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Appeals Court Sides with Texas in Criminal Background Check Case

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Texas, which does not allow felons to be hired for certain state jobs, had sued the Equal Employment Opportunity Commission over guidance that advised employers to curtail use of criminal background checks.

The federal government cannot limit Texas' use of criminal background checks during the hiring process for state jobs, an appeals court ruled this week in a case that undercuts guidance issued by the Equal Employment Opportunity Commission.

The U.S. Fifth Circuit Court of Appeals ruling stems from a lawsuit Texas brought over guidance the EEOC issued during the Obama administration as a means to prevent racial and ethnic discrimination. The EEOC guidance did not prohibit employers from conducting criminal background checks on job applicants or employees, but it advised employers to use background checks only when job-related and necessary for business.

It further concluded that “criminal record exclusions have a disparate impact based on race and national origin” and urged employers to “eliminate policies or practices that exclude people from employment based on any criminal record.”

Texas prohibits the hiring of felons for certain state jobs and filed a lawsuit challenging the legality of the 2012 guidance, arguing that it interfered with the state’s authority to limit the hiring of people convicted of felonies.

The EEOC investigates complaints of employment discrimination and can file suit under Title VII of the Civil Rights Act of 1964, which prohibits discrimination based on race, color, religion, sex or national origin. While criminal history is not a protected class under the act, the guidance by EEOC lays out a framework for the agency to investigate and assess whether reliance on a criminal record to deny employment was a violation of Title VII. The guidance indicates violations would include a demonstration that an “employer's neutral policy or practice has the effect of disproportionately screening out a Title VII-protected group.” 

More than 90% of employers use background checks, which can have a disproportionate impact on people of color, according to the NAACP Legal Defense Fund, which sided with the EEOC in the case. 

“When these background checks turn up a record, employment prospects plummet: the callback rate drops by half for white applicants and two-thirds for African-American candidates,” the NAACP Legal Defense Fund said in a fact sheet on the case. 

But a unanimous three-judge panel concluded that the EEOC “overstepped its statutory authority in issuing the Guidance” and upheld a lower court’s injunction preventing the EEOC from enforcing the rule against the state of Texas.

A spokeswoman for the EEOC declined to comment on the ruling, saying the agency was still reviewing the decision. Neither the Department of Justice, which argued the case for the EEOC, nor the Texas Attorney General’s Office responded to requests for comment on the case Wednesday. 

Legal experts said that while the ruling is limited to Texas, it could raise substantial questions about the EEOC’s ability to enforce the guidance in future investigations.

“The sweeping decision from the 5th Circuit Court of Appeals calls into question not only the future of the guidance as applied to other employers across the country, but also the EEOC’s power to issue such guidance in the first place,” wrote Fisher Phillips attorney Hollie Reiminger on a blog post for the firm.  

Although the guidance in this case is not a rule that employers could be forced to follow, it represented a framework that the EEOC used to interpret statute and explain to employers how it would enforce that statute, said Ann Hodges, professor of law emeritus at the University of Richmond. While the EEOC does not have the authority to sue states over their hiring practices, the Attorney General can, she said. 

But the 5th Circuit’s decision “really casts doubt on the EEOC’s use of this kind of guidance,” Hodges said. 

The ruling does not, however, preclude the agency from pursuing challenges to criminal background checks that allegedly violate Title VII, wrote attorneys Rod Fliegel and Molly Shah, of labor and employment law firm Littler. 

“The court’s analysis will be welcomed by the employer community as opening an avenue to contest the EEOC’s vague Guidance under the [Administrative Procedure Act],” Fliegel and Shah wrote in a blog post. “The timing is ideal because this area of the law remains fertile ground for discrimination claims.”

Andrea Noble is a staff correspondent for Route Fifty.

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