Citing the need to end discrimination based on sexual orientation, gender identity or gender expression in the executive branch of state government, on April 7, 2016, Pennsylvania Governor Tom Wolf signed Executive Order No. 2016-05, which prohibits private organizations that contract with or are issued grants by the commonwealth from discriminating against applicants, employees and subcontractors on these bases. The Executive Order, which took effect immediately upon Governor Wolf’s signature, is estimated to impact more than 3,500 state contracts and 9,000 agency grantees.

The Governor’s Executive Order

Governor Wolf’s Executive Order requires commonwealth agencies to establish, implement and maintain contract compliance programs to ensure that the commonwealth’s contracts with and grants to private organizations are nondiscriminatory on the basis of sexual orientation or gender identity and expression in three key areas:

  • In the award of contracts and grants;
  • In the hiring and treatment of employees by those who are awarded commonwealth contracts and grants; and
  • In prime contractors’ award of subcontracts and supply contracts for performance under commonwealth contracts and grants.

The Executive Order designates the Department of General Services, the Pennsylvania agency that purchases goods and services for the commonwealth’s government, as the central agency to develop and manage Pennsylvania agency programs. Specifically, the Department of General Services will be responsible for ensuring that discrimination on the basis of sexual orientation or gender identity and expression (in addition to race, gender, creed or color) does not exist with respect to the award, selection or performance of any contracts or grants issued by commonwealth agencies. Agency heads under Governor Wolf’s jurisdiction are required to ensure that their agency’s commitment to the contract compliance program is understood and implemented by all agency employees. The Executive Order likewise vests agency heads with the authority to recommend sanctions to the Secretary of General Services for noncompliance with the new mandate. Where a commonwealth agency’s receipt and use of federal funds are subject to approval and oversight by a federal funding agency, agency heads must comply with the contract compliance requirements imposed by that federal agency as a condition of eligibility for the funds rather than the requirements eventually established by the Department of General Services.

The Executive Order defines sexual orientation to mean heterosexuality, homosexuality or bisexuality. Gender identity or expression is defined more broadly as the gender-related identity, appearance, mannerisms, expression or other gender-related characteristics of an individual regardless of the individual’s designated sex at birth. A number of Pennsylvania municipalities already have laws prohibiting discrimination on the basis of sexual orientation and gender identity or expression (including Philadelphia, Pittsburgh and Harrisburg), even though the Pennsylvania Human Relations Act does not prohibit discrimination on these bases. The Executive Order comes nearly one year after the U.S. Department of Labor’s Office of Federal Contract Compliance Programs’ final rule implementing President Obama’s Executive Order No. 13672 (Jul. 21, 2014), which prohibits federal contractors and subcontractors from discriminating on the basis of sexual orientation or gender identity, went into effect.

What This Means for Employers

Governor Wolf’s Executive Order applies only to businesses that contract with the commonwealth or receive grants issued by the state and does not apply to private employers who do not hold a commonwealth contract or grant. Employers who are uncertain as to whether they are a state contractor or grant recipient subject to the Executive Order should consider reviewing this issue with their legal counsel.

Private employers that contract or subcontract with the commonwealth or that receive grants from the Department of General Services may want to ensure that their equal employment opportunity policies (including non-discrimination and anti-harassment policies) and subcontractor procurement policies prohibit discrimination on the basis of sexual orientation and gender identity or expression as defined in Governor Wolf’s Executive Order. Any changes to these policies also should be incorporated into employee handbooks and other related policy documents. Updates should be sent to all existing employees (or, at a minimum, those responsible for dealing with compliance or procurement with respect to state contracts and grants) to ensure their knowledge of and compliance with the requirements of the Executive Order.