Judge Jerry E. Smith of the U.S. Court of Appeals for the Fifth Circuit ruled that Texas can reject guidance from the Equal Employment Opportunity Commission on hiring felons. Photo: Diego M. Radzinschi/ALM.

The U.S. Court of Appeals for the Fifth Circuit upheld a ruling rejecting guidance for employers on hiring felons, a 2012 initiative stemming from Obama administration efforts to make it easier for ex-convicts to get jobs.

Texas had asked the court if it could exclude felons from state employment under the Declaratory Judgment Act. But in an opinion Tuesday, the Fifth Circuit declined to rule on the merits of that claim, finding the point moot, as the state won an injunction against the Obama-era guidance.

Two jurisdictional issues faced the federal appellate court. First: Did the Equal Employment Opportunity Commission guidance constitute a final agency action subject to judicial review?

And second: whether Texas had legal standing to challenge the guidance, which advised employers against any blanket bans on hiring felons, especially because data showed these policies disproportionately affected minorities, a violation of Title VII of the Civil Rights Act of 1964.

The case has a complicated procedural history. But in the latest turn, the appellate panel found the guidance was subject to judicial review. It also agreed with the state, finding that Texas could sue the EEOC, its acting chairwoman Janet Dhillon and U.S. Attorney General William P. Barr over EEOC guidance.

Instead, the EEOC recommended policies and systems using the ban only when necessary for specific business purposes to avoid infringing Title VII, which governs employment discrimination.

But the Fifth Circuit disagreed, siding with the district court in blocking the guidance.

Tuesday’s opinion also went a step further, ruling that the EEOC never had the statutory authority to issue the guidance in the first place, as the commission had failed to comply with Administrative Procedure Act rules, including allowing a period for public comment on the guidance.

The appellate panel also modified the scope and phrasing of the injunction, clarifying that the guidance isn’t binding. To make that clear it struck the words, “until the EEOC has complied with the notice and comment requirements under the APA for promulgating an enforceable substantive rule.”

“To avoid any confusion, we modify the injunction to clarify that EEOC and the attorney general may not treat the guidance as binding in any respect,” the Fifth Circuit ruled.

The underlying case began after the EEOC issued the guidance. That move prompted a rejected applicant who’d tried to gain employment in Texas’ Department of Public Safety to file a complaint against the state with the commission.

Texas in turn sued the EEOC and other defendants in 2013, alleging the commission’s guidance was unlawful, and that the state had the right to avoid hiring criminals.

“Texas’s injuries are fairly traceable to the attorney general,” Fifth Circuit Judge Jerry E. Smith wrote for the court, with Judges Jacques L. Wiener Jr. and Jennifer W. Elrod concurring. “The pressure on Texas to change its laws exists, in part, because the attorney general has prosecutorial power to bring enforcement actions against Texas based on EEOC referrals or a pattern-or-practice claim. That was true when Texas filed the suit, and it remains so now. … An injunction forbidding EEOC and the Attorney General from enforcing the Guidance would safeguard Texas’s sovereign interests.”

Scott A. Keller, Jason R. LaFond and David A.R. Nimocks served as counsel to the state, according to online case files, while the EEOC’s lead attorney was Justin M. Sandberg. The attorneys did not respond to requests for comment by deadline.

Read the opinion:

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