Winning Back-Office Strategies to Boost Your Business Agility
VIEWpoint Issue 1 | 2023
2023 Compliance Trends: Staying Ahead in an Evolving Regulatory E...
Valuations Can Help Business Owners Plan for the Future
SBA Lenders Beware of BSA
IRS Delays New Reporting Rule for Online Payment Processors
The effects test refers to the principle that discrimination under the Fair Housing Act (FHA) may be established through evidence of discriminatory effects (i.e., facially neutral practices with an unjustified discriminatory effect). Illegal discrimination can be shown if a neutral policy or practice either has a disparate impact on a protected group or creates, perpetuates or increases segregation, even if such a policy or practice was not adopted for a discriminatory purpose. The FHA prohibits not only overt discrimination, but also practices fair in form, but discriminatory in operation.
In 2013, the HUD issued a rule formalizing a burden-shifting three-part test for determining whether a given practice has an unjustified discriminatory effect:
The 2013 rule was viewed by many, including consumer groups, as favoring those harmed by illegal discrimination. While the 2020 rule was viewed as tipping the scales in favor of defendants, as it “removed the definition of discriminatory effect, added demanding pleading elements that made it far more difficult to initiate a case, altered the burden-shifting framework, created new defenses, and limited available remedies in disparate impact claims.”
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