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Tumult in Texas: 5th Circuit Bans EEOC’s Use of Criminal Records

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Employers who conduct criminal background checks are familiar with the Equal Employment Opportunity Commission (EEOC) and the factors it created seven years ago. In 2012, the EEOC implemented its “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.” The goal of the guidance is to lessen the disparate impact of background screening experienced by racial minorities. Under the guidance, employers must weigh various factors when reviewing criminal histories for applicants and employees, including determining whether the record is job-related and consistent with business necessity. Employers cannot apply blanket no-hire policies based on criminal records, such as “no felonies” or “no criminal convictions.”

The State of Texas took issue with the EEOC guidance, claiming in State of Texas v. Equal Employment Opportunity Commission that the agency overstepped its boundaries. The State suit was based on a claim made by the EEOC on behalf of a former applicant who had been denied employment due to the State’s bar against felonies. The State argued that the EEOC did not have the authority to make and enforce rules under Title VII. The U.S. District Court for the Northern District of Texas found that while the EEOC could not enforce its guidance against Texas at that time, it could address the issue by complying with notice and comment requirements under the Administrative Procedure Act. Both the State of Texas and the EEOC appealed this holding.

On August 6, 2019, the U.S. Court of Appeals for the Fifth Circuit found for the State of Texas. The Court agreed that the 2012 EEOC guidance is a substantive rule that extends beyond the power of the EEOC. Even if the EEOC had adhered to notice and comment requirements, it still lacked the power to create and enforce the guidance. Based on the Court’s decision, the EEOC cannot currently enforce its guidance in Texas.                                                    

While this decision is currently limited to Texas, it can potentially impact other jurisdictions where employers who face claims by the EEOC may bring the same argument. Whether this latest decision will stand is also in question as the EEOC is likely to appeal the Fifth Circuit’s holding. If you are a Texas employer, we recommend working with your employment counsel to determine whether your company should still follow the EEOC guidance, especially if you are a multijurisdictional employer.  If you would like AccuSource to provide a complimentary review of your current background screening compliance program, please contact us at marketing@accusource-online.com.

Jennifer Daimon, Esq.

Jennifer Daimon, Esq.

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