On June 14, 2016, the US Department of Labor’s (DOL) Office of Federal Contract Compliance Programs (OFCCP) issued a final rule updating the sex discrimination guidelines governing federal contractors for the first time in 40 years. The new rule pulls together legal issues covered by Title VII of the Civil Rights Act of 1964, the Pregnancy Discrimination Act and the Equal Pay Act. The new rule becomes effective August 15, 2016, and will apply to employers with federal contracts or subcontracts totaling US$10,000 or more over a 12-month period. According to the OFCCP, the purpose of the new rule is to implement the provisions of Executive Order 13672, which President Obama issued in July 2014, and to bring the OFCCP sex discrimination guidelines into alignment with recent case law and US Equal Employment Opportunity Commission (EEOC) guidance on Title VII.

The new rule is organized into eight sections, with an appendix of non-mandatory best practices. Key provisions of the new rule include the following:

  • The final rule contains an expanded definition of “sex” to include pregnancy, childbirth or related medical conditions; gender identity; transgender status; and sex stereotyping. Sexual orientation is notably absent from this definition. During the comment period, the OFCCP was asked to add sexual orientation to the list of sex discrimination prohibitions but declined, noting that it remains unsettled whether sexual orientation is encompassed within the word “sex” under Title VII. Although the OFCCP indicated it would continue to monitor developments in this area, it is unclear whether the agency will revisit the issue in the future.
  • The OFCCP now recognizes four distinct types of sex stereotyping claims: (1) dress, appearance and/or behavior; (2) gender identity or transgender status; (3) jobs, sectors or industries in which it is considered appropriate for women or men to work; and (4) caregiving roles.
  • The OFCCP will treat discrimination based on an employee’s or applicant’s gender identity or transgender status as sex discrimination. Contractors are also now required to allow employees to use the restrooms, changing rooms, showers and similar facilities consistent with the gender with which each worker identifies. This change tracks recent administrative guidance on bathroom access from the EEOC, the DOL, the US Department of Justice and the US Department of Education. The OFCCP’s new rule also prohibits employers from treating employees or applicants adversely because they have received, are receiving or are planning to receive transition-related medical services designed to facilitate the adoption of a sex or gender other than the individual’s designated sex at birth. This change largely tracks administrative guidance issued last year by the US Department of Health and Human Services.
  • Under the new rule, covered contractors are prohibited from paying different compensation to similarly situated employees because of their sex. And covered contractors may not discriminate on the basis of pregnancy, childbirth or related medical conditions, including with regard to fringe benefits.

Given the August 15, 2016 implementation date, covered employers should begin to audit their workplace policies and benefits programs now in order to ensure timely compliance. To that end, employers should consider taking the following basic steps:

  • Employers that extend health insurance coverage should review their plans for categorical exclusions, such as excluding health services related to gender transitions.
  • Employers should consider updating their training programs to ensure employees avoid applying preconceived notions about how employees should dress or carry themselves.
  • Employers should consider implementing the OFCCP’s best practices, which are included in the new rule’s appendix. These suggested practices include (1) avoiding the use of gender-specific job titles such as “foreman” when gender-neutral alternatives are available; (2) designating single-user restrooms as unisex; (3) making changing rooms or showers sex-neutral; and (4) making sure fringe benefits are available to men and women equally.