Fifth Circuit Upholds Injunction Blocking Enforcement of EEOC Guidance on Criminal History Bans

By: Attorney Jerilyn Jacobs – Weld Riley, S.C.

While the EEOC’s 2012 enforcement guidance regarding arrest and convictions records may have been received by most Wisconsin employers with a collective “ho hum,” employers in other states without the arrest and conviction record protections in existence in Wisconsin had a stronger reaction. The State of Texas was one such employer.  It responded with a lawsuit.

Last week the Fifth Circuit Court of Appeals (covering Louisiana, Mississippi, and Texas) upheld an injunction issued by a Texas federal district court that blocked the Equal Employment Opportunity Commission (EEOC) and the U.S. Department of Justice (DOJ) from enforcing its enforcement guidance that interpreted Title VII of the Civil Rights Act to reject blanket bans on hiring individuals with criminal records. 

In 2012, the EEOC issued the “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII” to instruct businesses not to employ blanket bans on hiring individuals with criminal records.  The EEOC expressed concern that consideration of criminal background would have a disparate impact on racial and national origin minorities, and thus would constitute national origin or race discrimination.

The 2012 enforcement guidance provided that an employer may defend against a charge of an improper criminal-record policy by showing that its non-hiring decision was job-related and consistent with business necessity.  Pursuant to the guidance, in order to establish such a defense, the employer would need to demonstrate that its criminal-record hiring policy operated so as to effectively link specific criminal conduct and its accompanying dangers with the risks inherent in the duties of the particular position. 

At the time the 2012 guidance was issued, different Texas state agencies had broad no-felony hiring policies.  Texas’s Department of Age and Disability Services, for instance, categorically barred all convicted felons from employment.  Other Texas agencies excluded applicants convicted of specified felonies. Texas sued the EEOC, challenging the guidance and claiming that the EEOC had overstepped its authority because the guidance amounted to a substantive rule.  An agency must engage in the public comment process prior to effectuating any substantive rule.

Initially, the Texas district court dismissed the lawsuit holding that Texas lacked standing to sue because the guidance had not yet been enforced against it.  The Fifth Circuit overruled that decision, finding that there was standing, and allowed the lawsuit to proceed.

Back at the district level, the court then issued a number of rulings, including an injunction against the EEOC prohibiting it from enforcing its interpretation of the guidance against the State of Texas until the EEOC complied with notice and comment requirements required for promulgating an enforceable substantive rule.

Up again on appeal, the Fifth Circuit panel modified the district court’s order slightly by eliminating a clause of the injunction that stated, “until the EEOC has complied with the notice and comment requirements under the [Administrative Procedure Act] for promulgating an enforceable substantive rule.” The Fifth Circuit held that the EEOC lacked authority to promulgate substantive rules implementing Title VII.

The Wisconsin Fair Employment Act (WFEA) has long prohibited consideration of an applicant’s arrest or conviction background. For most employers, a pending arrest or a conviction may be taken in consideration only if the crime substantially relates to the circumstances of the particular position the individual is seeking or holds. For pending arrests, an employer can put the application process on hold – if the position is substantially related to the offense charged – only so long as the charge is pending.  If the charge does not result in the conviction of a crime that is substantially related to the position being sought, neither the arrest nor charge can be used against the individual to bar him or her from employment.

Wis. Stat. § 111.335(3) provides certain exceptions from the ban. School districts, for example, can avail themselves of Wis. Stat. § 111.335(3)(e) and refuse to employ individuals convicted of any felony, unless they have received a pardon.  Accordingly, one might argue, and the lawyers for the State of Texas made such an argument in Texas v. EEOC, this may put the Wisconsin statute in conflict with the EEOC enforcement guidance.

Whether the EEOC responds by challenging the ruling or by rescinding and reissuing guidance so as to make clear that it is not imposing any binding rule on any particular employer remains to be seen. To date, it has issued no press release on the matter. Stay tuned for further developments.

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