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Texas Wins Fight Over Obama-Era Criminal Record Check Policy (1)

Aug. 6, 2019, 6:47 PMUpdated: Aug. 6, 2019, 10:58 PM

The EEOC guidance that discouraged employers from blanket bans on hiring workers with criminal records will not be binding in Texas, a federal appeals court ruled.

Although the state of Texas prevailed, many employers have already moved toward more comprehensive views of hiring workers with criminal records, employment attorneys say, but the ruling could have wider effects on the power of federal agencies’ interpretations of laws.

The U.S. Court of Appeals for the Fifth Circuit on Aug. 6 upheld an order blocking enforcement of the Equal Employment Opportunity Commission’s guidance against Texas. The three-judge panel found that the agency overstepped its statutory authority when it issued the guidance in 2012.

The EEOC’s criminal background guidance said employers that rely on criminal convictions to disqualify applicants could lead to discrimination allegations. It encouraged “individualized assessments” instead. Advocates told the appeals court that outright bans on people with criminal records could have a disproportionate impact on people of color.

Texas challenged the EEOC guidance, arguing the state should have the right to refuse to hire convicted felons without further consideration. Texas said the guidance conflicts with state laws that don’t allow businesses to hire certain individuals with criminal histories for some jobs.

The EEOC, which enforces federal civil rights laws, issues guidance about various topics to help employers best avoid discriminatory practices. In the years since the guidance was issued, employers have largely adopted policies that take a more comprehensive view on hiring people with criminal records, and dozens of states and local governments have passed “ban the box” legislation to prevent practices that screen out people with convictions, employment attorneys said.

Around the country, 35 states and more than 150 cities and counties have adopted “ban-the-box” laws that prevent an employer from using a criminal conviction to disqualify a job candidate. Then-President Barack Obama endorsed such legislation, directing federal agencies to delay inquires into job applicants’ records until later in the hiring process.

“The politics on the broader issue of criminal background check information and the hiring process have changed quite a bit since the guidance came out,” said Jim Plunkett, a senior government relations counsel with Ogletree, Deakins, Nash, Smoak & Stewart. “Disparate groups and political parties make efforts to hire folks convicted of crimes, as a broader response to criminal justice reform. The dust has settled and both sides have figured it out.”

‘Chilling Effect’ for Agencies?

Practically, this might have little effect on businesses, but the language could address whether agencies, beyond the EEOC, use this type of action to push policy.

The Obama administration was criticized by the business community for subverting the rulemaking process with such actions, and the appeals court ruling could reinforce that guidance can’t be used as a vehicle for policy making, Plunkett said.

He said it could potentially provide ammunition for groups to sue the government over guidance, but at a minimum it could mean “a chilling effect” for other agencies.

If you are an employer wanting to ensure that your practices aren’t discriminatory, you’d likely follow the guidance, said Michael Eastman, a partner at NT Lakis. He said courts don’t defer to EEOC guidance on many issues, and attorneys can already argue that such guidance isn’t due that level of deference.

“Certainly, I never viewed the guidance as binding. It does give you a good idea of how the agency looks at your case,” Eastman said.

The oral argument in the case was heard in June. If the lawsuit is allowed to move forward, it could have consequences on other federal agency guidelines, Dallas-based civil rights attorney Ed Cloutman said at the time. Cloutman represents advocacy groups like the NAACP and the National Employment Law Project, which wrote a friend-of-the-court brief in support of the EEOC’s guidance.

The case also represented a clash and shift on civil rights issues by the Trump administration’s Justice Department, which argued before the appeals courts on behalf of the EEOC. The DOJ also made clear it won’t enforce such guidance and doesn’t agree with the EEOC’s stance on limiting the use of criminal background checks in employment.

“Neither the Department of Justice, nor any other government agency is bound by the guidance,” the Justice Department attorneys wrote in a brief to the court. The Justice Department “disagrees with the approach and analysis of the EEOC in numerous respects.” There is “no material probability” that the DOJ would seek to enforce the guidance at all, DOJ attorneys said.

The Texas Attorney General’s office and the EEOC didn’t immediately respond to requests for comment.

The case isState of Texas v. EEOC, 5th Cir., 18-10638, 8/6/19.

(Updated with additional reporting.)

To contact the reporters on this story: Brian Flood in Washington at bflood@bloomberglaw.com; Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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