Is the EEOC’s Guidance on use of background checks for employment in jeopardy?

In 2012, the Equal Employment Opportunity Commission (“EEOC”) issued guidance regarding the use of arrest or conviction records in employment decisions (“Guidance”). The stated purpose of the Guidance was to explain the circumstances under which use of criminal history in employment decisions would violate Title VII of the Civil Rights Act of 1964. In brief, the EEOC’s position is that the use of criminal history to exclude persons from employment poses a disparate impact on minority applicants and may constitute employment discrimination. The EEOC took special issue with employers’ use of blanket bans of those with criminal history or felony convictions. You can read more on the details of the Guidance in backgroundchecks.com’s Compliance Update from April 2012. After the announcement of the Guidance many employers revamped their practices around use of criminal history to ensure that their hiring guidelines excluded persons with criminal history from employment only when there was a close relationship between the job’s duties and the applicant’s criminal history.

The State of Texas, however, sought to keep its blanket exclusions on hiring felons in state agencies and sued the EEOC in 2013 (State of Texas v. EEOC, Case No. 5:13-cv-00255-C, pending in the United States District Court for the Northern District of Texas, Lubbock Division). After much legal wrangling, on February 1, 2018, a Texas federal District Court ruled that the Guidance is unenforceable because it was issued without the EEOC providing formal notice to the public and an opportunity for the public to comment. Under the ruling, the EEOC is enjoined from enforcing this Guidance against the State of Texas. However, the ruling leads the way for challenges by other states and private employers on the same grounds.

When Texas filed its lawsuit, it asked the court to (1) declare that it had unfettered discretion to deny jobs to applicants on the basis of criminal history and (2) to enjoin the EEOC from enforcing the Guidance or issuing “right-to-sue” letters on the basis of the Guidance. The court refused to declare that Texas has the unmitigated authority to apply whatever hiring criteria it chooses as it relates to criminal history. The court also refused to enjoin the EEOC from issuing right to sue letters to those persons who claimed employment discrimination on the basis of race resulting from use of criminal history. However, the court enjoined enforcement of the Guidance on the narrow ground that the Administrative Procedures Act requires a government agency to go through a formal notice and comment period before it issues new substantive rules. The EEOC did not follow this procedure; therefore, it may not enforce the Guidance.

What this means to you:

• This ruling is very narrow and does not dramatically change the law regarding your use of background checks in hiring. You should use caution and speak to your counsel before you take any action on the basis of this ruling.
• The court’s injunction applies only to the State of Texas as an employer. It may be expanded to other states or private employers, but it has not been yet.
• Even if the Guidance is unenforceable, courts across the country have ruled that if an employer’s use of criminal background checks disproportionately disadvantages minorities, the employer must show that its exclusions are job-related for the position in question and consistent with business necessity. Your hiring criteria should take these precedents into account.