On August 6, the 5th Circuit Court of Appeals invalidated the EEOC’s 2012 Enforcement Guidance on “Consideration of Arrest and Conviction Records in Employment Decisions under Title VII of the Civil Rights Act of 1964.” See Texas v. EEOC, No. 18-10638 (August 6, 2019). Among other things, the Guidance prohibits consideration of blanket bans on hiring people with a criminal record, and requires nuanced case-by-case consideration as to whether a particular employment policy or action satisfies Title VII’s business necessity test. The State of Texas claimed that the Guidance was an unauthorized substantive rule that would override numerous mandatory state law bars to hiring people with a felony conviction. After rejecting various jurisdictional defenses based on lack of finality and standing, the court affirmed the district court’s holding invalidating the Guidance.
Perhaps the most significant thing about the appeals court’s ruling is its conclusion that the Guidance was a substantive rule that exceeded the EEOC’s authority to bind either public or private employers. The district court had simply enjoined enforcement of the Guidance pending satisfaction of the notice and comment rulemaking requirements of the APA. But the court of appeals went further, stating that “the text of Title VII and precedent confirm that EEOC lacks authority to promulgate substantive rules implementing Title VII.” It therefore modified the district court’s injunction to strike the clause “until the EEOC has complied with the notice and comment requirements under the APA for promulgating an enforceable substantive rule.” The court also “clarified” the terms of the injunction to say that “the EEOC and the Attorney General may not treat the Guidance as binding in any respect.”
While there may yet be further litigation over the Guidance, and while Congress may yet decide to act to bar record-based discrimination, it would appear that action to secure fair chance employment will now be with the states.