Not since the 1970s has the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) amended its Sex Discrimination Guidelines for federal contractors. With the newly issued final rule effective August 15, 2016, federal contractors have further enlightenment regarding obligations on matters such as equity in compensation, sex discrimination and harassment, and proper treatment of pregnant workers. The final rule aligns the OFCCP’s guidelines with the current state of the law and clarifies obligations affected entities have under Executive Order 11246 (EO 11246), as amended, which was originally issued in 1965.
OFCCP director Patricia A. Shiu noted:
“… it is important that we bring these old guidelines from the ‘Mad Men’ era to the modern era, and align them with the realities of today’s workplaces and legal landscape.”
The OFCCP enforces EO 11246, which prohibits employment discrimination by covered contractors on the basis of race, color, religion, sex, sexual orientation, gender identity or national origin. EO 11246 also requires that covered contractors take affirmative action to ensure that applicants and employees are treated without regard to such characteristics. Additionally, EO 11246 disallows discrimination against employees or applicants for discussing compensation.
Case law interpreting Title VII’s protection against sex discrimination has evolved over the last several decades notwithstanding the OFCCP’s stagnancy on the subject. The final rule brings the regulations into compliance with federal case law and current EEOC interpretations. As a result, federal contractors now have clarity regarding their obligations to ensure protections against pregnancy bias, sexually hostile work environments, and discrimination based on unlawful sex stereotypes, gender identity or transgender status. Although the final rule substantially revises the OFCCP’s Sex Discrimination Guidelines to address the modern workplace, the requirements for covered federal contractors in this area of the law are not substantially altered.
However, one of the many clarifications the new guidelines provides is that sex discrimination now includes consideration of gender identity. Contractors must open their bathrooms and other personal hygiene facilities, including showers, to employees in accordance with the gender with which they identify. In addition, the final rule discourages stereotypes based on gender related to caregiving for family members: Contractors may not deny fathers flexible workplace arrangements that are available to mothers.
Generally, the final rule applies to any business that (1) holds a single federal contract, subcontract, or federally assisted construction contract or subcontract in excess of $10,000; (2) holds federal contracts or subcontracts that have a combined total in excess of $10,000 in any 12-month period; or (3) holds government bills of lading, serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount. Note that all of a covered business’ employees are protected under the final rule, not just those actually working on a federal contract or subcontract. Grant recipients and non-construction recipients of federal financial assistance are not covered.
Federal contractors should keep in mind that potential penalties for violating EO 11246 include suspension, cancellation, termination and debarment of federal contracts and subcontracts, as well as liability for make-whole and injunctive relief.
