On Tuesday, the U.S. Department of Labor announced a final rule to expand sex discrimination guidelines for federal contractors and subcontractors. The final rule updates—for the first time in over 40 years—the Office of Federal Contract Compliance Programs' sex discrimination regulations to align them with current interpretations of Title VII of the Civil Rights Act of 1964 and the realities of today's diverse workforce.

In addition to explicitly prohibiting discrimination in legally recognized areas, the rule goes beyond settled law to prohibit discrimination based on sex stereotypes and gender identity. For example, the rule provides that contractors must allow workers to use restrooms, changing rooms and similar facilities consistent with the gender with which they identify. Moreover, while not required, the rule sets forth a list of "best practices," which include designating single-user restrooms and avoiding gender-specific job titles where gender-neutral alternatives are available.

The rule goes into effect on August 15, 2016. Because the requirements generally mirror current discrimination law as interpreted by federal courts and the Equal Employment Opportunity Commission, most employers already are in compliance. Nevertheless, federal contractors and subcontractors should ensure their internal policies reflect the rule's various provisions, including those designed to protect transgender individuals.