For the first time since 1970, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) is updating its sex discrimination guidelines for federal contractors. These updates, announced last week, will become effective on August 15, 2016. Most companies subject to the OFFCP’s oversight – including businesses that perform work for the federal government under contracts worth at least $10,000 – will only need to make few, if any, changes to their current practices as a result of these guidelines. Yet employers should focus on the OFCCP’s broad interpretation of sex discrimination as there may be additional implications.

The agency’s fact sheet accompanying the final rule touts that the rule will bring its sex discrimination guidelines “from the ‘Mad Men’ era to the modern era.” The new rule arguably imposes requirements on federal contractors beyond what federal anti-discrimination laws already require. The final rule remains generally unchanged from the proposed rule announced on January 30, 2015.

In the OFFCP’s FAQ page discussing the final rule, the OFCCP explains that it expects that federal contractors “are already complying with most, if not all, of these obligations.” In fact, the agency estimates that the rule will impose a one-time cost of just $83 per contractor company for the time it will take businesses to become familiar with the new guidelines.

However, despite these assurances, contractors should be aware that the OFCCP interprets sex discrimination broadly in the final rule. For example, although the courts generally lack consensus as to a precise definition of which specific actions constitute unlawful sex discrimination, the OFCCP has adopted positions taken in its earlier directives. These earlier directives prohibit discrimination based on gender identity or transgender status and permit the use of disparate impact theory to investigate pay discrimination.

The OFCCP described the existing guidelines from 1970 as “out of touch with current law and with the realities of today’s workforce and workplaces” in its fact sheet, and the agency also put out a chart explaining its changes to the existing guidelines. Specifically, the new OFCCP guidelines require that federal contractors:

  • Prohibit discrimination and harassment on the basis of sex, pregnancy (as well as childbirth and related medical conditions), sexual orientation, transgender status, and gender identity – including any negative treatment based on sex stereotypes or for failing to conform with gender-based norms and expectations
  • Provide reasonable accommodations, including light duty assignments and disability leave, for pregnancy, childbirth, and related medical conditions on the same basis as leave and other accommodations for disabilities and occupational injuries
  • Extend leave, flexible workplace arrangements, and other benefits associated with child care on an equal basis to both mothers and fathers, and prohibit the use of stereotypes that assume women are more likely to take care of children
  • Provide pay and fringe benefits to men and women on an equal basis – even if the costs of a certain benefits such as health insurance cost more for women than men
  • Allow employees to use bathrooms, changing rooms, and similar facilities that correspond with their gender identity

The final rule explains that the OFCCP will use a “disparate impact” analysis when investigating allegations of unequal pay and other sex-based discrimination, meaning that practices which lead to disparities between male and female workers are unlawful unless they are job related and consistent with a business necessity (although the OFCCP will consider legitimate, non-discriminatory factors, such as work experience and tenure, that contribute to disparities). The new guidelines on sex discrimination also clarify that efforts to recruit women to comply with affirmative action requirements are not unlawful.

Additionally, the final rule recommends, but does require, that federal contractors follow certain “best practices,” including:

  • Designating gender-neutral, single-user bathrooms
  • Avoiding the use of gender-specific job titles (such as “foreman” or “lineman”) where gender-neutral alternatives are available

There is no question that the OFCCP has taken an expansive view of what constitutes sex discrimination in its final rule that will take effect August 15. While these guidelines do not purport to change existing requirements for federal contractors, this is a good opportunity for employers to review their policies to ensure they are in compliance with the law.