The U.S. Department of Housing and Urban Development (HUD) established regulations requiring all housing providers take steps to end harassment. The regulation includes homeowner associations as a housing provider. (Code of Fed. Reg. §100.7(a)(1)(iii).) California Fair Employment and Housing Council approved fair housing regulations providing guidelines to help associations address discrimination claims. The new state regulations took effect January 1 2020. (Calif. Code of Regs §§12000-12271.) It includes the "governing bodies of common interest developments." (Code of Regs §12005(t).) Associations must investigate complaints of harassment and take appropriate action whether it involves, residents, employees or vendors.
Factors to Evaluate. The alleged harassment must be related to a person’s membership in a protected class. If the harassment isn’t based on a protected class, then it may still qualify as harassment, but it’s not subject to the act’s requirements that an association intervene. To determine if harassment is taking place, boards can evaluate the nature of the unwelcome conduct, the context in which the incidents occur, the severity, scope, frequency, duration, and location of the conduct, and the relationships of the people involved. It does not require that the complaining party suffer psychological or physical harm, only that the alleged harassment occurred.
Hearing & Corrective Action. If after investigating a claim the board determines that harassment is occurring, it can make a demand on the harassing party that he/she cease the harassment. If it continues, boards should hold hearings before taking corrective action such as sending a cease and desist letter, levying fines and suspension of privileges (as provided for in the governing documents), or taking legal action. If the board determines that an owner is a threat to the membership, it can take further action, such as seeking a restraining order.
Failure to Investigate. If a board fails to investigate and take appropriate action when it "knew or should have known" of the harassment or the person experiencing harassment is not satisfied with the board's action, the person can file a complaint with the U.S. Department of Housing and Urban Development (HUD). The person can also file a complaint if they are not satisfied with the association’s investigation or the result of the investigation. Once a complaint is lodged with HUD, it is referred to California's Department of Fair Employment and Housing (DFEH) for investigation and possible action. Following is an example out of San Diego:
6-15-20. Board and Management Company pay $120,000. In a case brought by the DFEH, two board members were accused of retaliating against a homeowner who reported she was being sexually harassed by an employee of the gardener working under contract for the association. In settlement, the association, directors and management company agreed to pay $120,000 in damages and attorney’s fees as well as update the association’s antidiscrimination policies, post fair housing notices, complete fair housing training, and report complaints of discrimination and harassment to DFEH for five years.
DFEH Investigation. The DFEH is supposed to be neutral in its investigations. It has been our experience, however, that investigators working for the DFEH are more often than not advocates for the person filing a complaint and can be heavy-handed in their demands. If the investigator determines the allegations appear legitimate, the DFEH will serve a complaint on the association giving the board 30 days to respond. If the matter cannot be resolved to DFEH's satisfaction, the case is moved to its Legal Division. If the matter cannot be resolved at this stage, DFEH may file a lawsuit against the association.
Responding to DFEH. Whenever an association receives a demand letter from the DFEH, the board should immediately contact legal counsel. If the association conducted an adequate investigation per the HUD guidelines, the DFEH complaint will be much easier to defend against. Assuming the board's investigation was reasonably thorough and the proper conclusions drawn, and especially if it was conducted in consultation with legal counsel, the directors will be protected under the business judgment rule.
Recommendation: Boards should work with legal counsel to adopt procedures for handling harassment claims in their associations. The policies should cover the reporting and investigation of alleged harassment as well as procedures for adopting findings and taking appropriate action.
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.