On June 14, 2016, the Office of Federal Contract Compliance Programs (OFCCP) published a final rule substantially revising its prior, 1970s-era Sex Discrimination Guidelines for federal contractors and subcontractors covered by E.O. 11246. According to OFCCP, “it is important that we bring these old guidelines from the ‘Mad Men’ era to the modern era, and align them with the realities of today’s workplace and legal landscape.” Thus, per OFCCP, the rule codifies OFCCP’s and the U.S. Equal Employment Opportunity Commission’s (EEOC’s) current interpretation of sex discrimination law, provides examples of discrimination on the basis of sex, and offers suggested “best practices” for employers.

  • The new guidelines go into effect Aug. 15, 2016, and have been specifically updated to include explicit protections regarding pay discrimination, hostile work environment harassment, pregnancy bias, family caregiving discrimination, and workplace accommodations for pregnant workers.
  • The guidelines also include detailed provisions against discrimination based on gender stereotypes, sexual orientation, gender identity and transgender status.

Some of the new guidelines will be of no surprise to employers, merely echoing existing case law and recent OFCCP/EEOC interpretations. Other provisions are more aggressive in scope and provide a preview of coming attractions for all employers about agency enforcement posture (regardless of whether an employer is a federal contractor), despite OFCCP’s assurance that “the requirements for affected entities are largely unchanged by this rule.”

Highlights of the New Guidelines

In general, the new guidelines:

  • Clarify the definition of “sex” to include sexual orientation, gender identity, transgender status, pregnancy and stereotypes about sex roles.
  • Prohibit discrimination on the basis of sex with regard to fringe benefits such as (a) medical, hospital, accident, life insurance and retirement benefits; (b) profit sharing and bonus plans; (c) leave; and (d) other “terms, conditions, and privileges of employment.”
  • State that contractors may not “pay different compensation to similarly situated employees on the basis of sex” and clarify that the OFCCP defines “similarly situated” broadly, looking for both disparate treatment and disparate impact when analyzing compensation.
  • Incorporate language from the federal Pregnancy Discrimination Act of 1978 regarding prohibitions against pregnancy discrimination.
  • Incorporate language from the Lilly Ledbetter Fair Pay Act of 2009 regarding the recovery of lost wages in gender discrimination compensation actions, including OFCCP’s position regarding the asserted trigger for when the statute of limitations begins to run for such claims.
  • Provide examples of alleged unlawful pregnancy discrimination, to include: (i) requiring employees to go on leave because they are pregnant or have children; (ii) requiring a doctor’s note in order for a pregnant employee to continue or resume working; and (iii) providing health insurance that does not cover hospitalization and other medical costs for pregnancy, childbirth or related medical conditions to the same extent provided to non-pregnancy related medical conditions.
  • Incorporate agency enforcement positions (arguably beyond that outlined in Young v. United Parcel Service) regarding the obligation of employers to reasonably accommodate employees unable to perform job duties because of pregnancy, childbirth or related medical conditions (e.g., by proving extra bathroom breaks, modified job duties and light-duty assignments).
  • State that sex discrimination includes adverse employment decisions based on stereotypes such as failure to conform to gender norms and expectations for “dress, appearance and/or behavior.”
  • Wade into the recent North Carolina HB2, federal Title IX and federal Title VII national controversy, directing that contractors must allow transgender employees access to “restrooms, changing rooms, showers or similar facilities” that are consistent with the gender with which the workers identify.
  • Assert in the preamble that a categorical exclusion of employee insurance coverage for care related to gender dysphoria or gender transition is “facially discriminatory because such an exclusion singles out services and treatments for individuals on the basis of their gender identity or transgender status, and would generally violate E.O. 11246’s prohibitions on both sex and gender identity discrimination.”
  • Encourage employers to adopt a variety of OFCCP-approved “best practices” included as an appendix to the final rule, some of which are common-sense approaches already implemented by many employers (e.g., “[p]roviding appropriate time off and flexible workplace policies for men and women”), and others of which are likely to draw political fire (e.g., “[a]voiding the use of gender-specific job titles such as ‘foreman’ or ‘lineman’ where gender-neutral alternatives are available”).

OFCCP Resources

The OFCCP has released a number of resources to accompany its new Sex Discrimination Guidelines, including:

Practical Steps for Contractors (and Other Employers)

For contractors who have been attentive to their Title VII and state law obligations as to prohibited sex discrimination, the updated guidelines offer little change in most areas impacting employees and some larger-scale changes with respect to others. Thus, as a starting point, below are a few practical steps that federal contractors and subcontractors (and all employers) can take to review compliance:

  1. Review health care plans for categorical exclusions that could be deemed discriminatory under the new regulations (e.g., related to gender transition).
  2. Review policies and practices to ensure that women are given the same opportunities as men (e.g., with respect to promotions, pay raises and “talent development”). The OFCCP will be looking at gender-neutral practices that may have a disparate impact on women by denying them the opportunity to advance.
  3. Review policies and practices to ensure that “sex stereotypes” play no role in decision-making (e.g., assigning lifting responsibilities to male employees in the belief that female employees generally may not be strong enough to perform the task).
  4. Consider implementing some of the OFCCP’s suggested best practices.