(Rule) updating the Office of Federal Contract Compliance Programs (OFCCP) Sex Discrimination Guidelines, which had not been updated since the 1970s, despite drastic changes in the law. According to OFCCP, the rule is meant to “address the realities of today’s workplaces” and the variety of “sex-based barriers to employment and fair pay,” including compensation discrimination, sexual harassment, gender identity, and pregnancy bias.

What Does the Rule Change? When does it Apply and to Whom?

The Rule replaces outdated guidance with OFCCP’s recent interpretations of Executive Order 11246 and OFCCP’s and the Equal Employment Opportunity Commission’s recent interpretations of Title VII of the Civil Rights Act of 1964 (Title VII).

The Rule takes effect on August 15, 2016. It applies to employers with federal contracts or subcontracts totaling $10,000 or more, unless otherwise exempt. The Rule applies to all employees who work for a covered employer. As such, the Rule’s application is not limited to employees who work on a federal contract.

What New Topics Does the Rule Cover?

The Rule is comprehensive, covering many topics related to sex discrimination. Some of the current hot topics in the new Rule are as follows:

  • Transgender Employees: The Rule provides that discrimination on the basis of an employee’s gender identity or transgender identity is unlawful sex discrimination. Additionally, the Rule prohibits contractors from denying transgender employees access to use bathrooms, changing rooms, showers, and similar facilities consistent with the gender with which they identify. The preamble of the rule also notes that a contractor’s categorical exclusion of medical coverage for care related to gender transition or gender dysphoria may constitute unlawful sex discrimination if it singles out services on the basis of gender identity or transgender status.1
  • Pregnancy Discrimination/Accommodations: The Rule goes beyond the traditional requirement that contractors must treat women affected by pregnancy, childbirth, or related medical conditions at least as well as others for all employment-related purposes, including fringe-benefit programs. Additionally, the Rule provides a non-exhaustive list of “related medical conditions,” including, lactation, gestational diabetes, and other after-effects of delivery. Contractors must generally provide workplace accommodations to an employee who needs such accommodations due to pregnancy, childbirth, or related medical conditions, particularly if the employer grants similar accommodations to other employees who are unable to perform their regular job duties because of work injuries or disabilities. The Rule also provides practical examples of leave policies and reasonable accommodations to address pregnancy bias, childbirth, and related medical conditions, including extra bathroom breaks, adequate time and place for breastfeeding, and light-duty or modified job assignments.
  • Sex Stereotyping: Contractors are prohibited from treating employees and applicants adversely because they do not fit gender norms, including in regard to looks, demeanor, and skills. The Rule highlights examples of unlawful sex stereotyping of both men and women. For example, a contractor may not deny fathers flexible workplace arrangements that would be available to mothers solely based on gender stereotypes about childcare responsibilities. Other forms of unlawful sex stereotyping include failing to promote a woman because she does not wear high heels and make up and harassing a male because he is considered effeminate.
  • Compensation Disparities: Contractors are prohibited from compensating workers differently—in wages, fringe benefits, and earnings opportunities—because of their sex. The Rule bans sex discriminatory compensation both on an individual and systematic basis. Discriminatory practices include contractors denying women equal opportunities for overtime hours, commissions, and trainings that may lead to advancement to higher-paying positions. The rule specifically lists certain types of fringe benefits, such as medical, hospital, accident, life insurance, and retirement benefits, profit-sharing and bonus plans, leave, and other privileges of employment. The Rule requires contractors to provide male and female employees equal benefits when participating in fringe-benefit plans, even if the contractor must incur greater expenses by doing so.
  • Intersection with Affirmative Action Requirements: The Rule states that “under no circumstances will a contractor’s good faith efforts to comply with the affirmative action requirements” under OFCCP’s preexisting regulations be considered a violation of the Rule. The OFCCP notes that the Rule should not deter contractors from targeted efforts to recruit and advance women in order to comply with their affirmative-action obligations.

The Rule contains illustrative examples throughout to demonstrate unlawful discrimination practices. It also includes an appendix that contains best practices for keeping workplaces free of unlawful sex discrimination. For example, best practices listed include designating single-user restrooms and showers as sex-neutral, providing appropriate flexible workplace policies, and providing anti-harassment training to all personnel. The Rule specifies that these best practices are for contractors’ consideration and are not required.

What to Do?

The promulgation of the Rule should be a reminder to contractors to take the time to review and, as necessary, update employment-related policies, procedures, and practices (including benefit plans) to ensure compliance with current law. Contractors may find it useful to review their policies and procedures against the best practices discussed in the Rule.

Hogan Lovells is available to advise on the Rule and steps that contractors can take now to comply.