On Tuesday, June 14, 2016, the Office of Federal Contract Compliance Programs (“OFCCP”) announced a Final Rule that updates its sex discrimination regulation, which apply to federal contractors and subcontractors, including those performing work under federally assisted construction contracts. The new regulations contained in the Final Rule were published in the June 15 Federal Register and go into effect August 15, 2016.

These new regulations cover not only discrimination based on sex, but also pregnancy, childbirth, pregnancy or childbirth-related medical conditions, gender identity, transgender status and/or gender stereotyping. In this regard, the new rules require that contractors provide job-guaranteed family leave, including any paid leave, for male employees on identical terms that family leave is provided for female employees. Similarly, the new rules require that contractors provide equal benefits and equal contributions for male and female employees participating in fringe-benefit plans, as well as accommodations for pregnancy, childbirth or related medical conditions consistent with accommodations provided to other workers similar in their ability or inability to work, such as workers with disabilities or occupational injuries.

Relevant to recent news events, the rules also specifically clarify that sex discrimination includes discrimination based on an individual’s gender identity, as well as the adverse treatment of employees because they do not conform to gender norms and expectations about appearance, attire and behavior. Notably, the regulations require that contractors allow a transgender person to use the restroom of his or her choice.

The new rules also provides greater protections for compensation discrimination, deeming employees “similarly situated” if they are “comparable” in terms of some tasks performed, skills, efforts, levels of responsibility, working conditions, job difficulty, minimum qualifications and other objective factors, even if they are not similar to others. (Note that this “comparable” standard is different than the traditional “equal” standard set forth under the Equal Pay Act, and is a similar term as that used in the recent California Equal Pay Law.)

The rules also clarify that compensation discrimination can result from job segregation or classification on the basis of gender – and not just unequal pay for work – and require employers to justify any employment policies or practices that have an adverse impact on the basis of sex as being job-related and consistent with business necessity.

Most notably, the OFCCP takes the position that these new regulations are mandatory and binding on federal contractors and subcontractors, taking the place of the previous precatory guidelines on sex discrimination, which had been in place since 1970.