Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
On August 6, 2019, in Texas v. EEOC, the U.S. Court of Appeals for the Fifth Circuit dealt the EEOC a significant setback, largely affirming the district court’s decision that the EEOC violated the federal Administrative Procedure Act (APA) in issuing its 2012 Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (the “Guidance”).
The lengthy but often vague and unspecific Guidance sets forth the EEOC’s position that Title VII prohibits restrictive criminal record screening policies, and in most circumstances, mandates an individualized review of each applicant’s criminal record and circumstances. After the EEOC issued the Guidance, the State of Texas sued the EEOC to bar its enforcement against Texas, claiming that the Guidance interfered with the State’s authority and discretion to limit the hiring of felons into public sector jobs.
The District Court Decision
The district court granted summary judgment for the State of Texas on the issue of whether the Guidance was a substantive rule that ran afoul of the APA since it was issued without providing notice to the public and an opportunity to comment. On that narrow basis, the district court enjoined the EEOC from enforcing the Guidance unless and until it satisfied the APA’s notice and comment requirements. However, the district court also granted summary judgment to the EEOC, agreeing with the agency that “Texas did not have a right to maintain and enforce its laws and policies that absolutely bar convicted felons (or certain categories of convicted felons) from serving in any job that the State and its Legislature deemed appropriate.” Specifically, the district court held that “a categorical denial of employment opportunities to all job applicants convicted of a prior felony paints with too broad a brush and denies meaningful opportunities of employment to many who could benefit greatly from such employment in certain positions.” Finally, the district court denied the State of Texas’s request that the EEOC be enjoined from issuing right-to-sue letters for charges involving claims based on the charging party’s criminal history.1
The Circuit Court Decision
On appeal, the Fifth Circuit confined itself to a narrower range of issues, but ultimately upheld the injunction and on a broader basis. The Fifth Circuit held that the Guidance was a substantive rule, and as such, the EEOC was enjoined from enforcing it at all because federal law does not authorize the EEOC ito promulgate substantive rules to implement Title VII. In light of that threshold determination that the EEOC did not have power to issue the Guidance at all, regardless of whether it complied with the notice and comment requirements under the APA, the Fifth Circuit modified the district court’s injunction by striking the clause “until the EEOC has complied with the notice and comment requirements under the APA for promulgating an enforceable substantive rule.” Since the court decided that the EEOC could not promulgate the Guidance at all, the Fifth Circuit then declined to rule on the district court’s refusal to declare that Texas has a right to maintain and enforce its laws and policies that bar convicted felons from serving in any job it deems appropriate, or its refusal to enjoin the EEOC from issuing right-to-sue letters in relation to the denial of employment opportunities based on the criminal history of the job applicant, since these holdings were based on the Guidance in the first place. Perhaps more important, the Fifth Circuit expressly declined to prohibit the EEOC from enforcing an interpretation of Title VII simply because it is embodied in the Guidance. Put more simply, while the EEOC may now be reluctant to rely on the Guidance in bringing suit, the agency may still pursue challenges to criminal background checks for allegedly violating Title VII (for example, on an adverse impact theory).
The Fifth Circuit ultimately issued an unconditional injunction against the EEOC’s reliance on the Guidance as binding for any purpose against Texas. The court’s analysis will be welcomed by the employer community as opening an avenue to contest the EEOC’s vague Guidance under the APA. The timing is ideal because this area of the law remains fertile ground for discrimination claims.2 Relatedly, employers with criminal record screening requirements should continue to be mindful of the various obligations imposed by the fair credit reporting3 and “ban the box” laws.4
1 Rod M. Fliegel and Molly Shah, EEOC's Background Check Guidance Suffers Loss in Texas Federal Court, Littler ASAP (Feb. 5, 2018).
2 See Rod M. Fliegel and Julie A. Stockton, EEOC Continues to Scrutinize Criminal Record Screening Policies, Littler ASAP (Oct. 1, 2018); Rod M. Fliegel, Criminal Record Screening Policies Continue to Raise Important Compliance Issues, Littler ASAP (Apr. 6, 2018).
3 See Rod M. Fliegel, The Ninth Circuit Adopts an Expansive Reading of the FCRA’s Provision Governing Background Check Disclosures, Littler ASAP (Jan. 29, 2019); Rod M. Fliegel and William J. Simmons, Third Circuit Holds Individual Plaintiffs Lack Standing for Some Alleged Violations of the FCRA's Pre-Adverse Action Notice Requirement, Littler Insight (Sept. 11, 2018); Rod M. Fliegel and Julie A. Stockton, Eighth Circuit Holds Individual Plaintiff Lacks Standing for Alleged Violations of the FCRA’s Authorization and Disclosure Requirement, Littler Insight (Sept. 10, 2018); Rod M. Fliegel, Seventh Circuit Holds Class Action Plaintiff Had Standing for an Alleged Violation of the FCRA’s "Pre-Adverse Action" Notice Provision, Littler ASAP (Aug. 30, 2018); Rod M. Fliegel, The Ninth Circuit Holds Plaintiff Lacked Standing for an Alleged Violation of the FCRA's "Pre-Adverse Action" Notice Provision, Littler ASAP (July 18, 2018).
4 See Rod M. Fliegel and William J. Simmons, San Francisco is Likely to Amend its Ban-the-Box Law, Littler ASAP (updated Sept. 27, 2018); Rod M. Fliegel and Allen P. Lohse, Impending Necessary Ban-the-Box Updates for Criminal Record Inquiries in Massachusetts and San Francisco, Littler ASAP (Apr. 24, 2018).