HF1142

Purpose

• To restrict how landlords use technology to set rents and screen tenants. Specifically, the bill aims to stop rent decisions that rely on nonpublic data from competitors and to prevent background screening tools from discriminating against protected groups.

Main Provisions

• Prohibition on rent-setting algorithms using nonpublic competitor data
  • Landlords may not use, rely on, or have others use an algorithmic device to set the rent for a residential unit if it uses nonpublic data from competitors.
• Definition of what counts as an algorithmic device
  • An algorithmic device is a tool that uses one or more algorithms to analyze data (including local or statewide rent data) to advise a landlord on how much rent to charge.
  • This includes products known as revenue management software.
  • Some tools are not covered, such as:
  • Reports from trade associations that publish renter data in aggregate and anonymous form.
  • Tools that establish rent or income limits under local, state, or federal housing programs.
• Definition of nonpublic competitor data
  • Information not widely available or easily accessible to the public, including data about actual rent prices, occupancy rates, lease dates, and similar data from or provided by competitors in the same housing market, even if the data are anonymized.
• Prohibition on biased background screening tools
  • The use of any algorithm or artificial intelligence for tenant background screening is prohibited if the tool is likely to have a disproportionate and arbitrary effect on a protected class.
  • A landlord found to be using such a tool in a discriminatory way could be liable under existing liability provisions.
• Definitions of key terms for background screening
  • Algorithm: a computational process (including machine learning or other data processing) that makes decisions.
  • Artificial intelligence: a technology system that can learn, adapt, and make decisions based on data using complex algorithms.
• Liability and enforcement
  • Violations related to biased background screening can trigger liability under the existing statute governing housing practices (section 504B.245).

Significant Changes to Law

• Adds a new ban on rent-setting tools that rely on nonpublic competitor data, potentially changing how rents are determined in practice.
• Adds a prohibition on background screening tools that cause disproportionate harm to protected classes, strengthening protections against discriminatory screening.
• Narrows what counts as a permissible data source or tool by listing specific exemptions (aggregate anonymous data and certain housing program tools).

Exemptions and Limitations

• Tools and data that are exempt from the new prohibitions include:
  • Aggregate, anonymous reports published by trade associations.
  • Tools that establish rent or income limits under approved affordable housing program guidelines.

Practical Implications

• Landlords will need to rely on public data or approved exemptions when setting rents.
• Landlords must avoid using background screening tools that could disproportionately harm protected groups.
• Property managers and landlords may need to review their current software and data sources to ensure compliance.

Relevant Terms - nonpublic competitor data - algorithmic device - revenue management software - rent - background screening - biased algorithms - protected class - artificial intelligence - algorithm - liability - 504B.245 - 363A.09 subdivision 1 - aggregate anonymous data - trade association report - affordable housing program guidelines