Applying Old Laws to New Problems
If you’re renting out a room in your apartment or giving someone a ride in your car, are you legally obligated to abide by the same anti-discrimination rules that businesses must observe? The answer isn’t crystal clear for millennial-preferred services such as Uber, Lyft, and Airbnb that have enjoyed massive growth as part of the new “sharing economy”, where the business does not fall neatly into traditional legal categories. ((Vanessa Katz, Cyberlaw: Regulating the Sharing Economy, 30 Berkeley Tech. L.J. 1067-68 (2015).)) On Airbnb, the host rents his or her personal space out to another registered member of the site that requests it. The catch is that the host has the ability to accept or reject reservation requests after seeing a requestor’s name, picture, and hometown. ((See Airbnb, http://www.airbnb.com (last visited Sept. 27, 2016).)) While on its face the feature seems innocuous, there has been a dark side that has gotten Airbnb into trouble recently.
Last month, a frustrated user of the service sued Airbnb filed a class-action discrimination suit against Airbnb. ((Second Amended Complaint against Airbnb, Inc. with Jury Demand, at 7, Selden v. Airbnb, Inc., No. 1:16-cv-00933 (D.D.C. May 17, 2016), Entered.)) The plaintiff, Gregory Selden, claimed that a host on the service denied his reservation request when it was originally submitted with a real photo showing him to be African-American, but then accepted the reservation request when he changed the photo to that of a White male and changed his name to “Todd.” ((Id. at 7-9.))
This came at an unfortunate time for the relatively young company, as it was followed soon after by published academic reports that seemed to reinforce the claim. A study by researchers at Harvard University found that applications from guests with distinctively African-American names are 16% less likely to be accepted relative to identical guests with distinctively White names. ((Benjamin Edelman et al., Racial Discrimination in the Sharing Economy: Evidence from a Field Experiment 1,4, Harvard Bus. Sch., Working Paper No. 16-069 (2016), http://www.benedelman.org/publications/airbnb-guest-discrimination-2016-01-06.pdf.)) In the study, researchers inquired about 6,400 listings on Airbnb across five cities under a fake account. ((Id. at 2.)) They created two versions of each account – one with a distinctively African-American name and the other with a distinctively White name – but the rest of the profile information (including place of residence and occupation) was otherwise identical. ((Id.)) The results painted a grim picture of societal racism today: African-American guests received a positive response roughly 42% of the time, compared to roughly 50% for White guests. ((Id.))
Below are laws that may apply to hosts, all of which Airbnb claims to comply with:
- State and Local laws: The laws vary widely by state and city, with some states being more renter and buyer-friendly than others. All local laws must be followed. ((Jeremy Quittner, Airbnb and Discrimination: Why It’s All So Confusing, Fortune (June 23, 2016), http://fortune.com/2016/06/23/airbnb-discrimination-laws/.))
- Title II of Civil Rights Act of 1964: Title II prohibits discrimination on the ground of race, color, religion, or national origin (notably leaving out gender) in any place of public accommodation, including hotels. It does not apply to any building which contains less than five rooms for rent and which is actually occupied by the owner as his or her principal place of residence. ((Civil Rights Act of 1964, Pub.L. 88-352, 78 Stat. 241 (1964).))
- Americans with Disabilities Act (ADA): The ADA prohibits discrimination against people with disabilities in employment, transportation, public accommodation, communications, and governmental activities. The applicability of this statute may turn on whether (or when) private homes and apartments become places of “public accommodation.” ((Americans with Disabilities Act of 1990, Pub. L. No. 101-336, 104 Stat. 327 (1990).))
- Title VIII of Civil Rights Act of 1968 (Fair Housing Act, or “FHA”): The FHA has a narrower focus than Title II, applying to housing specifically and prohibiting discrimination because of race, color, national origin, religion, sex, disability, and familial status. It covers both sales and rentals. This law is the most problematic for Airbnb and its hosts given the difficulty in adherence and enforcement inherent in a shared-service business where hosts invite paying guests into their personal homes. ((Civil Rights Act of 1968, Pub. L. No. 90-284, 82 Stat. 73 (1968).))
Navigating the laws is complex given the several exemptions and qualifications. For example, apartment dwellers who rent out their entire apartment are exempt from the FHA only if the building has four units or less and they are the owners of the apartment. ((Id. at § 801.)) Rentals of single-family homes by owners who consider it a vacation property or secondary home are not typically covered by the FHA as long as the owner does not rent out more than three such homes simultaneously and the rental isn’t facilitated or advertised by a broker or agent. ((Id.)) However, Airbnb’s position as an “agent” that facilitates the rental may complicate the matter and trigger compliance with the FHA.
Confused? So are courts. The case law is still developing, and the judiciary has yet to weigh in on how lodging share sites like Airbnb will ultimately be governed by the various non-discrimination laws. ((Katz, supra note 1, at 1099.))
How it shakes up for Airbnb
Airbnb has not taken the recent hits lightly. The company appropriately recognized that an effective response to discrimination claims was necessary to assure investors of the validity of the $30 billion valuation and blunt any business blowback that could result. ((Katie Benner, Airbnb Vows to Fight Racism, but Its Users Can’t Sue to Prompt Fairness, N.Y. Times (June 19, 2016), http://www.nytimes.com/2016/06/20/technology/airbnb-vows-to-fight-racism-but-its-users-cant-sue-to-prompt-fairness.html.)) Essential to the company’s expansion nationwide and worldwide is the ability of people from different ethnic backgrounds, religions, and nationalities to feel just as welcome at an Airbnb host’s house as they do at a hotel. ((Id.)) There has already been evidence to the contrary with the emergence of two rival services, Innclusive and Noirbnb. ((Id.)) These two companies market themselves as racially-inclusive and minority-safe alternatives to Airbnb. ((See Innclusive, http://www.innclusive.com (last visited Sept. 27, 2016); Noirbnb, http://www.noirbnb.com (last visited Sept. 27, 2016).))
Airbnb’s recent efforts to combat discrimination and make the platform more inclusive, announced early in September, go beyond what the federal and local laws discussed above may or may not require. In an effort to put in place “powerful systemic changes to greatly reduce the opportunity for hosts and guests to engage in conscious or unconscious discriminatory conduct” and stay true to its commitment to make home sharing easier and more popular, the company shared a set of product and policy changes it will pursue immediately. ((Laura W. Murphy, Airbnb’s Work to Fight Discrimination and Build Inclusion, Airbnb 4 (Sept. 8, 2016), http://blog.airbnb.com/wp-content/uploads/2016/09/REPORT_Airbnbs-Work-to-Fight-Discrimination-and-Build-Inclusion.pdf.)) Most notably, Airbnb is requiring all hosts to affirmatively agree to the Airbnb Community Commitment, which mandates that hosts “commit to treat all fellow members of this community, regardless of race, religion, national origin, disability, sex, gender identity, sexual orientation or age, with respect, and without judgment or bias.” ((Id. at 10.)) Agreeing to the Commitment means also agreeing to the New Nondiscrimination Policy which sets forth rules that are in some cases more stringent than the law. ((Id.)) The Policy states that hosts cannot discriminate on the basis of “race, color, ethnicity, national origin, religion, sexual orientation, gender identity, or marital status” when deciding which reservation request to accept. ((Id. at 29.)) It goes further to disallow hosts from imposing any different terms or conditions based on those protected characteristics or posting any listing that discourages or indicates a preference for or against any guest on account of that characteristic. ((Id.)) The requirements are just as stringent when it comes to dealing with guests with disabilities. ((Id. at 30.)) On the issue of gender discrimination, the policy is a bit more forgiving, only allowing hosts to decline or impose different terms if they have to share living spaces (bathroom, kitchen, common areas) with the guest. ((Id. at 29.))
Things seem to be looking up for Airbnb; last week, the company raised $850 million in a new funding round that included Alphabet Inc.’s investment arm, Google Capital. ((Maureen Farrell and Greg Bensinger, Airbnb’s Funding Round Led by Google Capital, Wall St. J. (Sept. 22, 2016), http://www.wsj.com/articles/airbnb-raises-850-million-at-30-billion-valuation-1474569670.)) This may indicate that the investors are bullish on Airbnb’s growth trajectory and its adaptability to market needs. One can feel history being made as a company charts the path for other sharing-economy services who will undoubtedly depend on it as precedent.
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