In August, the U.S. Court of Appeals in New Orleans granted an order enjoining the U.S. Equal Employment Opportunity Commission from treating its guidance on the use of criminal records as binding.  The State of Texas had sued the EEOC over the guidance, claiming that the guidance was substantive rule and that the EEOC did not have the authority to issue substantive rules.  Texas sought a declaratory judgment as well as the injunction.

The EEOC issued the guidance in 2012 under the title “Enforce Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions under Title VII,” which sought to state the Commission’s position on when an employer’s use of criminal records might disproportionately disadvantage minorities and thus constitute race or national origin discrimination.  The  guidance took particular aim at state laws that prohibit convicted felons from being hired in certain occupations, a practice frequently employed in the occupational licensing laws of Texas.

The Court of Appeals for the Fifth Circuit agreed with Texas that the guidance was a substantive rule and that the EEOC did not have the authority to issue substantive rules.  However, it modified the injunction to make it clear that the EEOC could never issue the guidance as a substantive rule and that it was treating the guidance as binding that was being enjoined, not the EEOC’s interpretation set out in the guidance.  The court also denied the declaratory judgment sought by the State of Texas.

Thus the EEOC may still use the interpretation of Title VII set out in the guidance, but it may not treat the guidance as binding either on employers or on itself.  Got that?  Good.  Whether that is clear or not, employers should be familiar with the guidance and strongly consider following what the EEOC said in it to avoid future liability for the use of criminal records in hiring employees.