Hunton Employment & Labor Perspectives

Since President Lyndon B. Johnson signed Executive Order 11246 in 1965, the Office of Federal Contract Compliance Programs (OFCCP) has been charged with ensuring nondiscrimination and affirmative action for females in employment. In 1970, regulations were issued to further this goal, known as the Sex Discrimination Guidelines, codified at 41 CFR Part 60-20.

Those guidelines have not been substantially updated in the 46 years since. Until now, that is. The DOL acknowledges the Guidelines have become “out of touch with current law and with the realities of today’s workforce and workplaces.” See: OFCCP Fact Sheet on Sex Discrimination Final Rule. So, the OFCCP is bringing the Guidelines “from the ‘Mad Men’ era’ to the modern era.’”

The OFCCP published a Notice of Proposed Rulemaking on January 30, 2015. It received over 500 comments in response to the NPRM, before the Final Rule was issued on June 15, 2016. The effective date of the new regulations is August 15, 2016.

These changes should come as no surprise to the federal contractors to whom they apply. The OFCCP has been moving in this direction for some time.

The DOL notes that women are a vital aspect of the U.S. workforce and economy, and it is more important than ever that they receive equal access to jobs and fair treatment while working. The Guidelines, however, prohibit any discrimination based on sex, and thus apply to both males and females.

Among the notable changes in the updated rules are:

• The definition of “sex” is broadened to include gender identity, transgender status, pregnancy, and sex stereotyping.
• An explicit, categorical exclusion of coverage for care related to gender dysphoria or gender transition is deemed facially discriminatory; it singles out services and treatments for persons based on their gender identity   or transgender status.
• Employers may not make assumptions based on stereotypes about caregiving obligations. For example, a company may not deny mothers opportunities available to fathers based on the assumption that childcare responsibilities will affect the mothers’ performance. Nor can an employer deny fathers flexible work arrangements made available to mothers, based on the assumption men do not assume childcare responsibilities.
• Examples of disparate treatment are updated. For instance, they now include denying transgender employees access to the restrooms, changing rooms, showers and similar facilities designated for use by the gender with which they identify.
• Examples of disparate impact are also modernized, i.e.: relying on recruitment or promotion methods like “word-of-mouth” recruitment, or using height and weight requirements, that have an adverse impact on women and are not job-related and consistent with business necessity.
• The regulations are to be read in connection with all relevant regulations implementing E.O. 11246, and not just Part 60-1, as previously provided. The Final Rule should not be read to conflict with good faith efforts to expand employment opportunities for women.
• The regulations adopt the Lilly Ledbetter Fair Pay Act standard, where pay discrimination occurs any time an employer pays an employee as a result of a discriminatory compensation decision.
• They also adopt Title VII’s broad approach to wage discrimination, and clarify that the OFCCP may apply both disparate treatment and disparate impact analyses.
• Employees may not be paid differently because of their sex, which includes opportunities for overtime, training, and better-paying positions. Nor may contractors distinguish based on sex with regard to fringe-benefit plans like insurance, retirement, profit-sharing, bonus, leave, etc.
• Contractors must provide workplace accommodations to employees who need them because of pregnancy, childbirth or related conditions, if contractors provide comparable accommodations to other workers, such as disabled individuals or employees with occupational injuries. Examples include extra bathroom breaks, and light-duty assignments.
• Gender-based job or training requirements are not permissible unless the company can demonstrate that they are a BFOQ (bona fide occupational qualification), which is a high standard to meet.
• The OFCCP incorporates into its Final Rule the substance of the EEOC’s Guidelines of Discrimination Based on Sex as relates to sexual harassment, found at 29 CFR §1604.11(a).
• The new regulations should be read as consistent with protections provided to religiously affiliated contractors, such as under the Religious Freedom Restoration Act. For instance, religiously affiliated contractors can generally favor individuals of a particular religion in employment decisions.
• The new rule includes an Appendix of Best Practices to aid contractors.

What does all this mean for contractors? Few changes are likely required. The new regulations codify legal trends that have been present in case law and administrative guidance for some time. However, companies should review their policies to ensure they do not run afoul of any of the updated Sex Discrimination Guidelines.