The Office of Federal Contract Compliance Programs (“OFCCP”) has issued revisions to the long-standing sex discrimination rules for federal contractors and published the Final Rule in the Federal Register on June 15. The Final Rule goes into effect on August 15, 2016.

The Final Rule addresses compensation discrimination, pregnancy accommodations, discrimination based on gender identity, and sex stereotypes.

Compensation Discrimination: The Final Rule prohibits discriminatory wages, but specifies that OFCCP will use a case-by-case approach in evaluating the pay practices during an audit. OFCCP opted not to adopt a prior iteration that would have required contractors to pay equal wages to similarly-situated employees, but instead is requiring fair pay for comparable work. Therefore, compensation differences stemming from neutral factors, such as tenure, are likely permitted.

Pregnancy Accommodations: The Final Rule is consistent with the 1978 Pregnancy Discrimination Act, which prohibits sex bias on the basis of pregnancy, childbirth, or related medical conditions. The Final Rule requires contractors to provide accommodations to pregnant employees that are comparable to accommodations that would be provided to disabled employees. Some examples of potential pregnancy accommodations are more frequent bathroom/hydration breaks and light-duty assignments.

Transgender Bias: The Final Rule reiterates the 2014 rule that discrimination based on gender identity is prohibited. The Final Rule clarifies that contractors must allow employees to use bathrooms and other segregated specific facilities that are consistent with their gender identity. The rule does not address how contractors in states requiring bathroom usage to correlate with biological sex, such as North Carolina, are to handle the competing directives. The Final Rule also requires contractors to provide equal fringe benefits regardless of gender identity. OFCCP is explicit that excluding medical coverage for an employee’s gender transition will be deemed facially discriminatory. Recognizing that changes to benefit plans may take time, OFCCP said that it will consider contractors’ good faith progress on this front in determining whether an enforcement action is appropriate.

Sex Stereotypes: The Final Rule prohibits sex stereotyping. Sex stereotyping includes judging an employee based on his/her conformance to sex-based appearance norms. Sex stereotyping also encompasses making employment decisions based on stereotypes of “proper roles” of males/females with regard to caregiving. OFCCP cites studies showing that mothers are less likely to be hired and are typically paid less than non-mothers, so prohibits decisions on account of one’s caregiver role. The Final Rule also prohibits limiting roles to a specific sex; however, includes a narrow carve-out where sex is a bona fide occupational qualification because it is “reasonably necessary to the normal operation” of a “particular business or enterprise.”

Contractors should review their policies to ensure compliance with the Final Rule prior to the August 15 effective date.