[Federal Register Volume 65, Number 219 (Monday, November 13, 2000)]
[Proposed Rules]
[Pages 67666-67668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28892]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 100

[Docket No. FR 4597-P-01]
RIN 2529-AA89


Fair Housing Act Regulations Amendments Standards Governing 
Sexual Harassment Cases

AGENCY: Office of the Assistant Secretary for Fair Housing and Equal 
Opportunity, HUD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would amend HUD's Fair Housing regulations 
to establish the standards the Department will use in sexual harassment 
cases.

DATES: Comment due date: January 12, 2001.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Rules Docket Clerk, Office of the General 
Counsel, Room 10276, Department of Housing and Urban Development, 451 
Seventh Street, SW, Washington, DC 20410. Communications should refer 
to the above docket number and title. Facsimile (FAX) comments are not 
acceptable. A copy of each comment submitted will be available for 
public inspection and copying during regular business hours (7:30 a.m. 
to 5:30 p.m.) eastern time at the above address.

FOR FURTHER INFORMATION CONTACT: David H. Enzel, Deputy Assistant 
Secretary for Enforcement and Programs, Room 5204, Department of 
Housing and Urban Development, 451 Seventh Street, SW, Washington, DC 
20410, telephone (202) 619-8046. (This is not a toll-free number). 
Individuals with hearing or speech impairments may access this number 
via TTY by calling the Federal Information Relay Service at (800) 877-
8339 (This is a toll-free number).

SUPPLEMENTARY INFORMATION The Fair Housing Act (42 U.S.C. 3600-3620) 
(referred to as ``the Act'' in this rule) prohibits discrimination on 
the basis of sex. Sexual harassment related to housing has been 
uniformly recognized by courts as a form of discrimination based on sex 
and a violation of the Fair Housing Act. Sexual harassment may violate 
sections 804(a), 804(b), 804(c), 805, 806 or 818 under the Act. As the 
Department's current Fair Housing regulations do not address the 
standards to be applied in cases of sexual harassment, courts have 
looked to Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000 et. 
seq.) (Title VII), and associated case law and regulations for guidance 
in Fair Housing Act cases. (See Grieger v. Sheets, 1989 WL 38707 (N.D. 
Ill); see also Henson v. City of Dundee, 682 F.2d 897 (11th Cir. 1982); 
Shellhammer v. Lewallen, 770 F.2d 167 (6th Cir. 1985); Honce v. Vigil, 
1 F.3d 1085 (10th Cir. 1993); Beliveau v. Caras, 873 F. Supp. 1393 (D. 
Cal. 1995); Krueger v. Cuomo, 115 F.3d 487 (7th Cir. 1997).) One court 
has expressed concern about the Department's lack of published 
standards concerning sexual harassment as a violation of the Act. (See 
DiCenso v. Cisneros, 96 F.3d 1004, 1007 (7th Cir. 1996)).
    The Department is promulgating this proposed rule to provide 
guidance on key aspects of evaluating sexual harassment claims. In 
formulating the Department's position on sexual harassment, the 
Department carefully reviewed case law applying the Fair Housing Act, 
case law governing Title VII, and the Equal Employment Opportunity 
Commission's (EEOC) guidelines and policy statements.
    Victims of sexual harassment at home lose their traditional place 
of refuge. ``When the harassment occurs in a woman's home, it is a 
complete invasion in her life. Ideally, the home is the haven from the 
troubles of the day, when home is not a safe place, a woman may feel 
distressed and often immobile.'' (Regina Cahan, Home is No Haven: An 
Analysis of Sexual Harassment in Housing 1987 Wis. L. Rev. 1061, 1072 
(1987).) At least two courts have recognized that sexual harassment in 
the home may have more severe effects than harassment in the workplace. 
(See Beliveau v. Caras, 873 F. Supp. 1393, 1397 (C.D. Cal. 1995); 
Williams v. Poretsky Management, 955 F. Supp. 490, 497 (S.D. Md. 
1996).)
    Sexual harassment violates the prohibitions against discrimination 
on the basis of sex found in sections 804(a), 804(b), 804(c), 805, or 
806 of the Act. Sexual harassment can also violate section 818 of the 
Act, which prohibits threatening, intimidating or coercive verbal or 
physical conduct that occurs because of an individual's membership in a 
protected class. Threatening, intimidating or coercive verbal or 
physical conduct, which occurs between neighbors or tenants, may 
constitute sexual harassment and, if so, the offending neighbor or 
tenant will be liable under section 818 of the Act.
    There are two types of actionable sexual harassment claims: ``quid 
pro quo'' claims and ``hostile environment'' claims. There will be 
cases where the conduct in question may support both quid pro quo and 
hostile environment claims of sexual harassment.

Proposed Sec. 100.500(a)(1)--Quid Pro Quo

    A ``quid pro quo'' claim exists when submission to unwelcome sexual 
advances and requests for sexual favors is made a term or condition of 
housing related to the sale or rental of dwellings, the provision of 
services in connection therewith, or the availability of residential 
real estate-related transactions. Such a claim may be established if 
submission to or rejection of such conduct is used as the basis for 
decisions affecting the provision of housing or residential real 
estate-related transactions and related benefits or services. 
Generally, an individual asserting a quid pro quo claim of sexual 
harassment must establish the existence of an unwelcome demand for 
sexual favors based on the individual's sex and that the harassment 
adversely affected one or more terms, conditions, or privileges of 
housing or a residential real estate-related transaction or associated 
benefits or services.

Proposed Sec. 100.500(a)(2)--Hostile Environment

    A person creates a hostile environment when that person's unwelcome 
conduct is sufficiently severe or pervasive that it results in the 
creation of an environment that a reasonable person in the aggrieved 
person's position would find intimidating, hostile, offensive, or 
otherwise significantly less desirable. Generally, an individual 
asserting a hostile environment sexual harassment claim generally must 
establish that he or she was subjected to unwelcome verbal or physical 
conduct; the conduct was severe or pervasive; the conduct was based 
upon the individual's sex; and the conduct made the environment 
burdensome and significantly less desirable than if the conduct had not 
occurred.
    Reasonable person standard. Whether conduct creates a hostile 
environment will be evaluated from the perspective

[[Page 67667]]

of a reasonable person in the aggrieved person's position. The 
perspective of a reasonable person in the aggrieved person's position 
is that of an ordinary person in like circumstances. The Department 
believes that the purpose and intent of the Act is best served by 
adhering to the reasonable person standard and adopts this standard for 
cases under the Act. This standard recognizes that men, as well as 
women, may be victims of sexual harassment. 
(Oncale v. Sundowner Offshore Services, Inc., 523 U.S. 75 (1998).) This 
standard also recognizes that either opposite-sex or same-sex 
discrimination violates the Fair Housing Act if the challenged conduct 
occurred because of the victim's sex. (Id.)
    The reasonable person standard is the perspective from which the 
victim's reaction to the harasser's conduct should be analyzed to 
determine whether an actionable sexual harassment claim exists. Use of 
the reasonable person standard to determine liability should not be 
confused with the standard used to determine appropriate damages to 
aggrieved persons in housing discrimination cases. It is a well-
established principle in fair housing law that perpetrators of housing 
discrimination must take their victims as they find them; that is, 
damages are measured based on the injuries actually suffered by the 
victim, not on the injuries that would have been suffered by a 
reasonable person. (Alan W. Heifetz and Thomas C. Heinz, Separating the 
Objective, the Subjective and the Speculative: Assessing Compensatory 
Damages in Fair Housing Adjudications, 26 Marshall Law Review 3, 21 
(1992).)

Proposed Sec. 100.500(b)--Totality of the Circumstances

    Whether any conduct in question constitutes sexual harassment in 
violation of the Act will depend on the totality of the circumstances 
involved in each particular situation on a case by case basis. (Harris 
v. Forklift Systems, Inc., 510 U.S. 17, 22 (1993).) Critical factors to 
examine include, but are not limited to, the context, nature, severity, 
scope, frequency, duration, and location of the incidents, as well as 
the identity, number, relative ages and relationships of the persons 
involved.
    This proposed regulation does not impose a quantitative requirement 
on the incidents of harassment that will constitute sexual harassment 
under the Act. (Harris, 510 U.S. at 22 ``[t]his is not * * * a 
mathematically precise test.'') A quantitative requirement unfairly 
penalizes the person who takes affirmative steps to avoid further 
harassment by avoiding the harasser. 
(Gnerre v. Massachusetts Commission Against Discrimination, 524 N.E. 2d 
84, 89 (Mass. 1988).) A single incident of conduct may constitute 
unlawful sexual harassment.

Proposed Sec. 100.500(c)--Unwelcome Conduct

    As evidenced by case law, unwelcome verbal conduct without physical 
conduct may independently support a sexual harassment claim. (See e.g., 
Grieger, 1989 WL 38707 (N.D. Ill.).) Verbal conduct includes, but is 
not limited to, the use of sexual epithets. Since verbal harassment may 
by itself support a sexual harassment claim under the Act, it follows 
that proof of physical harm is not necessary to establish a sexual 
harassment claim.
    An intentional touching of any part of the body may constitute 
unwelcome conduct. To establish that conduct is sexual harassment, it 
is not necessary that intentional physical conduct involve an intimate 
body part. Evidence of unwelcome conduct need not be sexual in nature 
to support a claim for sexual harassment. (Id.*3 (citing cases from the 
Eighth, Tenth, and District of Columbia Circuits).)

Proposed Sec. 100.500(d)--Liability

    (1) A person is responsible for his or her acts.
    (2) A person shall be vicariously liable for sexual harassment by 
his or her agents. An alleged perpetrator's responsibilities, duties 
and functions should be carefully examined to establish whether the 
perpetrator was acting in an agency capacity before determining whether 
a principal is liable. This principle is fully consistent with the 
Department's position on a principal's liability for the acts of 
agents. (See 24 CFR 103.20 (1999), and preamble to final rule 
implementing the Fair Housing Act Amendments of 1988, 54 FR 3232, 3260-
3261, January 23, 1989.)
    The duty of a property owner not to discriminate in the leasing or 
sale of property is non-delegable. (Alexander v. Riga, 208 F.3d 419, 
432-434 (3rd Cir. 2000); Walker v. Crigler, 976 F.2d 900, 904 (4th Cir. 
1992); Marr v. Rife, 503 F.2d 735, 741 (6th Cir. 1974); City of Chicago 
v. Matchmaker Real Estate Sales Center, Inc., 982 F.2d 1086, 1096 (7th 
Cir. 1996); Coates v. Bechtel, 811 F.2d 1045, 1051 (7th Cir. 1987); 
Phiffer v. Proud Parrot Motor Hotel, Inc., 648 F.2d 548 (9th Cir. 
1980)). The Department invites comment on whether an affirmative 
defense, similar to the one that was created for employers by the 
Supreme Court in Title VII cases (Burlington Industries, Inc. v. 
Ellerth, 524 U.S. 742 (1998), and Faragher v. City of Boca Raton, 524 
U.S. 775 (1998)) would be appropriate in the Fair Housing context. The 
Department also solicits comments on methods by which it can 
incorporate in the regulation provisions regarding training and other 
methods to educate individuals as to the prohibitions against sexual 
harassment under the Fair Housing Act.
    (3) A person shall be responsible for acts of sexual harassment by 
third parties, where he or she, or his or her agent, knew or should 
have known of the conduct and failed to take immediate and appropriate 
corrective action, and had a duty to do so. (Reeves v. Carrolsburg 
Condominium Unit Owners Association, 1997 U.S. Dist. LEXIS 21762 *23; 
Cf. Bradley v. Carydale Enterprises, 707 F. Supp. 217 (E.D. VA 1989).) 
The duty to take corrective action may be established by leases, 
contracts, condominium by-laws and local ordinances. (Reeves, 1997 U.S. 
Dist., LEXIS 21762, *23.) Examples of third parties include tenants and 
independent contractors.
    The Department solicits comments on other mechanisms that may 
create a duty to take corrective action and factors the Department 
should consider when determining whether such a duty exists.

Proposed Sec. 100.500(e)--Other Related Conduct

    When a housing-related opportunity or benefit is granted because of 
an individual's submission to sexual advances or requests for sexual 
favors, a person may be held liable for sexual harassment by other 
individuals who were qualified for and had a reasonable expectation of 
receiving an opportunity or benefit, but were denied. (Cf., Broderick 
v. Ruder, 685 F. Supp., 1269 (D.D.C. 1988).) For example, the manager 
of a housing complex with a long waiting list offers to move applicants 
to the top of the waiting list in exchange for sexual favors. Other 
applicants, even if they were not propositioned, but lost housing 
opportunities because of the manager's preferential treatment of others 
in exchange for sexual favors are aggrieved persons under the Fair 
Housing Act.

Proposed Sec. 100.500(f)--Evidence of Psychological harm

    Evidence relating to the relative mildness or severity of an 
aggrieved person's psychological harm is not relevant to whether a 
respondent has violated the Fair Housing Act's prohibition against 
sexual harassment.

[[Page 67668]]

(Harris, 510 U.S. 17 (1993)) Evidence of psychological harm may be 
considered in determining the proper amount of any money damages to 
which an aggrieved person may be entitled in compensation for emotional 
distress suffered.

Findings and Certifications

Executive Order 12866

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866, Regulatory Planning and Review, and determined 
that this rule is a ``significant regulatory action'' as defined in 
section 3(f) of the Order (although not economically significant, as 
provided in section 3(f)(1) of the Order). Any changes made in this 
proposed rule subsequent to its submission to OMB are identified in the 
docket file, which is available for public inspection between 7:30 a.m. 
and 5:30 p.m. in the Office of the Rules Docket Clerk, Office of 
General Counsel, Room 1026, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed this proposed rule before publication and 
by approving it certifies that this rule would not have a significant 
economic impact on a substantial number of small entities. This 
proposed rule would address sexual harassment in a housing or 
residential real estate-related transaction environment as a form of 
discrimination based on sex and a violation of the Fair Housing Act.

Environmental Impact

    In accordance with 24 CFR 50.19(c)(3) of HUD's regulations, this 
proposed rule would set forth fair housing standards, and therefore is 
categorically excluded from the requirements of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321-4347).

Executive Order 13132, Federalism

    This rule does not have Federalism implications and does not impose 
substantial direct compliance costs on State and local governments or 
preempt State law within the meaning of Executive Order 13132.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act 1995 (Pub. L. 104-4; 
approved March 22, 1995) (UMRA) establishes requirements for Federal 
agencies to assess the effects of their regulatory actions on State, 
local, and tribal governments, and on the private sector. This rule 
would not impose any Federal mandates on any State, local, or tribal 
government, or on the private sector, within the meaning of the UMRA.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number is 14.400.

List of Subjects in 24 CFR Part 100

    Aged, Fair Housing, Individuals with disabilities, Mortgages, 
Reporting and recordkeeping requirements.

    Accordingly, 24 CFR part 100 is proposed to be amended as follows:

PART 100--DISCRIMINATORY CONDUCT UNDER THE FAIR HOUSING ACT

    1. The authority citation for 24 CFR part 100 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d), 3600-3620.


Sec. 100.65  Discrimination in terms, conditions and privileges and in 
services and facilities.

    2. Section 100.65 is amended by removing paragraph (b)(5).

Subpart G--Prohibited Sexual Harassment

    3. In part 100, a new subpart G that consists of new Sec. 100.500 
is added to read as follows:


Sec. 100.500  Prohibited sexual harassment.

    (a) Sexual harassment can violate the prohibitions against 
discrimination on the basis of sex found in sections 804(a), 804(b), 
804(c), 805, or 806 of the Act. Sexual harassment can also violate 
section 818 of the Act. There are two types of actionable sexual 
harassment claims:
    (1) Quid pro quo. Unwelcome sexual advances, requests for sexual 
favors, and other verbal or physical conduct of a sexual nature 
constitute sexual harassment when submission to the conduct, either 
explicitly or implicitly, is made a term or condition relating to the 
sale or rental of dwellings, the provision of benefits or services in 
connection therewith, or the availability of residential real estate-
related transactions.
    (2) Hostile environment. Unwelcome sexual advances, requests for 
sexual favors, and other verbal or physical conduct constitute sexual 
harassment when the conduct has the effect of creating an environment 
which a reasonable person in the aggrieved person's position would 
consider intimidating, hostile, offensive, or otherwise significantly 
less desirable in connection with the sale or rental of dwellings, the 
provision of benefits or services in connection therewith, and the 
availability of residential real estate-related transactions. Proof of 
an adverse action is not necessary to create an actionable hostile 
environment claim.
    (b) Totality of the circumstances. Whether any particular conduct 
constitutes sexual harassment will depend upon the totality of the 
circumstances, including the nature of the conduct and the context in 
which the incident(s) occurred. Critical factors to examine include, 
but are not limited to, the context, nature, severity, scope, 
frequency, duration, and location of the incidents, as well as the 
identity, number, relative ages and relationships of the persons 
involved. A single incident of conduct may constitute hostile 
environment sexual harassment.
    (c) Unwelcome conduct. Unwelcome verbal conduct may include, but is 
not limited to, sexual epithets. Unwelcome physical conduct may 
include, but is not limited to, contact with an intimate body part.
    (d) Liability. (1) A person is responsible for his or her acts.
    (2) A person is vicariously liable to a victimized individual for 
sexual harassment by his or her agents.
    (3) With respect to liability for sexual harassment by a third 
party, a person is responsible for acts of sexual harassment where the 
person, or his or her agents, knew or should have known of the third 
party's conduct and did not take immediate and appropriate corrective 
action and had a duty to do so.
    (e) Other related conduct. When a housing-related opportunity or 
benefit is granted because of an individual's submission to sexual 
advances or requests for sexual favors, a person may be held liable by 
other individuals who were qualified for and had a reasonable 
expectation of receiving the opportunity or benefit, but were denied.
    (f) Evidence of psychological harm. Evidence relating to the 
relative mildness or severity of an aggrieved person's psychological 
harm from such conduct is not relevant to a determination of whether a 
respondent violated the Act, but such evidence will be considered in 
determining the proper amount of any money damages to which an 
aggrieved person may be entitled in compensation for emotional distress 
suffered.

    Dated: August 21, 2000.
Eva M. Plaza,
Assistant Secretary for Fair Housing and Equal Opportunity.
[FR Doc. 00-28892 Filed 11-9-00; 8:45 am]
BILLING CODE 4210-28-P