Seyfarth Synopsis: In a showdown between the State of Texas and the EEOC – whereby Texas alleged that the EEOC’s “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII” interfered with its authority to limit the hiring of felons – a federal district court in Texas recently granted the EEOC’s motion for summary judgment, and denied Texas’s motion for summary judgment and request for declaratory relief.

This decision signals to employers that the Commission’s position on the unlawful nature of categorical bans on the hiring of felons remains viable.

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Case Background

In State of Texas v. EEOC, No. 5:13–CV-255, 2017 U.S. Dist. LEXIS 30558 (N.D. Tex. Feb. 1, 2018) (which we previously blogged about here), Texas argued that the EEOC’s Guidance directly interfered with its authority to impose categorical bans on hiring felons and to be able to discretionarily reject felons for certain jobs. Id. at *1. In its Second Amended Complaint, Texas brought two causes of action. The first cause of action, brought under the Declaratory Judgment Act, sought 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 and its Legislature deem appropriate; and (2) an injunction preventing the EEOC and the U.S. Attorney General from enforcing the interpretation of Title VII that appears in the Guidance, and from issuing right-to-sue letters. Id. at *2. The second cause of action, brought under the Administrative Procedures Act, asked the Court to hold the Guidance unlawful and to set it aside as (1) a substantive rule issued without notice and opportunity for comment; (2) outside the statutory scope given to the EEOC; and (3) an unreasonable interpretation of Title VII. Id.

The EEOC argued that the Guidance had not yet been enforced against Texas, and therefore, the issue was not ripe for adjudication. Id. Further, the EEOC asserted that the only purpose of the Guidance 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. The EEOC additionally contended that the Guidance was not an expansion of Title VII’s prohibition against hiring policies that create a disparate impact upon protected classes (in this instance, certain racial classes are alleged to be disproportionately impacted by consideration of felony convictions as a ban for employment opportunities).

The District Court’s Decision

The Court granted the EEOC’s motion for summary judgment, and denied Texas’s motion for summary judgment and request for declaratory relief. First, the Court opined 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. Id. at *3. The Court explained that although there were 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 and its citizens, there were also many conceivable scenarios where otherwise qualified applicants with felony convictions would pose no objectively reasonable risk. Accordingly, the 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.” Id.

Further, the Court addressed Texas’s request that it 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. The Court rejected this request, holding the issuance of a right to sue letter was not a determination by the EEOC that a meritorious claim exists. Accordingly, the Court granted the EEOC’s motion for summary judgment, and denied Texas’s motion for summary judgment and request for declaratory relief. Id.

Implications For Employers

This decision has a heavy dose of procedure, but assuming the District Court’s decision remains in place, it nonetheless puts employers on notice that courts will likely give strong deference to the EEOC’s Guidance when considering categorical bans regarding the hiring of felons. Further, the EEOC will likely use the momentum it gained from this ruling to continue enforcement of its Guidance in an aggressive fashion and investigate businesses with such sweeping hiring practices.

While employers in certain industries may have legitimate reasons for not hiring particular felons (for instance, a bank refusing to hire a felon convicted of embezzlement), businesses need to be cautious about implementing blanket hiring prohibitions of felons. Accordingly, the best practice for employers is to focus on the qualifications of applicants, and make hiring decisions based on merit.