The US Court of Appeals for the Fifth Circuit on Tuesday upheld an injunction granted by the US District Court for the Northern District of Texas preventing the Equal Employment Opportunity Commission (EEOC) from enforcing guidance issued in 2012.
The guidance, titled Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964, offered best practices on employers’ use of criminal history in the hiring process.
The state of Texas sued the EEOC and the Attorney General claiming that the guidance violated the Administrative Procedure Act because the guidance attempted to preempt Texas law that banned the hiring of convicted felons for certain positions like public safety and public schools.
In affirming the injunction, the Fifth Circuit determined that the guidance was final agency action, that the state of Texas did have standing, and that parts of the injunction should be modified.
We agree that the Guidance is a substantive rule subject to the APA’s notice-and-comment requirement and that EEOC thus overstepped its statutory authority in issuing the Guidance. That conclusion follows naturally from our holding that the Guidance is a final agency action. The district court held that the Guidance ‘is a substantive rule,’ but it did not deem it ‘necessary to the adjudication of the claims’ to reach the issue whether EEOC lacked authority to promulgate a substantive rule. The injunction, however, implies the answer, given that it would permit the Guidance to stand if it went through notice-and-comment rulemaking – a process used to promulgate substantive rules.
Because the Guidance is a substantive rule, and the text of Title VII and precedent confirm that EEOC lacks authority to promulgate substantive rules implementing Title VII, we modify the injunction by striking the clause ‘until the EEOC has complied with the notice and comment requirements under the APA for promulgating an enforceable substantive rule.’
The Fifth Circuit also determined that the case was not moot even though the Attorney General and Department of Justice ceased enforcing the guidance.