What Is Source of Income Discrimination?

California law prohibits discrimination based on source of income. Source of income is defined as legal, verifiable income paid directly to the tenant or his or her representative (such as a payee). Some examples of income types are Social Security, Supplemental Security Income (SSI), veteran’s benefits, CalWorks, General Assistance, child support, alimony, unemployment insurance, pensions, and wages.

Landlords, property managers, real estate brokers, home sellers, mortgage companies, and banks may not refuse to deal with you or treat you differently because your income includes sources other than wages. It is also illegal to have a preference for one occupation over another.

Do Housing Providers Have to Accept Section 8 or Rental Assistance Payments?

Under California state law, Section 8 Housing Choice Vouchers are not considered tenant income, and therefore a housing provider is not required to accept a voucher. Housing providers are also not required to treat other rental assistance programs as income.

There are two exceptions to this limitation. There are a handful of cities in the state that have enacted local ordinances that require a housing provider to accept Section 8 and other rental assistance. East Palo Alto, which is within Project Sentinel’s service area, has one such ordinance. Additionally, most affordable housing properties that are financed with federal funds and tax credits are required by law to accept Section 8 vouchers.

Can Housing Providers Discriminate Based on the Amount of Someone’s Income?

Yes, it is perfectly legal for a housing provider to require a minimum household income. Most housing providers require that the combined income of all household members equal 2.5 to 3 times the monthly rental amount. It is also legal to rent to the person with the highest income.

A landlord can require that each adult household member renting a shared unit meet a minimum income requirement individually only if he or she applies the policy equally among married and unmarried couples. Otherwise, the landlord must consider a household’s combined income to evaluate whether or not it satisfies the minimum income requirement. In other words, landlords must use the minimum income requirement in the same way for a married couple as for members of any other household. To do otherwise may be considered marital status discrimination.

Housing providers that accept Section 8 vouchers or another government rental subsidy must also be mindful of minimum income provisions. State law explicitly states that minimum income can only be assessed based on the portion of the rent to be paid by the tenant. For example, consider a prospective tenant that is only responsible for $200 of the monthly rent. If the policy is that prospective tenants must earn 3 times the rent, then the housing provider can only require the tenant to earn $600 a month.

Please note that, in some circumstances, if a person with a disability does not meet the minimum income requirement, but is able to provide a financially secure co-signer, he or she may be entitled to a reasonable accommodation.

Are Licensed Home Day Cares Protected by the Law?

Yes. California law explicitly requires landlords and homeowners associations to permit residents to operate licensed day cares from their homes. Lease provisions banning in-home businesses do not apply to in-home day cares, as long as they are licensed in accordance with state law. Day care providers are entitled to make upgrades to the units so that they can comply with state safety standards. This usually means that they may have to change the locking mechanisms on doors.

Licensed day care providers are not required to carry liability insurance under state law. If the provider does have insurance, however, the landlord must be added to the policy upon request. Those who do not have insurance must obtain waivers from their clients that acknowledge that the landlord may not be responsible for any injuries.

What Does Source of Income Discrimination Look Like?

If a housing provider does the following, he or she may be engaging in source of income discrimination:

  • Refuses to rent to an applicant who has non-wage income
  • Prefers one type of income over another, such as preferring applicants who earn employment income versus those who receive Social Security payments
  • States a preference for professionals or tech company employees
  • Only rents to applicants who have a job
  • Requires multiple years of steady employment
  • Denies an applicant because a representative payee is responsible for paying rent
  • Demands a higher deposit because an applicant has non-wage income
  • Refuses to rent to a tenant who plans to operate a licensed home day care

Source of Income Discrimination Resources

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