On July 21, 2014, President Obama issued an executive order that amends Executive Orders 11478 and 11246 by adding LGBT anti-discrimination protections. President Obama took this action after Congress failed to pass the Employment Non-Discrimination Act, which would have prohibited all employers with fifteen or more employees from discriminating based on “sexual orientation” or “gender identity.”
Executive Order 11478 protects federal employees against certain types of discrimination. When President Nixon issued Executive Order 11478 in 1969, it barred discrimination “because of race, color, religion, sex, national origin, handicap, or age.” Subsequently, President Clinton amended Executive Order 11478 to include “sexual orientation.” President Obama’s executive order, which is effective immediately, provides further protections for federal employees by prohibiting discrimination based on “gender identity.”
Executive Order 11246, which President Johnson issued in 1965, only governs federal contractors and federally-assisted construction contractors and subcontractors who perform more than $10,000 in Government business in one year. Since 1965, these employers have been prohibited from discriminating against any employee or applicant for employment on the basis of “race, color, religion, sex, or national origin.”
President Obama’s executive order adds “sexual orientation” and “gender identity” to the list of protected categories. Within ninety days of President Obama’s executive order, the Department of Labor must prepare regulations to enforce the new prohibitions against “sexual orientation” and “gender identity” discrimination. These regulations will only “apply to contracts entered into on or after the effective date” of the Department of Labor’s regulations.
Notably, President Obama’s executive order does not grant an exemption to religiously affiliated contractors that oppose gay rights. However, President Obama left untouched the religious exemption instituted by President George W. Bush through Executive Order 13279. Executive Order 13279 allows religiously affiliated contractors to consider religion when hiring. This means that despite President Obama’s executive order, a male applicant for a nonreligious position within a Catholic organization may be rejected because he is not Catholic, but not because he is homosexual or identifies as a female.
What does this mean for businesses?
President Obama’s executive order will likely do little to increase Executive Order 11478’s scope. The Equal Employment Opportunity Commission has already held that discrimination due to an individual being transgender qualifies as sex discrimination under Title VII of the Civil Rights Act of 1964. Other federal agencies also take this view. Accordingly, President Obama stated he added “gender identity” because he believed it is important to have an explicit prohibition.
Although the White House announced the July 21st executive order will affect 24,000 companies with federal contracts that collectively employ one-fifth of the nation’s workforce, this executive order will likely have a limited impact in the District of Columbia and Maryland. This is because these jurisdictions’ employment non-discrimination laws already cover “sexual orientation” and “gender identity.”
President Obama’s executive order could have a more substantial impact in Virginia. In January 2014, Governor McAuliffe issued Executive Order Number One, which bans employment discrimination based on “sexual orientation” and “gender identity,” but these protections only extend to state employees. Further, the White House noted 91% of Fortune 500 companies have “sexual orientation” non-discrimination polices and 61% of Fortune 500 companies prohibit discrimination based on “gender identity.” These percentages of Fortune 500 companies might include federal contractors located in Virginia.
Despite these efforts by private companies, the District of Columbia, and Maryland, federal contractors that fall within Executive Order 11246 may have to comply with federal regulations that are more stringent than their internal rules or local laws. The impact of President Obama’s executive order will likely not be apparent until the Department of Labor announces the new regulations for “sexual orientation” and “gender identity” discrimination in the coming months.