On July 21, 2014, President Obama issued an Executive Order that makes it illegal for federal government contractors to discriminate on the basis of sexual orientation or gender identity. The Executive Order amends Executive Order 11246, first issued in 1965, which prohibits federal government contractors and subcontractors from discriminating against an employee or applicant for employment because of that person's race, color, religion, sex or national origin. The Executive Order does not contain a religious exemption that many had believed might be included in the wake of the U.S. Supreme Court's recent decision in Burwell v. Hobby Lobby Stores, Inc., which was discussed in a previous Duane Morris Alert.

This step to expand workplace protections for lesbian, gay, bisexual and transgender individuals was widely anticipated in light of stalled federal legislative action on the Employment Non-Discrimination Act, which would prohibit employment discrimination by nearly all private employers on the basis of sexual orientation or gender identity. Currently, only 18 states, as well as numerous cities and municipalities, have laws prohibiting workplace discrimination based on sexual orientation or gender identity. This new expansion of Executive Order 11246's protections for employees of federal government contractors and subcontractors is particularly significant because employees of federal contractors and subcontractors comprise a substantial portion—approximately 20 percent—of the nation's workforce.

The Executive Order directs the Secretary of Labor to develop regulations to implement the non-discrimination provisions of the Order within 90 days. The prohibitions against discrimination on the basis of sexual orientation and gender identity will apply to contracts entered into on or after the effective date of the regulations issued by the U.S. Department of Labor, which is anticipated to be in early 2015.

What This Means for Employers

The new Executive Order applies only to federal government contractors and subcontractors and does not apply to private employers who do not hold a federal government contract or subcontract. Accordingly, employers who do not know whether or not they are a federal contractor or subcontractor subject to Executive Order 11246 may want to review this issue with legal counsel.

In addition, federal contractors and subcontractors may want to review their employment policies—particularly policies on equal employment opportunity and anti-harassment—to ensure that they prohibit discrimination and harassment on the basis of sexual orientation and gender identity. Federal contractors and subcontractors may also consider training managers and employees regarding these new protections, to the extent the contractor does not already have such protections in place.

Finally, this expansion of Executive Order 11246, which imposes affirmative action obligations on federal contractors and subcontractors, is only one of several recent changes to the laws, regulations and executive orders governing affirmative action for federal contractors and subcontractors. Now—before the federal government conducts an audit—is the time for federal contractors and subcontractors to consider reviewing their affirmative action plans, personnel and recruitment practices, compensation systems and recordkeeping, among other things, to ensure affirmative action compliance.