Federal Appeals Court Ruling: EEOC’s Criminal Background Check Guidance Unenforceable

Michelle Wilson - August 19, 2019

In the case of Texas v. EEOC, in a narrow ruling by the U.S. Court of Appeals for the Fifth Circuit on August 6, 2019, it was held that the Employment Opportunity Commission (EEOC) had violated its authority when in 2012 it issued a Guidance Document that cautioned employers not to screen job applicants using criminal background checks. The decision stated that the EEOC could not enforce the Guidance against the state of Texas. In doing so they effectively torpedoed the Guidance to both public and private employers across the entire country.

The Back Story

The Guidance Document the EEOC released invoked Title VII of the Civil Rights Act of 1964 which prohibited employers, nationally, from automatic blanket rejection of potential employees based on merely having a criminal record. The EEOC cited that blanket bans on potential employees with criminal records disproportionately impacts minorities. The Guidance Document directed employers to be required to perform an in person assessment of individuals as to whether or not their criminal record could/would impact the individual’s ability to perform the position, in lieu of screen policies that would automatically disqualify a person with a criminal record. The assessment would have to be performed before reaching a hiring decision.

In response to the EEOC issuing the Guidance Document, the State of Texas sued the EEOC in federal court to prevent enforcement of the guidance. According to state law, Texas has a long standing policy of excluded persons with felony records from attaining most public jobs. Texas argued that the EEOC Guidance was unlawfully limiting the prerogative of both public and private employers in considering employees with criminal records. Texas had made a request for a declaration from the court that it had the right to exclude felons from certain positions. Further, Texas also sought an injunction to prevent the EEOC from being able to enforce the Guidance against it.

The district court ruled in favor of the State of Texas. It found that the EEOC Guidance Document has breached its legal authority to implement the substantive rule without first giving the public a proper notice and ability to comment. The court did however leave open a door for the EEOC to re-issue the law, but stated it first must give proper public notice and provide the public an opportunity to comment.

On appeal, however, Texas argued that the ruling from the district court did not go far enough in its language. Texas argued that the court should have held that the EEOC did not have proper authority to issue such a document in the first place, regardless of whether the public was afforded an opportunity to comment or not. The appeals court agreed it held that the EEOC “overstepped its statutory authority” in releasing the Document because the federal law does not authorize the EEOC to promulgate substantive rules to implement Title VII.

What Employers Need To Know

If you are an employer who bases their hiring decisions on criminal background checks this is not a complete victory, however it is a very real and clear pushback for the EEOC.

The Fifth Circuit found that the EEOC overstepped its legal authority with its Guidance Document. The court did NOT, however, declare that Texas and/or any private employers have any right to enforce hiring practices that outright ban or disqualify potential employees with criminal records. While the court’s ruling prevents the EEOC from a full embrace of a rock solid position on the lawfulness of applicant screening based on criminal background checks, policies can STILL be held accountable for discrimination on a case by case basis. This could result in liability to employers. It’s also important, as an employer, to be mindful that in addition to Title Vii, the Fair Credit Reporting Act and various state laws may create obligations on employers conducting criminal background checks.

In the end, if you are an employer who wishes to rely on criminal background checks in hiring and retention decisions this is a step in the right direction for you. That said though employers should still exercise extreme caution in implementing and enforcing of background check policies, and should stay apprised of all legal actions and laws in this area.