In many of my fair housing classes, the question often arises as to who is liable for a violation of fair housing law. The question is asked both my managers (who wonder if they can be held personally liable) and by owners and management company supervisors (who wonder if they can be held liable for the actions of site staff that supervisors were unaware of. The short answer is that anyone can be held liable for a fair housing violation, and in some cases knowledge of the violation is not a defense.
Generally, apartment communities are operated by management firms. In many cases, these firms act as agents of the owner. There may also be lawyers, banks, investors, and others involved in housing project operations. Each of these may have their own employees who act on behalf of their firm.
The presence of all these potential players means that the “law of agency” plays an important role in determining who may be liable for a fair housing violation.
The general rule when determining liability is that a principal is legally responsible for the acts, conduct, and statements of its agents or employees if those acts are done within the scope of the agent/employee apparent authority. One of the primary court cases in this area of law, Meyer v. Holley (2003), resulted in the court stating that while the Fair Housing Act “says nothing about vicarious liability,” Congress is presumed to have intended that the statute incorporate “ordinary tort-related vicarious liability rules.” These rules “ordinarily make principals or employers liable for the acts of their agents or employees in the scope of their authority or employment.”
It is established law that an employer is liable for the unlawful discrimination of its employees under the doctrine of “respondeat superior.” This Latin phrase, meaning “let the master answer,” is a common law doctrine that makes an employer liable for the actions on an employee when the actions take place within the scope of employment. While an employee’s discrimination will bind the company, supervisor personnel up the chain of command will not generally be held liable. This assumes that such personnel were unaware of the discriminatory behavior. For example, if a property manager violates the Fair Housing Act, the company he or she works for will also be liable, but the direct supervisor of the manager may not be. Courts have made clear that a company is responsible for the actions of its employees so long as the company has the power to control those actions and the employees are acting on behalf of the company.
The rule holding a principal liable for its agent’s discrimination applies to all agency relationships – not just employer-employee relationships. As an example, if a real estate agent illegally discriminates against a minority home seeker, the owner that the agent represents may be held liable, along with the Agent.
Vicarious liability can result either from an “actual” agency relationship or from an “apparent” agency. “Actual” agency exists when the agent and the principal agree to have the agent act on the principal’s behalf, and be subject to the control of the principal. HUD’s fair housing regulations state that an agent “includes any person authorized to perform an action on behalf of another person regarding any matter related to the sale or rental of dwellings.” This liability occurs even if it is reasonable for a third party to believe that the agent is acting on behalf of the principal.
A principal cannot automatically escape vicarious liability for an agent or employee’s discrimination by showing that it did not explicitly authorize or approve such discrimination.
The key issue in most fair housing cases concerning whether a company or a property owner should be held vicariously liable for another person’s discrimination has been whether the alleged principal actually had the authority to direct and control the agent’s work. If this element of control is absent or weak, some courts have refused to attribute an agent’s discrimination to other defendants. Some decisions have excused absentee property owners for the discriminatory conduct of others on the property.
The principal of vicarious liability flows “upward,” not “downward.” So, an employee is not generally liable for a fair housing violation of by their employer. Clearly, if an employer orders an employee to discriminate, the employer is liable. Also, if an agent (or employee) violates the Fair Housing Act on orders from the principal, the employee or agent also is liable. “Following orders” is not a defense to a housing discrimination complaint. If an employee/agent refuses to follow a discriminatory order and is fired or otherwise disciplined, he or she has a cause of action under §3617 of the Fair Housing Act against the employer.
If a principal has not directed or endorsed its agent/employee discrimination, liability of the principal does not extend to punitive damages or other relief that is ordered against intentional violators. However, punitive damages may be imposed in cases where the principal authorized or ignored the discrimination. In Davis v. Mansards, a 1984 Indiana case, the court held an apartment management company liable along with its employees for all punitive damage awards, because the company “knew or ratified discriminatory acts of their employees or agents.”
A principal who is found liable solely because of its agent’s discrimination may be entitled to assert a claim against the agent for actual damages and other liability the principal suffers as a result of the agent’s discrimination.
This concept of “vicarious liability” makes clear the importance of regular training and supervision of agents and employees. Owners of property and of management companies cannot escape liability for discrimination based on claims of ignorance.