Executive Summary: On June 14, 2016, the Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) published its updated sex discrimination rule for federal contractors and subcontractors. The Final Rule, "Discrimination on the Basis of Sex," takes effect today, August 15, 2016. The Rule implements the requirements of Presidential Executive Order 11246 (E.O. 11246), which prohibits covered federal contractors and subcontractors from discriminating against their employees on a number of grounds, including sex. The OFCCP's sex discrimination rule was last updated in 1970, and the new rule incorporates many legal developments that have occurred since that time.

The rule applies to any business or organization that (1) holds a single federal contract, subcontract or federally assisted construction contract in excess of $10,000; (2) has federal contracts or subcontracts that, combined, total in excess of $10,000 in any 12-month period; or (3) holds government bills of lading, serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount.

Requirements of the New Rule

The new rule clarifies the OFCCP's interpretation of E.O. 11246 as it relates to sex discrimination and aligns its guidelines with Title VII case law and the Equal Employment Opportunity Commission's (EEOC's) interpretations of Title VII.

Important changes in the Final Rule include:

  • Clarifying that the term "sex discrimination" now includes, but is not limited to, discrimination on the basis of sex, pregnancy, childbirth, or related medical conditions, gender identity, transgender status and sex stereotyping;
  • Requiring contractors to provide workplace accommodations where needed because of pregnancy, childbirth, or related medical conditions;
  • Prohibiting contractors from paying workers differently because of their sex;
  • Clarifying that the prohibition on sex discrimination includes fringe benefits such as medical, hospital, accident and life insurance, retirement benefits, profit-sharing and bonus plans, leave, and other terms, conditions and privileges of employment;
  • Providing that the term "harassment because of sex" now includes harassment based on gender identity, pregnancy, childbirth or related medical conditions, and harassment because of sex or sex-based stereotypes even if it is not sexual in nature;
  • Prohibiting sex-based requirements for jobs and training unless the contractor can meet the high bar of demonstrating that such requirements are a bona fide occupational qualification;
  • Prohibiting treating female and male employees differently based on the stereotypical assumption that women are more likely to have caregiving responsibilities;
  • Clarifying that sex discrimination now includes discrimination because of an employee's gender identity – the term "gender identity" now refers to one's internal sense of one's own gender, and it may or may not correspond to the sex assigned to a person at birth, and may or may not be made visible to others;
  • Requiring contractors to allow workers to use bathrooms, changing rooms, showers and similar facilities consistent with the gender with which the worker identifies; and
  • Prohibiting discrimination based on failure to comply with expectations about how women and men should look or act or what kinds of jobs they should perform.

The Bottom Line:

Because the provisions of the new rule align with already existing federal and state law, contractors are likely already in compliance with most, if not all, of these obligations. Accordingly, the rule may not require significant changes by most covered contractors and subcontractors. Still, it is important that contractors are aware of the changes and consult with their labor and employment counsel to ensure they are in compliance.