California Code of Regulations
Title 21 - Public Works
Division 3 - California State Transportation Agency
Chapter 4 - Regulations Pursuant to the Housing Financial Discrimination Act of 1977
Article 2 - Nondiscrimination Requirements
Section 7105.1 - Discrimination by Effect

The key principle of Section 7105(b) herein is that if it is clear that a practice has a discriminatory effect against a protected group, the burden shifts to the financial institution to demonstrate that the practice is required to achieve a legitimate business purpose. Under this concept, each policy or practice is evaluated by first asking whether or not the policy or practice is discriminatory in effect. If the answer to this is "yes," then the financial institution will be considered to be in violation of the regulations unless it can demonstrate that the practice is required to achieve a legitimate business purpose. In evaluating a practice in accordance with the principles set forth in Section 7105(b) herein, the business purpose must be an important business purpose sufficiently compelling to override any discriminatory impact, the challenged practice must effectively carry out the business purpose it is alleged to serve, and there must be available no acceptable alternative policies or practices which would better accomplish the business purpose advanced--or accomplish it equally well--with a lesser discriminatory impact.

Note: Authority cited: Section 35814, Health and Safety Code. Reference: Sections 35810- 35815, Health and Safety Code.