Federal Appeals Court Finds EEOC Did Not Have Authority to Issue Criminal History Guidance

The U.S. Court of Appeals for the Fifth Circuit has ruled that the Equal Employment Opportunity Commission (EEOC) overstepped its limited rule-making 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. That Guidance outlines how the EEOC will assess whether an employer’s screening decisions regarding applicants with felony records has a disparate impact on EEOC-protected groups and is accordingly unlawful. The EEOC had determined that blanket bans on hiring anyone with a felony record could have a disparate impact on certain minority groups. The Guidance stated, “A covered employer is liable for violating Title VII when the employer's neutral policy or practice has the effect of disproportionately screening out a Title VII-protected group and the employer fails to demonstrate that the policy or practice is job related for the position in question and consistent with business necessity.” The Fifth Circuit held that the EEOC lacked power to promulgate the Guidance, and prohibited the EEOC from treating the Guidance as binding in any respect. This ruling impacted the Guidance as a whole, not just a specific section or prohibition.