EEOC takes a hit in criminal background case

No legal authority to issue its Enforcement Guidance!

In February 2018, I wrote about a federal court decision that enjoined (prohibited) the Equal Employment Opportunity Commission from taking any action to enforce its 2012 criminal background check guidelines against the State of Texas.

"Don't mess with us."


The EEOC appealed that decision to the U.S. Court of Appeals for the Fifth Circuit, and probably now wishes it had not.

A three-judge panel of the Fifth Circuit affirmed the injunction "as modified." But that little "modification" is a big deal and could be used, not only by Texas, but also by other state governments and by private sector employers who want to use "blanket" disqualifications based on criminal records.

Here's the background:

Texas refused to hire for certain positions any applicant who had a felony conviction. After learning that a rejected applicant had gone to the EEOC, the state sued to enjoin the EEOC from enforcing its 2012 "Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII."

In the Enforcement Guidance, which I criticized here, the EEOC said that the use of criminal background information had a disparate impact on African-American and Hispanic males. The Enforcement Guidance also said that a racially balanced workforce would not be a defense to a Title VII claim based on the use of criminal background information. However, the Enforcement Guidance provided two "safe harbors" for employers. Employers would generally avoid liability for discrimination if

  • Their use of criminal background information was "validated" in accordance with the Uniform Guidelines on Employee Selection Procedures, or
  • They conducted a "targeted screen," followed by an "individualized assessment" of any applicants who were excluded, taking into account things like age of the applicant when the conviction occurred, length of time that had elapsed since the conviction, extenuating circumstances, and whether the crime had a direct relationship to the job at issue (for example, a convicted embezzler applying for a finance position).

In 2018, the same federal judge who enjoined President Obama's "Persuader Rule" in 2016 agreed to enjoin the EEOC from enforcing its Guidance against Texas until it complied with the Administrative Procedure Act, which generally requires federal agencies to provide notice of rules and an opportunity for the public to comment. The judge didn't give Texas everything it wanted, so both parties appealed.

In this week's Fifth Circuit decision, the panel agreed that the Enforcement Guidance should be enjoined, but it went the lower court one better: It said that compliance with the APA would serve no purpose because the EEOC had no authority to issue a "substantive rule to implement Title VII" in the first place.

Title VII authorizes the EEOC only to issue "procedural regulations to carry out the provisions of this subchapter." (Emphasis added.) After finding that the Enforcement Guidance was a "substantive rule," the Fifth Circuit panel found that the EEOC had no authority to issue the Guidance at all. Hence the "modification" of the injunction.

Here is the injunction, before and after the EEOC's appeal.

BEFORE:

Defendants EEOC and the Attorney General of the United States (in any enforcement action against the State of Texas) are ENJOINED from enforcing the EEOC's interpretation of the Guidance against the State of Texas until the EEOC has complied with the notice and comment requirements under the APA for promulgating an enforceable substantive rule.

AFTER:

Defendants EEOC and the Attorney General of the United States (in any enforcement action against the State of Texas) are ENJOINED from enforcing the EEOC's interpretation of the Guidance against the State of Texas.

"Um," I imagine the EEOC asking, "can we go back to the original injunction and forget this appeal ever happened?"

"Pretty please?"


Employers may have good reason to flatly prohibit the hiring of applicants with certain criminal convictions, and considering all excluded applicants on a case-by-case basis may be impractical, if not impossible. Although the Fifth Circuit decision applies only to the State of Texas, other employers may use it to argue that the EEOC's Enforcement Guidance is invalid because the EEOC didn't have the legal authority to issue it. 

But one word of caution: Many states have laws restricting employers' ability to exclude applicants based on their criminal backgrounds. So even if you may not have to worry about Title VII and the EEOC any more, be sure you know and comply with the law in your jurisdiction.

Image Credits: Texas flag by Mark Gstohl (flickr, Creative Commons license); pleading man from Adobe Stock.

Robin Shea has 30 years' experience in employment litigation, including Title VII and the Age Discrimination in Employment Act, the Americans with Disabilities Act (including the Amendments Act). 
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