Recently, the U.S. Court of Appeals for the Fifth Circuit ruled in State of Texas v. EEOC that the Equal Employment Opportunity Commission (EEOC) violated the federal Administrative Procedure Act (APA) by issuing its 2012 Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decision Under Title VII of the Civil Rights Act of 1964. Although the ruling applies only to the State of Texas as an employer, it opens the door to future challenges by private employers in the Fifth Circuit and beyond.
The guidance, relying on data suggesting blanket bans on hiring individuals with criminal records disproportionately impacts minorities, declares an employer’s use of criminal records subjects it to liability under Title VII unless it is job related and consistent with business necessity. The guidance condemns across-the-board exclusions and mandates an individualized review of each applicant’s criminal record and circumstances.
The State of Texas filed suit against the EEOC arguing the guidance was contrary to a state law prohibiting individual assessments and challenged the EEOC’s authority to promulgate substantive rules to implement Title VII. The district court ultimately held the EEOC and Attorney General were enjoined from enforcing the guidance against the State of Texas because the EEOC failed to comply with APA’s notice and comment requirements for promulgating substantive rules.
The Fifth Circuit agreed the guidance was a substantive rule and determined the EEOC lacked the power to promulgate substantive rules to implement Title VII at all, regardless of whether it complied with the notice and comment provisions of the APA. Accordingly, the Fifth Circuit upheld and expanded the district court’s injunction and stated the EEOC and Attorney General could not “treat the Guidance as binding in any respect” against the State of Texas.
Whether other courts will follow the lead of the Fifth Circuit remains to be seen. Employers with criminal record screening requirements should exercise caution in disregarding the guidance and continue to be mindful of various obligations imposed by federal, state, and municipal law relating to the use of an applicant’s criminal history.