicant becomes a resident (all at a cost to you). Richer said you should consult with your legal counsel whether the benefit of this condition outweighs the administrative burden and costs of managing the enforcement.
FAQ: Postponing Access to Criminal Records
Question: What is the reasoning behind the recommendation to run criminal reports after other screening has been completed?
Answer: The thought process is if you are not “viewing” criminal records until other qualifying criteria have been met (such as credit, rental history, employment verifications, and the like), then you will reduce the number of times that you are disqualifying applicants for housing based on previous criminal histories, Richer said. You are also likely to reduce the frequency of individualized assessments, which are time-consuming, costly, and require judgmental review of the applicant’s circumstances surrounding the criminal record.
For more information: Visit our website, FairHousingCoach.com, to download the June lesson, “Q&A on HUD’s New Guidance on Criminal Background Checks,” and to get information about our webinar, “Applicant Screening and Criminal Histories: Addressing Disparate Impact Liability under the Fair Housing Act.”
Linda Richer: Vice President, AmRent, Inc., 250 E. Broad St., Columbus, OH 43215; (614) 222-5355; LRicher@Amrent.com.
Kathelene Williams, Esq.: The Law Firm of Williams & Edelstein, P.C., 7742 Spalding Drive, Ste. 478, Norcross, GA 30092; (770) 840-8483; email@example.com.