The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) issued a final rule (LGBT Rule) prohibiting federal contractors and subcontractors from discriminating in employment on the basis of sexual orientation or gender identity. The LGBT Rule,published in the Federal Register on December 9, 2014, will apply to non-construction contractors and subcontractors, as well as federally assisted construction contractors and subcontractors, that hold contracts of US$10,000 or more entered into or modified on or after April 8, 2015 (collectively, contractors). 

Background 

The LGBT Rule implements Executive Order (EO) 13672, which President Obama issued this summer. That EO amended EO 11246 to add “sexual orientation” and “gender identity” to the list of protected classes already applicable to contractors, which includes race, color, religion, sex, and national origin. Contractors are subject as well to rules concerning disability and veteran status, which were expanded by OFCCP in another initiative that went into effect earlier this year.

Effect of the LGBT Rule

In practical terms, the LGBT Rule requires that contractors

  • not take adverse employment actions against employees or applicants on the basis of sexual orientation or gender identity (while some states and localities already prohibit discrimination on these bases, and the federal Equal Employment Opportunity Commission has taken the position with some success that these forms of discrimination may constitute a form of sex discrimination under Title VII, the LGBT Rule makes this a more prominent compliance issue for contractors);
  • update the equal opportunity clause contained in new or modified subcontracts and purchase orders to reference sexual orientation and gender identity;
  • include in job solicitations or advertisements language stating that it considers all applicants for employment without regard to sexual orientation or gender identity (while the relevant rule says contractors could simply include the phrase “An Equal Opportunity Employer,” that would not be sufficient for contractors subject to the OFCCP rules concerning veterans or individuals with disabilities, which impose enhanced obligations to include specific job solicitations/advertisements language); and
  • post new workplace notices issued by the government that include references to sexual orientation and gender identity.

Although EO 13672 says contractors must take affirmative action to assure nondiscrimination, unlike contractors’ affirmative actions obligations with respect to certain other protected classes, the LGBT Rule does not require contractors to (1) collect any information about sexual orientation or gender identity, or request that employees voluntarily self-identify as having a particular sexual orientation or gender identity; (2) conduct any compensation, hiring, or other statistical data analysis with respect to sexual orientation or gender identity; or (3) set placement goals on the basis of sexual orientation or gender identity. However, OFCCP reserves the right to consider both statistical and nonstatistical evidence in evaluating contractor compliance with the LGBT Rule’s nondiscrimination obligations.

The LGBT Rule does not expand the exemption for religious employers to allow discrimination on the basis of sexual orientation or gender identity. The current rule only allows religious employers to favor the employment of individuals of a particular religion in certain circumstances. 

What should federal contractors do?

Federal contractors and subcontractors should prepare now to be in full compliance with the LBGT Rule no later than the effective date by, among other things,

  • implementing the specific actions required by the LGBT Rule;
  • updating antidiscrimination and harassment policies and procedures that are issued to employees to include sexual orientation and gender identity (if they do not already do so); and
  • conducting training to ensure compliance with the LGBT Rule.