Court tosses EEOC employer guidance on use of criminal history

In 2012, the EEOC published guidelines for employers cautioning them on the use of arrest and conviction records when making hiring and other employment decisions. Since that time, if not well before, employers were advised against two practices: using arrest and conviction records as the sole basis for hiring decisions.

The U.S. Court of Appeals for the 5th Circuit, based in New Orleans, issued a decision in August that effectively threw out this guidance. The court ordered that the EEOC and U.S. Attorney General not enforce the guidance against employers, holding that the agency did not have authority to issue the guidance because it was a substantive rule.

The guidance

The EEOC’s guidance interpreted Title VII of the Civil Rights Act of 1964, the main federal law prohibiting employment discrimination, and sets forth parameters for employers wanting or needing to use criminal histories as part of their job- and candidate-screening process.

One kind of discrimination illegal under Title VII is based on “disparate impact.” This means that even if a hiring policy does not unlawfully reject applicants based on a protected characteristic, like race, if a hiring practice (like screening out anyone with a felony record) “disproportionately screens out a Title VII-protected group,” disparate impact discrimination occurs. In other words, even if the practice is not illegal on its face, its impact when exercised may be illegal.

According to the EEOC, “[n]ational data” shows blanket screening based on criminal history discriminates against groups based on race and national origin. Therefore, the agency requires that a covered employer tie the type of criminal history to the job requirements, essentially showing a “business necessity” for its use.

The case

Texas agencies have job-screening requirements for certain positions that disqualify anyone with felony records generally or felony records for certain categories of crimes. A job applicant rejected on this basis filed a complaint with the EEOC, alleging that the Texas policy disparately impacted him and other applicants in violation of Title VII.

In response, Texas sued the Attorney General and EEOC over the guidance because state employers must violate state law to follow the guidance or follow state law and risk federal enforcement action. The Fifth Circuit found that the guidance was a final agency rule that was substantive (concerning the substance of Title VII), rather than procedural (defining required processes under the law); because Title VII does not allow the EEOC to make substantive rules, only procedural ones, the guidance was not binding on Texas as an employer and is unenforceable.

The ramifications

The decision holding is only controlling in federal courts within that circuit – in Louisiana, Mississippi, and Texas – but we anticipate other circuits to take a close look at this issue in the near future. Kentucky is located within the Sixth Circuit, which also covers Ohio, Michigan, and Tennessee.

Any employer who uses criminal history to set hiring or other employment practices should speak with an experienced employment law attorney for guidance. Not only might Title VII and EEOC policy be relevant, but a host of other federal, state, and local laws may also apply, including the Fair Credit Reporting Act.


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