On August 6, 2019, in State of Texas v. Equal Employment Opportunity Commission, the U.S. Court of Appeals for the Fifth Circuit ruled that the Equal Employment Opportunity Commission (EEOC) overstepped its limited rulemaking and enforcement power when it issued its 2012 Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964. The Guidance, in part, requires employers to make a case-by-case assessment of whether a criminal conviction is disqualifying. So, does this mean that employers can now have blanket bans on applicants with criminal history?
The short answer is no. First, this ruling and the related injunction are limited to saying the EEOC cannot use this Guidance against Texas.
Second, even if other states, or even private employers, are able to make a similar argument in the Fifth Circuit and other jurisdictions, employers would institute broad bans on criminal convictions at their peril. A broad ban on applicants with criminal histories may violate the Fair Credit and Reporting Act (“FCRA”). FCRA requires that before an employer takes an adverse employment action based on a credit report, the employer must send a pre-adverse action notice. Lawsuits have been filed alleging violations of FCRA where an employer has a blanket ban on criminal convictions. The theory is that the employer already decided not to hire an applicant prior to sending the pre-adverse action notice.
Another issue is that several states/municipalities have laws either prohibiting discrimination based on criminal conviction history or are so-called “Ban the Box” laws that may require an individualized assessment of whether the criminal history is disqualifying.
Employers faced with enforcement actions from the EEOC may certainly use this decision to argue against use of the Guidance. However, it is doubtful, in the absence of a nationwide injunction, that the EEOC will back down from using the Guidance.