Phil Querin Q&A - Screening process and requiring valid social security number

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April 21, 2015
Phil Querin
MHCO Legal Attorney
Querin Law

Question:  I am still unclear on the issue of whether we may insist that all applicants for tenancy produce a valid social security number. Is it legal that we do so?

Answer: In a guest blog dated March 13, 2015, Jo Becker, Educational/Outreach Specialist for the Fair Housing Council of Oregon (“FHCO”) posted an article for the Willamette Valley MLS titled: “Screening without Social Security Numbers: There are Options!”  The post is set out in full at this link.

 

What I’ve set forth below is a summary of Ms. Becker’s points, with some editorial comment of my own.  First and foremost, this is not to be used as legal advice, as everyone’s factual situation is different.

 

Mr. Obama’s controversial (my word, not hers) amnesty program will result in approximately 4 million U.S. residents who are undocumented, coming into the United States.  Although they will have an opportunity to apply for work permits and social security numbers, many may still not have SSNs when seeking housing.

 

In pointing  out that “…the Fair Housing Act and Oregon law apply to everyone present in the US, regardless of immigration status” Ms. Becker suggests that there are alternatives to screening other than requiring proof of a SSN.  Though she recognizes the “importance of thorough tenant screening,” she states that:

 

 “…criminal history information can be acquired without an SSN and, of course, current and past landlords can provide rental history and references. Applicants may be able to provide other information such as proof of “x” number of recent months’ paid utility bills, rent, or other regular monthly bills that can show a pattern of timely payment.”

 

However, regardless of a landlord or manager’s willingness to rent or lease space to all who qualify, the litmus in screening is really what the screening company requires.  Ms. Becker suggests that rather than issuing a “flat no,” landlords and managers say to the applicant “show me what you can.”[1]   She states that:

 

“…your screening company should be able to give you an informed estimate about how much time and money an evaluation could cost.  Costs may vary so shop your screening company.  Once you have a cost estimate, inform the consumer and, if you wish and do so consistently, you may then pass this cost on to them if they want to continue with the application.”

 

This suggestion makes the following assumptions: (a) That the applicant actually has some reliable identifying information sufficient to permit the a company to complete the screening process; (b) The company is capable of completing the screening process – even for an increased fee – that does not rely upon a SSN; and (c) That the screening report will provide equally reliable information as if the applicant had tendered a SSN. 

 

Ms. Becker notes that an alternative to a SSN is an ITIN (Individual Taxpayer Identification Number). Here is what the IRS says about ITINs:

 

  • ITINs are for federal tax reporting only, and are not intended to serve any other purpose. IRS issues ITINs to help individuals comply with the U.S. tax laws, and to provide a means to efficiently process and account for tax returns and payments for those not eligible for Social Security Numbers (SSNs). 
  • If you do not have a SSN and are not eligible to obtain a SSN, but you have a requirement to furnish a federal tax identification number or file a federal income tax return, you must apply for an ITIN.
  • By law, an alien individual cannot have both an ITIN and a SSN.
  • For more information, go to link here.

 

Based upon the above, this leads me to believe – or at least suspect – that the use of an ITIN is really only appropriate if the individual has a federal income tax reporting obligation and is unable to obtain a SSN.  So the question landlords and managers should ask their screening company is whether it can even use the ITIN for purposes of tenant screening.  If the company can do so, and the background check can be accomplished with a comparable level of accuracy as with a SSN, then the following rules should apply:

 

  1. If applicants do not have a SSN, but do have an ITIN, their application should be processed.
  2. Make sure that the use of the ITIN in lieu of the SSN is applied evenly and consistently to ALL applicants.

 

If your screening company does not use the ITIN for tenant screening, are you legally required to find one that does?  I will leave that question to your own attorney.  As for me, if I could pass on the added cost, if any, to the applicant [as Ms. Becker’s article suggests], and the company can provide equally reliable and prompt service, I would personally consider doing so.  

 

However, Ms. Becker notes in her article that:

 

“After having consulted with screening companies and the credit bureaus, it does not appear that this will allow a credit report to be pulled in the same way that an SSN does.”  [Underscore mine.]

 

That statement does not sound like a ringing endorsement by Ms. Backer of her own suggestion that landlords use an ITIN in lieu of the SSN.  In any event, it’s worth a try.

 

So setting the ITIN issue aside, the FHCO’s position is that:

 

“…a refusal to review alternative documentation when a SSN is not available will have a negative and disparate impact on individuals whose national origin is not the US, thereby having a disparate impact on that protected class.  Therefore, a policy or practice of not accepting applicants because they do not have a SSN is not appropriate.  That said, we feel that passing on actual additional costs of screening in a situation like this as a legitimate business expense that could be passed on to the applicant. [Underscore mine.]

 

Here is where Ms. Becker and I part company.  What she is saying is that: (a) Since members ostensibly of a protected class [e.g. Mr. Obama’s four million invitees - who will be given an opportunity to apply for SSNs] will be adversely affected; (b) By insisting exclusively on the SSN as the sole screening tool, it indirectly singles them out, and that’s discriminatory.  That is what she means when she says it creates a “disparate impact.”  So even if a manager or landlord has no intent to discriminate – i.e. they are applying the SSN requirement to ALL applicants, it is the FHCO’s position that such a screening practice is a violation of the Federal and State Fair Housing Laws.

 

There is one problem with the above quote: Disparate impact theory has never been validated by the U.S. Supreme Court.  There are many legal scholars who maintain that the Fair Housing Act (“FHA”) was only intend to be applied to prevent intentional discrimination. 

 

After several false starts, on January 21 of this year, the case of Texas Dept. of Housing vs. The Inclusive Communities Project, was heard by the Supreme Court. In a Forbes article (“Disparate-Impact Theory Finally Gets Its Test At Supreme Court“) published the following oral argument on the day of the hearing, writer Daniel Fisher, stated that the case:

 

“…represents a long-awaited test of disparate impact, which critics say allows the federal government — or allied non-profit groups like Inclusive Communities — to sue businesses and housing authorities for committing racial discrimination not because an identified person discriminated but because the racial outcome was skewed one way or another.”

 

In other words, the issue finally before the Court is whether the FHA can be used to produce racial outcomes when there is no proof of intent to discriminate. [2]   

 

Conclusion. Although I disagree that landlords and managers are today engaging in illegal discrimination via disparate impact, when they rely exclusively upon SSNs as a screening tool, there are some take-aways from the Becker article I do endorse:

 

  • The FHCO believes that landlords and managers should review “alternative documentation” protocols, rather than just saying “No” whenever an applicant seeks to rent or lease a space without a SSN.  I have no problem with that, and suggest park owners develop such protocols. 
  • However, the protocols must produce a reasonably equivalent [i.e. timely and reliable], result as when using a SSN. 
  • If there are companies out there that can produce such results without SSNs– even if more costly – they should be seriously vetted. According to Ms. Becker, the cost, as of today, can be passed on to the applicant, should he or she choose to proceed. 
  • Note that Ms. Becker is not saying that park owners and managers must use alternative procedures, even if they are bad or unreliable.  She is only saying that, if available, alternatives should be considered. I repeat: Landlords and managers should not initially “screen” [i.e. reject] all tenant applicants based solely on the fact they do not have a SSN.[3] You want to see if there is an alternative screening protocol.
  • If (a) valid alternative screening tools exist, and (b) they are equally applied, there should be no legal basis for a claim of discrimination if the tenant applicant does not pass that screening protocol.
  • Whether screening out all tenant applicants based upon their not having a SSN would result in a “disparate impact” against members of a protected class and therefor violate the FHA, will have to wait until the U. S. Supreme Court issues its decision.

 

In the meantime, landlords and managers may want to investigate various screening companies today, to learn whether there are other suitable substitutes to using the SSN as a screening tool.  If there are, and they prove reliable, these alternatives should be included on a written list and provided to tenant applicants preferably upon first face-to-face contact.[4]  Remember to be consistent and apply this approach across the board to ALL tenant applicants. To be absolutely safe, I would even go so far as to say that the list – if one can be developed – should be given to all applicants with the rest of the park’s paperwork. In other words, don’t ask the applicant if they have a SSN, and if they do not, then refuse to give them an application. If there are comparable alternatives that a screening company will accept, then you may use one of them.    

 

 


[1] I respectfully submit that “show me what you can” is an insufficient and slightly misleading approach to the issue, as it is too open-ended.  It implies that the applicant need only produce what they can.  I suggest that the proper approach is to ask:  “Show me the best documentation you have of your identity.” If the applicant produces a valid birth certificate or a valid driver’s license, it may suffice for the screening company. If he or she produces a library card as the “best evidence,” there may be some difficulty in its suitability for use by the screening company.

[2] I wrote a blog post explaining disparate impact late last year, before the case was argued. It can be found here.

[3] There is a slightly comparable analogy with medical marijuana. As long as it is a federally “controlled substance” landlords may – in my opinion – have a policy against its on-site use, cultivation, manufacture, or sale; they do not have to allow its on-site use as a “reasonable accommodation.”  But having a no-medical marijuana policy does not mean landlords may “screen” tenant applicants, based upon whether they simply have a medical marijuana card.  

[4] I say “face-to-face contact”, as I don’t recommend engaging in a discussion of screening issues with applicants over the phone. There is too much chance there is a tester on the other end of the line. You want to be consistent in giving all applicants the same paperwork when they arrive.

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