Why it matters

The Equal Employment Opportunity Commission’s (EEOC) guidance on the use of background checks will remain on hold in Texas after a federal court judge granted partial summary judgment in favor of the state, holding that the agency violated the Administrative Procedure Act (APA). In 2012, the EEOC released guidance warning employers that the blanket use of criminal background checks to block the hiring of those with criminal records could have a disparate impact on minorities, in violation of Title VII. Instead, employers should use background checks on a case-by-case basis, the agency advised. The state of Texas sued, arguing that the EEOC overreached. Considering cross-motions for summary judgment, a federal court agreed that the guidance was a substantive rule that was issued without notice and the opportunity to comment, in violation of the APA, and issued an injunction against enforcement in the state. However, the court also declined 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. Nor did the court 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.

Detailed discussion

In 2012, the Equal Employment Opportunity Commission (EEOC) released “Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.” The guidance emphasized that while the use of criminal justice history information does not violate Title VII per se, an employer may run afoul of the law if the checks result in systemic discrimination based on race, color, national origin, religion or sex.

The state of Texas challenged the guidance and sought declaratory and injunctive relief, arguing that the guidance directly interfered with its authority to impose categorical bans on hiring felons and the ability to discretionarily reject felons for certain jobs. The two-count complaint requested a declaration that Texas has 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 the state or legislature deems appropriate. It also sought an injunction preventing the EEOC from enforcing the interpretation of Title VII that appears in the guidance, as well as issuing right-to-sue letters against the state.

Brought under the Administrative Procedure Act (APA), the second count asked the court to find the guidance unlawful and to set it aside as a substantive rule issued without notice and the opportunity for comment.

The EEOC countered that the case was not ripe because the guidance had yet to be enforced against Texas. In addition, the guidance did not violate the requirements of the APA because its only purpose was to update and consolidate all of the EEOC’s prior policy statements about Title VII and the use of criminal records in employment decisions, not expand Title VII’s prohibition against hiring policies that have a disparate impact on protected classes.

U.S. District Judge Sam R. Cummings issued a split decision. He disagreed with Texas that the state has a right to maintain and enforce its laws and policies that absolutely bar convicted felons from serving in any job the state or legislature deems appropriate.

“There are certainly many categories of employment for which specific prior criminal history profiles of applicants would be a poor fit and pose far too great a risk to the interests of the State of Texas and its citizens,” the court said. “However, there may well be instances in which otherwise qualified job applicants with certain felony convictions in their criminal histories pose no objectively reasonable risk to the interests of the State of Texas and its citizens. To find otherwise would be illogical. Thus, 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.”

The court also declined to enjoin the EEOC from issuing right-to-sue letters, which are “not a determination by the agency that a meritorious claim exists.”

Although the court granted summary judgment in favor of the EEOC on count one, it did the opposite for the second count, ruling the guidance “is a substantive rule issued without notice and the opportunity for comment,” in violation of the APA. Judge Cummings enjoined the EEOC from enforcing the EEOC’s interpretation of the guidance against Texas “until the EEOC has complied with the notice and comment requirements under the APA for promulgating an enforceable substantive rule.”

To read the order in Texas v. EEOC, click here.