Sounds bad and unfair for the landlord--and I think it is--but I think I know what is going on here.
Listening to Freakonomics radio yesterday, Dubner was doing a story about tipping. One of the contributors was an economics professor who's thesis and career-long interest focuses entirely on tipping...so he's probably the foremost expert on the topic. On to the related point:
This dude mentioned that it is very likely that tipping should be considered illegal due to the similar "fair business practice" statutes, and the reasoning is based not only on his data, but all of the public domain data regarding tipping. It is well understood, for example, that whites generally tip more than other races, that blacks tip the least for various reasons, and the other minorities tip at some non-standard rate between blacks and whites. Further, servers actually receive disproportionate amounts of tipping based on their race. Both whites and blacks will tip whites, on average, larger sums than they will tip their black servers.
Crazy, right?
Here is where it applies: due to SCOTUS precedent that has already ruled that even unintentional consequences (the restaurant can not control the tipping behavior of their patrons) of forced wage models (preposterous dependence on tipping--that was actually an awesome show and is worth the listen) can be held as discriminatory and a violation of the discrimination in employment act (why the businesses are legally bound to sell cakes to gays, for example).
This is kind of fascinating. Tipping is certainly not meant to be discriminatory, nor can it be argued that it is on its face. But simply due to common human behavior that makes it a significantly discriminatory factor (Data significant), businesses that determine wages through tipping percentages can very likely be held in violation, and through no intentional fault of their own.
I think the same argument is being made here re: renting to convicts. Once past offenders are recognized within some protected class, all rights to those classes become extended through various other policies. At some point, that right represents a severe and unintended detriment to the opposite party.