Employment Law Daily EEOC criminal background check guidance is substantive rule, APA notice and comment procedures apply
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Wednesday, February 7, 2018

EEOC criminal background check guidance is substantive rule, APA notice and comment procedures apply

By Lisa Milam-Perez, J.D.

A federal district court denied a request from the state of Texas for a declaration that the state has the right to impose a categorical ban on hiring individuals with criminal felony convictions for certain state jobs, as well as a motion for an injunction prohibiting the EEOC from enforcing its criminal background check guidance in hiring decisions against the state. However, agreeing with Texas that the EEOC’s guidance amounts to substantive rulemaking under the Administrative Procedure Act (APA), the court restricted the EEOC from enforcing the guidance, ruling that the Commission should have provided notice and an opportunity for public comment (State of Texas v. EEOC, February 1, 2018, Cummings, S.).

EEOC guidance. In 2012, the EEOC issued Enforcement Guidance 915.002: “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII.” The guidance sets out a framework for addressing both whether a hiring policy screens out a Title VII-protected group and whether a policy is consistent with business necessity. According to the summary section of the enforcement guidance, the EEOC document builds upon “longstanding court decisions and existing guidance documents” that the EEOC issued over twenty years ago.

Lone Star lawsuit. Texas sued the EEOC, seeking declaratory and injunctive relief. Certain Texas state agencies do not hire convicted felons, felons convicted of particular categories of felonies, or, in some cases, individuals convicted of certain misdemeanors, the state asserted, and the EEOC guidance “directly interferes with its authority to impose categorical bans on hiring felons and to be able to discretionarily reject felons for certain jobs.”

The state sought a declaration that it had the right to impose an absolute bar on the hiring of convicted felons as well as an injunction prohibiting the EEOC from enforcing the criminal background guidance and from issuing right-to-sue letters on the basis of the guidance. Texas also contended that the EEOC violated the APA by engaging in binding rulemaking without providing notice and an opportunity to comment, and that the Commission exceeded the scope of its authority. Also, substantively, the guidance represented an unreasonable interpretation of Title VII, the state argued.

The EEOC countered that the dispute was not ripe since the agency had not yet enforced the guidance against the state. Also, as to the substance of the guidance, the Commission asserted that the document was not a new regulation and did not expand already existing Title VII restrictions on the use of hiring practices that have a disparate impact on a protected class. Rather, the guidance merely reflected an effort to update and consolidate the Commission’s past policy statements about Title VII and the use of criminal background checks for screening applicants.

Procedural background. Concluding that Texas lacked Article III standing to sue, the district court previously granted the EEOC’s motion to dismiss. However, in a June 2016 decision, the Fifth Circuit reversed, holding that Texas has constitutional standing to challenge the enforcement guidance because the state was an “object” of the guidance and it had suffered a sufficient alleged injury by being forced to alter its hiring policies accordingly. The appeals court also found the guidance constituted a final agency action for APA purposes, even though the Commission is not authorized to bring an enforcement action against the state directly. The EEOC had “enacted a policy statement couched in mandatory language that is intended to apply to all employers,” the appeals court observed, reversing the lower court’s dismissal of the lawsuit for lack of subject matter jurisdiction. Both parties filed summary judgment motions on remand, at issue here.

Categorical bar impermissible. The court declined to declare that Texas has the right to impose an absolute bar on hiring convicted felons (or certain categories of felons) for any specific jobs that the state or the state legislature deem appropriate. Although conceding there are certain categories of jobs for which applicants with a specific criminal history could be a poor fit and pose a risk to citizens, the court reasoned that there also may be instances in which individuals with such criminal histories pose no objectively reasonable risk. In the court’s view, “to find otherwise would be illogical.” Thus, a categorical denial of employment “paints too broad a brush” and would unfairly deny meaningful job opportunities to individuals who would “greatly benefit” from state employment. The state’s request for declaratory relief was therefore denied. The court also refused to enjoin the EEOC from issuing right-to-sue letters based on the denial of employment due to an applicant’s criminal history.

Substantive rulemaking. On the other hand, the court agreed with Texas that the EEOC’s enforcement guidance amounted to substantive rulemaking and, that it was issued without the EEOC providing notice and an opportunity for the public to weigh in. However, the court would not go so far on summary judgment as to find the EEOC exceeded the scope of its authority, or to hold that the agency’s guidance embodied a faulty interpretation of Title VII.

Therefore, the court granted only partial summary judgment in favor of Texas: The EEOC was barred from enforcing the guidance against the state of Texas until the Commission complies with the APA’s notice and comment rulemaking requirements.

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