On January 30, 2015, the Office of Federal Contract Compliance Programs (OFCCP) published a Notice of Proposed Rulemaking (NPRM) in the Federal Register to rescind and replace the OFCCP's Sex Discrimination Guidelines. These significant proposed regulations would rescind the current Sex Discrimination Guidelines at 41 CFR part 60-20, issued in 1970, as well as create substantially revised new sex discrimination guidelines to address current issues in the workplace and to align OFCCP's rules with current law, including under Title VII of the Civil Rights Act of 1964. The proposed regulations are open for public comment until March 31, 2015.

Companies that provide goods or services to a federal agency, receive federal funds for a construction project or provide goods or services to another company that supplies a federal agency or receives construction funds are considered federal contractors or federal subcontractors. Any business or organization that holds a single federal contract, subcontract or federally assisted construction contract in excess of $10,000 or that has federal contracts or subcontracts that combined total in excess of $10,000 in any 12-month period will be subject to requirements under one or more of the laws enforced by OFCCP. The OFCCP administers the equal opportunity requirements of three federal authorities that prohibit federal contractors and subcontractors from discriminating based on race, color, religion, sex, national origin, disability and veteran status.

Many of the additions and changes set forth in the proposed regulations echo current law seen elsewhere, but some provisions are new. Among the more significant new changes discussed below, the revised regulations require contractors to provide childcare for men on the same terms as it is available for women and to prepare for increased scrutiny about whether male and female employees are "similarly situated" for purposes of equal employment opportunity (EEO) pay analysis. In addition, these regulations provide the first specific federal guidance that employment actions based on stereotypes about how a particular sex looks, speaks or acts, or stereotype-based discrimination on the basis of gender identity are a form of employment discrimination.

Many Changes Are Consistent with Existing Law Applicable to Contractors

While these changes to the regulations are substantive, most are consistent with current law as set forth in Title VII, the Pregnancy Discrimination Act (PDA) and applicable case law. Some aspects of the pregnancy accommodation provisions in the new proposed section 60-20.5 are in line with recent state law developments; for example, contractors must provide workplace accommodations to women affected by pregnancy, childbirth and related conditions, ranging from extra bathroom breaks to light-duty assignments. Other pregnancy-related provisions merely mimic existing federal guidance. As seen in the PDA, the new rules prohibit employers from treating employees differently on the basis of pregnancy, including limiting a pregnant employee's job duties based solely on the fact that she is pregnant or requiring a doctor's note in order to continue to work when such notes are not required for similarly situated employees. This last requirement may change depending on the Supreme Court's impending decision in Young v. United Parcel Service, Inc., where the Court will decide whether the PDA prohibits an employer from denying an accommodation to pregnant workers that is available to other employees, even if it is available only to other employees who are disabled.

Gender-Based Pay Discrimination

Section 60-20.4 of the proposed regulations also reflects OFCCP's continued focus on gender-based pay discrimination. This section addresses the relevant factors to be considered in determining if employees are "similarly situated" for purposes of EEO pay analysis, including tasks performed, skills, effort, levels of responsibility, working conditions, job difficulty and minimum qualifications. The proposed rule provides that employees may be similarly situated if they are comparable on some of these factors, even if they are not similar on others. Contractors should therefore prepare for OFCCP compliance evaluations based on these new standards. It may also be prudent for contractors to document their rationale for determining what constitutes similarly situated pay measurement groups, especially considering the OFCCP's use of "pay analysis groups" in compliance evaluations, pursuant to OFCCP Directive 307. Section 60-20.4(d) also addresses the role that performance review systems play in pay equity and suggests that the OFCCP may focus more on such review systems than it has in the past, seeking to determine whether those systems have a gender-based adverse impact.

Sex Stereotyping

One key new provision of the proposed regulations, Section 60-20.7, states that disparate treatment based on dress or personal appearance and other forms of sex stereotyping constitutes sex discrimination. For example, employment actions based on stereotypes about how a particular sex looks, speaks or acts, or stereotype-based discrimination on the basis of gender identity, are discrimination. Although the Equal Employment Opportunity Commission (EEOC) issued a guidance in 2007 on the topic, until now, there has not been a specific federal provision prohibiting discrimination on this basis. The NPRM also addresses disparate treatment based on gender identity, providing protections for transgender employees.

Additionally, the proposed regulations clarify that childcare must be available for men on the same terms as it is available for women and that adverse treatment of an employee because of gender-stereotyped assumptions about family caretaking responsibilities is discrimination. Some courts have already recognized, based on Title VII and/or the PDA, that discrimination based on gender stereotypes concerning caregiving responsibilities may be protected. The proposed regulations take this a step further in prohibiting gender stereotyping in childcare.

What This Means for Employers

These updated guidelines continue a growing trend toward increased protections for workers based on sex and gender, including pregnancy and sex stereotyping. The proposed regulations are yet another indication of OFCCP's continued focus on gender-based pay discrimination and may serve as a timely reminder for employers to consider consulting with an employment attorney to revise and update their equal employment opportunity and leave policies, along with their compensation systems and practices, to ensure compliance with applicable law prohibiting discrimination on the basis of sex, gender and/or pregnancy—regardless of whether changes are made to the proposed regulations in the final version.