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Equality for Convicts?

Another case of federal overreach.

Dec 16, 2013, Vol. 19, No. 14 • By TERRY EASTLAND
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A question: Are Texas and all its agencies and local governments breaking the law? The answer is that they probably are, according to the Obama administration and its Equal Employment Opportunity Commission. But the Texas attorney general, Greg Abbott, isn’t waiting for the EEOC to investigate and bring charges. Last month, in a preemptive strike, he sued the commission. The case is Texas v. EEOC.

AP / Tony Gutierrez

Greg Abbott

AP / Tony Gutierrez

The EEOC enforces Title VII of the Civil Rights Act of 1964, which prohibits discrimination in employment on grounds of race, color, religion, sex, or national origin. Under the law as amended by Congress, the agency may enforce Title VII according to the theory of “disparate impact,” which holds that a race-neutral employment policy that has a disproportionate impact upon individuals protected by Title VII violates the law if it is not job-related and consistent with business necessity.

In the classic case, from the 1970s, an electric power company in North Carolina required a high school diploma for certain jobs. That selection criterion was not strictly job-related and had a disparate impact upon black applicants, who were less likely than white applicants to hold a diploma.

In the late 1980s, the EEOC began scrutinizing the exclusion of job applicants convicted of felonies, and the Obama administration has made it a priority to apply disparate impact analysis in this area (as well as in lending, housing, and school discipline).

Thus, in April last year, the EEOC issued Enforcement Guidance for employers on the use of criminal background checks. The guidance invoked “national data” showing that blacks and Hispanics “are incarcerated at rates disproportionate to their numbers in the general population” and that the exclusion of job applicants with criminal records has “a disparate impact based on race and national origin.” These data, the guidance said, provide “a basis for the Commission to investigate Title VII disparate impact charges challenging criminal record exclusions.” 

The guidance makes clear that the categorical exclusion of applicants with certain criminal histories from jobs is especially problematic and that instead of absolutely barring such applicants, employers should conduct “individualized assessments” of applications, a change in policy that would presumably result in more hires of former felons and thus reduce the disparate impact to legal insignificance. What was previously an unambiguous “no” to a would-be security guard at a private company would become instead, “Okay, well, tell me about yourself . . .” 

Even before issuing the guidance, the Obama EEOC had stepped up disparate impact investigations of employers that use criminal background checks in hiring. “We’ve been tracking this for a while,” Abbott told me in an interview. And he’s not liked what he’s seen—legally dubious cases, sanctionable litigation tactics, high defense costs. 

In its complaint Texas points to a case the commission brought against Peoplemark, a temporary staffing company in Michigan. The case lasted three years, during which the agency subpoenaed 18,000 pages of corporate documents and came up with nothing. The federal district court in the case sanctioned the EEOC, whose conduct it said “falls between frivolous and insulting,” dismissing the agency’s complaint with prejudice and awarding Peoplemark more than $750,000 in fees and costs.

Abbott notes with grim amusement that the EEOC questioned the company’s refusal to hire an applicant who’d twice been convicted of felonies (housebreaking and larceny), a decision whose prudence was evident when she was returned to prison (for felonious assault) while the investigation was still under way. 

In sum, Abbott sees a bad enforcement policy being pursued by a zealous agency. Already he’s watched one company in Texas—Freeman, a trade-show and convention company—go through an investigation for its refusal to hire felons. The commission made so many errors in its handling of the data necessary for disparate impact analysis that the court in the case finally had no choice but to dismiss it.

Abbott, who has served as attorney general since 2002 and is the prohibitive favorite to be elected governor in 2014, doesn’t want any more businesses in Texas to have to endure disparate impact probes into their use of criminal background checks in hiring. That’s one motivation for his lawsuit. The other: a federal government acting beyond its proper authority. 

Consider that Title VII applies to public as well as private employers, including the state of Texas and its Department of Public Safety, Department of Aging and Disability Services, General Land Office, Juvenile Justice Department, state lottery commission, and Parks and Wildlife Department, not to mention school districts.

Texas states in its complaint that “state law and longstanding hiring policies impose” on the state’s public employers “absolute bans on hiring convicted felons or in some instances persons convicted of certain categories of felonies” and that “these absolute exclusions do not allow the sort of ‘individualized assessments’ ” that the guidance embraces.

It may seem, then, that Texas has asserted that its law and federal law are in conflict. In such a case, state law is “preempted,” and the state must comply with the federal law.

But, of course, Texas is not saying that. Its suit argues that the conflict is not between Texas law and Title VII but between Texas law and the “EEOC’s interpretation” of Title VII, as stated in the guidance. And that is not a real conflict, says Texas, because the EEOC’s interpretation of Title VII is not federal law. 

The complaint explains that “Congress has denied the EEOC the authority to promulgate substantive rules interpreting Title VII.” And yet that is what the Enforcement Guidance attempts to do. When the guidance announces that hiring policies categorically excluding convicted felons create an unlawful “disparate impact” under Title VII and employers instead should conduct “individualized assessments” of job applicants with felony records, that is not Congress speaking, says Texas, but an agency that Congress has instructed not to make substantive rules interpreting Title VII.

Texas further maintains that those rules, if not invalidated, would require state employers “to choose between evaluating and hiring convicted felons in defiance of state law or risking investigations, challenges, and lawsuits” from the EEOC. 

The EEOC has until early January to respond. The agency is likely to argue that the case is premature, and Texas to respond that it shouldn’t have to wait until the EEOC sues a state employer, especially given the agency’s record of abusive litigation tactics.

If the case goes forward, Texas’s strongest claim is that the court should “hold unlawful and set aside the Enforcement Guidance” on the ground that the agency “has exceeded its statutory authority.” If the case centers on that claim, the EEOC will be forced to defend the legality of its Enforcement Guidance. And so it will have to defend its use of disparate impact analysis in criminal background check cases and address whether it is requiring or merely “encouraging,” as it says it does, individualized assessments of job applicants with criminal records.

In July the attorneys general of nine states sent a letter to the commission describing the Enforcement Guidance as “a quintessential example of gross federal overreach” and asking (unsuccessfully) that it be rescinded. It would not be surprising if those states followed Texas’s example and filed cases on the same issues.

If not rescinded by decision of the commissioners, the Enforcement Guidance still could be held “unlawful and set aside” by the federal courts—as should be the fate of any gross federal overreach.

Terry Eastland is an executive editor at The Weekly Standard.

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