We have previously reported on Congress’s failed efforts to pass the Employment Non-Discrimination Act, which would prohibit discrimination in hiring and employment on the basis of sexual orientation or gender identity. President Obama took matters into his own hands and recently signed an executive order that prohibits the federal government and federal contractors from discriminating against employees on these traits.

On July 21, 2014, President Obama signed an executive order amending Executive Order 11246, which imposes equal employment opportunity obligations on federal contractors and subcontractors. Under the amended Executive Order, sexual orientation and gender identity are added to the list of protected classes upon which federal contractors may not discriminate. Protected classes under Executive Order 11246 previously included only race, color, religion, sex, and national origin.

Surprisingly, the amendment does not afford an exemption to religiously affiliated contractors or subcontractors, making them similarly prohibited from considering sexual orientation and gender identity when making employment decisions. However, an existing provision of Executive Order 11246 does allow religious organizations to favor individuals of a particular religion.

Obama’s executive order also amends Executive Order 11478, which addresses equal employment opportunity in federal hiring. As with federal contractors, federal agencies are prohibited from discriminating against federal workers in employment on the basis of gender identity. Federal agencies were already prohibited from discriminating on the basis of sexual orientation.

While the new non-discrimination requirements imposed on the federal government take place immediately, the provisions relating to federal contractors only apply to contracts entered into on or after the effective date of regulations implementing the amendment. The executive order directs the Secretary of Labor to prepare those regulations by mid-October 2014. We will keep you updated on advancements in this area. In the meantime, federal contractors and subcontractors should be prepared to add sexual orientation and gender identity to their non-discrimination policies, and include similar language in their contracts with vendors and suppliers.