By Gerald L. Maatman, Jr., Pamela Q. Devata, Robert T. Szyba, and Ephraim J. Pierre

On June 27, 2016, the U.S. Court of Appeals for the Fifth Circuit handed a victory to the State of Texas in Texas v. EEOC , No. 14-10949 (5th Cir. June 27, 2016), by remanding back to the district court the case it dismissed in 2014.  Notably, Fifth Circuit held that the State of Texas has standing to challenge the EEOC’s “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII” (“Guidance”), and that the Guidance was a final agency rule subject to court challenge.

As a quick recap, the EEOC issued the Guidance in April 2012, urging businesses to avoid blanket rules against hiring individuals with criminal convictions, reasoning that such a hiring check could violate Title VII if they create a disparate impact on particular races or national origins, and calling for a multi-factor individualized assessment of an applicant’s criminal history.

In an unprecedented and novel action, the State of Texas filed suit against the Commission in November, 2013 seeking to enjoin the enforcement of the Guidance (which Texas nicknamed the “Felon Hiring Rule”) because it conflicted with Texas law that prohibited hiring felons for certain jobs.  On August 20, 2014, Judge Sam R. Cummings of the U.S. District Court for the Northern District of Texas dismissed the case under Federal Rule 12(b)(1) (which we reported here), finding that Texas lacked standing to maintain its suit because no enforcement action had been taken against it pursuant to the Guidance.  Texas, however, was not about to be messed with, and promptly appealed to the Fifth Circuit in November, 2014 (reported here).

Fifth Circuit Reverses and Remands

The Fifth Circuit’s decision is a stunner.

It found that Texas, in fact, has standing to challenge the Guidance because it presented “(1) an actual or imminent injury that is concrete and particularized, (2) fairly traceable to the defendant’s conduct, and redressable by a judgment in [Texas’s] favor.”  Id. at 5.  The Fifth Circuit pointed out that Texas, in its capacity as an employer, was an “object” of the Guidance because the Guidance was directed at all employers, including state agencies.  As an object of the Guidance, Texas did not need an enforcement action to establish a concrete injury.  Instead, it could establish two concrete injuries for purposes of Article III.  First, Texas pointed to the increased regulatory burden on it as an employer because of the hiring policies that the Guidance required.  Id. at 7-8.  Thus, the increased regulatory burden itself constituted a concrete injury.  Second, the Guidance forced Texas to “undergo an analysis, agency by agency, regarding whether the certainty of EEOC investigations stemming from the [] Guidance’s standards overrides the State’s interest in not hiring felons for certain jobs.”  Thus, “being pressured to change state law” constituted a concrete injury.  Id. at 8-9.  Therefore, regardless that there was no enforcement action, the Fifth Circuit concluded that Texas was deemed to have standing to challenge the Guidance.

Continue to read the full article here.