On June 14, 2016, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) published its Final Rule (Rule) revising sex discrimination regulations applicable to federal contractors, which were unchanged since 1970. Specifically, the Rule provides guidelines that generally apply to any business or organization that

  • holds a single federal contract, subcontract or federally assisted construction contract in excess of $10,000;
  • has federal contracts or subcontracts that, combined, total in excess of $10,000 in any 12-month period; or
  • holds government bills of lading, serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount.

The Rule is intended to protect millions of employees and applicants, both male and female, who work or seek to work for federal contractors. It is not necessary that employees work on a federal contract to be covered; they need only work for a company that holds a covered federal contract or subcontract.

The original guidelines were first promulgated in 1970 to enforce Executive Order 11246, issued by President Lyndon Johnson in September 1965. E.O. 11246 prohibits employment discrimination by a federal contractor against any employee or applicant on the basis of sex, among other qualities. In July 2014, President Obama amended E.O. 11246 to include sexual orientation and gender identity. The former guidelines were extremely outdated – they had not been amended substantively since they were adopted in 1970 – and no longer provided accurate or sufficient guidance to contractors regarding their nondiscrimination obligations. The Rule generally aligns OFCCP’s regulations with Title VII of the Civil Rights Act of 1964, as interpreted by courts and the EEOC. While they are not binding upon employers who have no federal government contracts, the new guidelines should interest those employers because they are intended to be consistent with current federal case law and Title VII.

In the updated guidelines, the term “sex” has been expanded to include pregnancy, childbirth or related medical conditions; gender identity; transgender status; and sex stereotyping. The guidelines also address sexual harassment, which was not included in the original 1970 guidelines. The Rule includes these key changes and explicit protections for employees:

Expands the definition of sex to provide protection for transgender status and gender identity.

Under the original guidelines, sex was identified as a separate protected category. The Rule clarifies that sex includes gender identity and transgender status and makes employment discrimination on those bases unlawful.

Prohibits employment decisions based on sexual stereotypes.

A contractor may not treat employees or applicants adversely because they fail to comply with expectations about how women or men should look or act or what kinds of jobs they should perform.

Prohibits sexual harassment.

A contractor is prohibited from allowing unwelcome sexual advances, requests for sexual favors, offensive remarks about a person’s sex, and other verbal or physical conduct of a sexual nature when such conduct unreasonably interferes with an individual’s work performance, becomes the basis for employment decisions or creates a hostile working environment.

Requires equal treatment for employees affected by pregnancy, childbirth or related medical conditions.

A contractor is prohibited from denying accommodations for pregnancy, childbirth or related medical conditions where

  • the contractor denies accommodations only to employees affected by pregnancy, childbirth or related conditions;
  • the contractor provides accommodations to other employees whose ability or inability to perform their job duties is similarly affected; the denial of accommodations to employees affected by pregnancy, childbirth or related medical conditions imposes a significant burden on those employees; and the contractor’s asserted reasons for denying accommodations do not justify that burden; or
  • intent to discriminate is otherwise shown, for example, by evidence of managers making discriminatory statements when denying requested accommodations.

This aspect of the Rule is intended to follow the 2015 U.S. Supreme Court decision in Young v. United Parcel Service, applicable to contractor and non-contractor employers.

Provides equal benefits to male and female employees participating in fringe-benefit plans.

A contractor is prohibited from discriminating on the basis of sex with regard to fringe benefits including medical, hospital, accident, life insurance and retirement benefits; profit-sharing and bonus plans; leave; and other terms, conditions and privileges of employment.

Protects male and female employees regarding caregiving activities and responsibilities.

A contractor may not treat female or male employees or applicants differently based on a stereotypical assumption that women or men are more likely to have caregiving responsibilities. For example, a contractor may not deny mothers employment opportunities that are available to fathers based on the assumption that childcare responsibilities will conflict with job performance. Similarly, contractors may not deny flexible workplace arrangements to a father based upon the assumption that only a mother assumes childcare responsibilities.

Promotes fair pay practices and equal access to jobs and workforce development opportunities.

A contractor may not have requirements for jobs or training based on an applicant’s or employee’s sex unless the contractor can meet the high bar of demonstrating that such requirements are a bona fide occupational qualification. Additionally, a contractor may not set requirements, such as height or weight qualifications, that adversely affect applicants because of their sex unless the qualifications are job-related and consistent with business necessity.

The Rule goes into effect on August 15, 2016. While it generally aligns with current law under Title VII of the Civil Rights Act of 1964, as interpreted by courts and the EEOC, meaning that most employers are already subject to many of its provisions, employers should consider reviewing their policies and providing training for employees to ensure compliance.