On August 6, 2019, the Fifth Circuit Court of Appeals ruled that the Equal Employment Opportunity Commission ("EEOC") "overstepped its statutory authority" in issuing the "Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII" ("Guidance"). State of Texas v. Equal Employment Opportunity Commission and Attorney General of the United States, No. 18-10638 (August 6, 2018). http://www.ca5.uscourts.gov/opinions/pub/18/18-10638-CV0.pdf The 2012 Guidance, which was issued during President Obama's Administration, provides that employers should not automatically exclude convicted felons from employment, citing data suggesting that such a practice disproportionately impacts minorities. https://www.eeoc.gov/laws/guidance/arrest_conviction.cfm The Guidance limits consideration of an applicant's criminal conviction to circumstances which are "job-related and consistent with business necessity."
The State of Texas excludes applicants convicted of specified categories of felonies from many public jobs. When this practice was challenged by an individual rejected for a covered public job, Texas sued the EEOC and the Attorney General challenging the EEOC’s authority to promulgate the Guidance. The Fifth Circuit ultimately agreed with the State of Texas and barred the EEOC and the Attorney General of the United States from enforcing the EEOC's interpretation of the Guidance against the State of Texas.
In a 27-page opinion, the Court conducted a thorough legal analysis of the issues presented by the State of Texas and the EEOC, as well as the authority granted to the EEOC by Congress in Title VII. Title VII provides that the EEOC may issue "procedural regulations," but it does not grant the EEOC authority to promulgate "substantive rules." The EEOC took the position that the Guidance was not a "substantive rule." The Court disagreed and found that the Guidance could not be enforced against the State of Texas.
Although the Fifth Circuit’s ruling is clearly favorable for employers, caution should still be exercised when making hiring decisions based on an applicant's felony conviction. The decision has some limitations:
- The Court's decision applies only to the State of Texas as an employer and not to private employers in Texas or elsewhere. However, it is reasonable to anticipate that the same analysis will apply in a case involving a private employer.
- The Fifth Circuit Court of Appeals is the appellate court for Mississippi, Louisiana and Texas. Its rulings are not binding on other circuits, but may be persuasive.
- Many states have legislation limiting the authority employers have to inquire about an applicant's criminal history. This ruling has no impact on those states' laws.
In sum, employers should exercise caution before disregarding the EEOC's guidance and should consult legal counsel regarding the impact of the Fifth Circuit's ruling in the states where they do business. This ruling will likely be the first of many challenging the EEOC's authority to issue "Guidance" expanding the scope of Title VII. Our blog will keep you up-to-date on any developments.
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