Last year the U.S. District Court for the Northern District of Texas dismissed a high profile lawsuit brought by the State of Texas against the EEOC regarding the its “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII.” The District Court held that Texas lacked standing to maintain its suit because it did not allege that any enforcement action had been taken against it in relation to the EEOC’s guidance.

Texas filed an appeal with the U.S. Court of Appeals for the Fifth Circuit seeking to overturn the dismissal of its novel lawsuit. On January 8, 2015 the EEOC filed its opposition brief  and now Texas has filed its reply brief and it is a “must read” for all employers caught in the crosshairs of the EEOC’s aggressive litigation approach concerning its criminal background guidance.

Case Background

In April 2012, the EEOC issued guidance urging businesses to avoid a blanket rule against hiring individuals with criminal convictions, reasoning that such rules could violate Title VII if they create a disparate impact on particular races or national origins. Like various other states, Texas has enacted statutes prohibiting the hiring of felons in certain job categories. In November 2013, Texas sued the EEOC, seeking to enjoin the enforcement of this guidance, which Texas has nicknamed the “Felon Hiring Rule.”

The District Court dismissed Texas’ lawsuit entirely on a lack of subject matter jurisdiction. Because Texas did not allege that any enforcement action had been taken against it by the Department of Justice (as the EEOC cannot bring enforcement actions against states) in relation to the Guidance, the District Court held that there was not a “substantial likelihood” that Texas would face future Title VII enforcement proceedings from the Department of Justice arising from the Guidance. As standing to bring suit cannot be premised on mere speculation, the District Court held that Texas lacked the necessary standing to maintain its suit against the EEOC.

Texas’ Reply Brief

Texas followed up on the arguments it set forth in its opening brief as to why the District Court incorrectly dismissed its suit for a lack of subject matter jurisdiction. Specifically, Texas asserts:

  • The guidance document is reviewable as a final agency action because unlike a mere general statement of policy, the guidance document binds the EEOC (and its staff) to the position that race-neutral refusals to hire felons can constitute unlawful employment practices.
  • The guidance document constitutes final agency action (and is thus reviewable) because it has material consequences for regulated entities, including that it:
    • purports to preempt state laws that are inconsistent with the EEOC’s understanding of Title VII;
    • erects an elaborate compliance regime for employers whenever a candidate is screen out due to a conviction and exposes employers to potential liability unless they create an intricate compliance apparatus” as a result; and
    • threatens employers with Title VII liability if they do not follow the mandates of the guidance document.

Id. at 6-17.

Implications For Employers

Now that the briefing is concluded, stay tuned for oral arguments on this appeal. This case remains “one to watch,” especially since the EEOC has repeatedly asserted that the guidance “has no legal consequences, nor does it impose any obligations on Texas, its-state agencies, or other employers” in trying to fend off Texas’ appeal.