Head's Up: Increased Risk Of Consumer Class Actions With Growing Trend Of Local Restrictions On Reporting And Considering Criminal History For Rental Housing

On January 21, 2020, the Oakland City Council unanimously passed the of prior criminal history. It also impacts background check companies that offer a tenant screening product ("consumer reporting agencies") because they will have to modify their processes and procedures to ensure that information that is "off limits" to landlords and property managers is not included in a tenant screening report ("consumer report"). The Council will take a final vote on February 4, 2020. Given that Oakland is not the first jurisdiction to enact such an ordinance, and there are other similar laws pending across the country, background check companies need to monitor this evolving area of the law and take affirmative steps to avoid a class action.

Seattle Paved the Way for Laws Restricting Reporting and Consideration of Criminal History for Rental Housing Purposes

In the context of tenant screening, restrictions on consideration of criminal history appear to be gaining traction. The first such law was passed in 2017, when the City of Seattle enacted its own "Fair Chance Housing Ordinance." In Seattle, it now is an unfair practice for any "person" (broadly defined to include landlords/property managers and their agents) to, among other things, "[r]equire disclosure, inquire about, or take an adverse action against a prospective occupant, a tenant or a member of their household, based on any arrest record, conviction record, or criminal history." The exceptions are quite narrow, however, Seattle allows landlords and property managers to consider a tenant applicant's status as a registered sex offender (but an applicant only can be denied on this basis if there is a "legitimate business reason" to do so).

While at first blush it appears the Seattle ordinance only restricts the information that landlords and property managers may request and consider, Seattle's FAQ expressly states that "[u]nless there is an exclusion, neither landlords nor any person may run criminal background checks," adding that "any person" includes, but is not limited to "property managers, owners, screening companies, etc." As a result, we previously have recommended that background check companies consider modifying their processes to ensure that criminal history information is not reported to Seattle landlords and property managers, absent clear proof that an exception applies (e.g., sex offender registry status).

Oakland Follows the Trend With a More Comprehensive Ordinance

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