What is Disparate Impact?

What is disparate impact?  Disparate impact analysis is an established legal doctrine that civil rights advocates use to help enforce laws like the Fair Housing Act.  Disparate impact arguments usually rely on statistical analysis to demonstrate that a policy that may seem facially neutral actually has a disproportionate effect on a protected group of people.

For example, a lender’s requirement that borrowers prove a certain length of employment history may seem reasonable and neutral on its face, but in fact might have a disparate impact on people with disabilities, whose full time employment history could be limited even though an individual with a disability may have enough income to cover loan payments.

Why is disparate impact so important?  Just because banks, landlords or other parties may not mean to discriminate doesn’t mean policies don’t negatively impact a group of people. The banking industry, however, has recently suggested that fair housing law should be limited to cases where a lender or landlord openly admits they intended to discriminate.  This would make it virtually impossible to enforce civil rights law.

What is the difference between disparate impact and disparate treatment?  Disparate impact claims are distinct from disparate treatment claims because plaintiffs are not required to demonstrate malice or discriminatory motivation, but rather acknowledge fault based on effects.  In other words, while disparate treatment theory is based on intent, disparate impact analysis establishes culpability for a policy that is developed with little attention to, or understanding of, the potential impact on a protected group of people.

When is disparate impact analysis used?  Disparate impact theory can be used to analyze the effects of zoning, banking, or even residency or occupancy rules, to name a few.

      Examples:

  • Zoning ordinances that limit areas to single family residences or types of residences could, for example, have a discriminatory impact on people with disabilities.  Not because the zoning ordinance treats people differently, but rather because the policy might limit group homes or other arrangements necessary to accommodate an individual’s disability.
  • Residential rules may also appear neutral while negatively impacting a protected class.  For example, condominium association or housing complex rules that ban doormats, signs and other materials in hallways could seem like a neutral policy, but in effect may amount to the eviction of observant Jewish residents on religious grounds, who would then be unable to post a mezuzah.

In essence, disparate impact analysis establishes a discriminatory effect standard.  Without it, proving intention would strip civil rights statutes of all de facto segregation and discrimination enforcement.