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Texas Loses Criminal Background Guidance Suite against EEOC

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There continues to be growing firestorm of litigation initiated by the EEOC over hiring checks based on criminal backgrounds.

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In one of the most high profile cases addressing this issue (that we previously blogged about here and here,) Judge Sam R. Cummings of the U.S. District Court for the Northern District of Texas issued a decision in State of Texas v. EEOC, granting the EEOC’s motion to dismiss a lawsuit brought against it by the State of Texas. The lawsuit regarded Texas’ “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII.”

Texas argued that the EEOC did not have the authority to issue the guidance and that the EEOC’s position that Title VII trumps conflicting state laws violates its state sovereignty. Judge Cummings rejected the State’s arguments in this first-of-its-kind attack on the EEOC’s authority.

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Case Background

In April 2012, the EEOC issued guidance urging businesses to avoid a blanket rule against hiring individuals with criminal convictions, reasoning that such rules could violate Title VII if they create a disparate impact on particular races or national origins. Like various other states, Texas has enacted statutes prohibiting hiring of felons in certain job categories. In November 2013, Texas sued the EEOC, seeking to enjoin the enforcement of this guidance, which Texas nicknamed the “Felon Hiring Rule.” In March of this year, Texas amended its complaint to include more specific allegations of injury. For example, Texas alleged that the EEOC issued a right-to-sue letter to an applicant who had been rejected by the Texas Department of Public Safety, after disclosing on his application that he had been convicted of a felony (unauthorized use of a motor vehicle). Texas claims that the job involved “access to sensitive personal information for all 26 million Texans.”

The EEOC offered three primary arguments as to why Texas’ lawsuit should be dismissed:

• Lack of jurisdiction because the EEOC’s guidance is not legally binding and does not constitute a final agency action.

• Texas lacks standing to pursue its claims, given that the guidance has no binding authority.

• Texas’ claims are not ripe.

The Court’s Decision

Judge Cummings based his decision entirely on a lack of subject matter jurisdiction. Because “Texas does not allege that any enforcement action has been taken against it by the Department of Justice (as the EEOC cannot bring enforcement actions against states) in relation to the guidance,” Judge Cummings held that there is not a “substantial likelihood” that Texas “will face future Title VII enforcement proceedings from the Department of Justice arising from the Guidance.” As standing to bring suit “cannot be premised on mere speculation” Judge Cummings determined that Texas lacked the necessary standing to maintain its suit against the EEOC.

While acknowledging that the EEOC did in fact issue a right-to-sue letter to an applicant who was rejected by the Texas Department of Public Safety, who believed he was discriminated against based on a prior felony conviction, that was still not enough for the court, since “there are no allegations that any enforcement action has been taken by the EEOC or Department of Justice” based on Texas’ “felony conviction” rule. Accordingly, since the guidance is not a final agency action and because no enforcement proceeding is pending against Texas, Judge Cummings dismissed the case as “seeking a premature adjudication in the abstract without any actual facts and circumstances relating to the employment practices at issue.

Implications for Employers

While Judge Cummings’ decision is a blow to one of the most high profile challenges to the EEOC’s guidance, the dismissal is solely based on procedural grounds and is in no way an acceptance of the guidance and/or the litigation initiated by the EEOC over hiring checks based on criminal backgrounds.

Furthermore, while the EEOC may have won the battle in round one of this lawsuit, the war is likely far from over. To this end, employers obtained strong ammunition to use going forward, based on certain arguments advanced by the EEOC in pursuing the dismissal of Texas’ case. In furtherance of its lack of standing argument, the EEOC admitted that the guidance is neither “legally binding” nor does it carry with it any “legal consequences.” As such, to the extent the EEOC attempts to rely upon the guidance moving forward as the basis for prosecuting disparate impact cases focused on criminal background checks—particularly in cases where the EEOC alleges that an employer willfully violated Title VII—employers need only turn to the EEOC’s representations to the U.S. District Court for fodder in their own defense. It remains to be seen whether Texas will appeal this ruling.

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Stay Tuned!

This blog previously appeared on the Seyfarth Shaw website’s EEOC Countdown blog here.

Measuring Employee Engagement

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Organizations that successfully engage their employees earn loyalty and can see measurable benefits from higher shareholder returns, according to BI Worldwide. Engaged employees translate to increased productivity, higher quality of work, lower accident and injury rates and higher employee retention.

BI Worldwide explains that companies can encourage employee engagement by creating a culture where loyalty is rewarded.

Also included are trainings to enhance employee performance, safety awareness and wellness programs.

Napa Quake Economic Loss Estimates at $1 Billion

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A state of emergency was declared in California yesterday by Gov.

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Edmund G. Brown due to the effects of a 6.1 magnitude earthquake that rocked the Napa Valley area in northern California. The U.S. Geological Survey estimates that economic losses from the quake could top $1 billion and said there is a 54% likelihood of another large quake, magnitude 5 or higher, within the next week.

As of 4:15 p.m. Sunday, six aftershocks had been reported, four centered near Napa, ranging 2.5 to 3.6 magnitude. Two others, a 2.8 and a 2.6 were reported near American Canyon, according to the USGS.

The Napa quake is the largest in the Bay Area since the 1989 Loma Prieta quake, which was magnitude 6.9. That quake resulted in $1.8 billion in insured claims (in 2013 dollars) being paid to policyholders, said Robert Hartwig, Ph.D., president of the Insurance Information Institute.

In the Napa region, widespread damage has been reported to infrastructure, including roads and utilities and public buildings such as the Napa Post Office, the county’s administration building and numerous homes. The City of Napa reported that as of Sunday afternoon 120 patients had been treated or are being treated. Three patients—two adults and one child—suffered critical injuries, Gov.

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Brown’s office reported., adding that power outages also occurred, affecting 69,000 people across the region.

The costliest earthquake in United States history, was the Northridge Quake, with insured losses totaling $24.1 billion (in 2013 dollars). The U.S. has about 20,000 earthquakes annually, mostly small, and 42 states are at risk of quakes, according to the U.S. Geological Survey.

Despite the known high potential for earthquakes and resulting damages in the state, however, only about 12% of California homeowners purchase earthquake coverage, the I.I.I. said.

Of concern are business interruption (BI) losses, as the Napa region is a popular tourist destination. Many businesses that attract visitors, including wineries and restaurants, have sustained damage, both non-structural and structural, according to EQECAT.

According to the I.I.I.:

Earthquakes in the United States are not covered under standard homeowners or business insurance policies. Coverage is usually available for earthquake damage in the form of an endorsement to a home or business insurance policy. However, insurers that don’t sell earthquake insurance may still be impacted by these catastrophes due to losses from fire following a quake.

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These losses could involve claims for business interruption and additional living expenses as well. Cars and other vehicles are covered for earthquake damage under the comprehensive part of the auto insurance policy.

A Proactive Approach to Travel Risk Management

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An improving economy and updated business practices have contributed to companies sending more employees than ever on international business trips and expatriate assignments. Rising travel risks, however, require employers to take proactive measures to ensure the health and safety of their traveling employees. Many organizations, however, fail to implement a company-wide travel risk management plan until it is too late – causing serious consequences that could easily have been avoided.

The most effective crisis planning requires company-wide education before employees take off for their destinations. Designing a well-executed response plan and holding mandatory training for both administrators and traveling employees will ensure that everyone understands both company protocol and their specific roles during an emergency situation.

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Additionally, businesses must be aware that Duty of Care legislation has become an integral consideration for travel risk management plans, holding companies liable for the health and safety of their employees, extending to mobile and field employees as well.

To fulfill their Duty of Care obligations, organizations should incorporate the following policies within their travel risk management plan:

• A customized policy specific to the organization and the specific needs of traveling employees.

• Clearly communicated protocols that are enforced to help educate and protect the safety and health of traveling employees.

• Response plans and procedures for handling medical/health emergencies.

Proactive Resources for Your Traveling Employees

A travel risk management strategy can only be successful if your workforce is given the necessary resources well before travel occurs. An important part of any travel risk management strategy involves answering common questions employees may have regarding their upcoming travels. It’s also a good idea to provide them with follow-up information so they can be up-to-date.

Not only will a company-wide pro-active travel risk management plan empower employees with the information they need, but implementing such a plan can also help keep your company’s reputation and financial standing in check and prevent any liabilities against your business. The following resources can be useful as part of your overall travel risk management strategy:

  • Travel logistics such as hotel/meeting site location and reservations details, nearby pharmacies and medical clinics, and passport and/or visa arrangements. It is also crucial to share contact information in the event employees need help during an emergency – such as that of your travel assistance partner or internal emergency resources – and encourage them to add this information to their mobile phone contacts.
  • A medical overview is essential, especially if the host country requires visitors have documentation of specific vaccinations. Employees should understand and be up-to-date on all routine vaccinations (such as influenza, measles, and mumps). The CDC’s Travelers’ Health website has valuable information, such as worldwide health alerts, although a travel assistance partner can provide this information directly to your employees prior to travel. Additional insight your company can provide to traveling employees is information about health risks in their destination countries.
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    This ensures employees are well aware of the quality of local food and drinking water as well as where to find quality medical care.

Also, since most health insurance plans do not cover members when they are traveling outside the U.S., businesses should purchase additional coverage. Even if their plans provide coverage outside the U.S., many health insurance policies aren’t able to mitigate all of the risks associated with business travel. It would only take one international medical evacuation (which can cost more than $100,000 from business hubs in Dubai, UAE to New York, or China to Texas) to make a serious impact, not just on your traveling employee but on your company as a whole.

  • A detailed synopsis of the destination’s political standing is crucial to keep your employees safe while traveling, as many regions of the world are experiencing political unrest and living under the very real threat of terrorism. It is important to ensure that your employee benefits package includes security coverage for employees traveling to high-risk areas.

Advance knowledge of the political status of a country will prepare employees should they face an unexpected issue abroad, as would these resources:

  •  American embassies and consulates at the destination country, as well as the State Department’s emergency contact numbers.
  • Travel alerts, which provide information on risks to the security of U.S. citizens. Though usually short-term, these alerts must be taken seriously.
  • The State Department’s Smart Traveler Enrollment Program (STEP) is an extremely reliable resource that provides up-to-date location-specific security updates to any employee enrolled for the destination as well as information on the nearest U.S. Embassy. The enrollment will help U.S. Embassy or nearest U.S. Consulate to be in contact with your traveler in the event of an emergency.

Keep in mind that it is not just traveling employees – but also the employers – who need to be prepared for a travel-related emergency.

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Planning ahead and implementing company-wide crisis management education allows your workforce to be fully aware of the guidelines and protocols. Successfully mitigating a crisis without any communication missteps can prevent a crisis from spiraling into disaster.