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New Final Rule Expands Sex Discrimination Prohibitions for Federal Contractors

On June 14, 2016, the Department of Labor (DOL), through its Office of Federal Contract Compliance Programs (OFCCP), announced a Final Rule implementing sweeping changes to the OFCCP’s sex discrimination regulations. The regulations, which apply to federal contractors and subcontractors, were initially promulgated to implement the anti-discrimination provisions of Executive Order 11246, and were last updated decades ago. In April 2014, however, President Obama signed Executive Order 13672, which amended the previous Executive Order and added protections against discrimination on the basis of sexual orientation and gender identity. The Final Rule, which implements this amendment and otherwise significantly modifies the OFCCP’s existing anti-discrimination rules as discussed below, takes effect August 15, 2016.

In addition to implementing President Obama’s Executive Order, the further aim of the Final Rule, according to the DOL, is to update the OFCCP’s anti-discrimination regulations and, in particular, to address and combat “sex–based barriers to equal employment and fair pay, including compensation discrimination, sexual harassment, hostile work environments, failure to provide workplace accommodations for pregnant workers, and gender identity and family caregiving discrimination.” To accomplish this, the 200+ page Final Rule implements a number of progressive concepts and requirements, including:

  • Expanding the prohibition against discrimination on the basis of “sex” or “gender” to also preclude discrimination on the basis of an individual’s pregnancy, childbirth, or childbirth or pregnancy-related medical conditions, gender identity, transgender status, and sex stereotyping;
  • Requiring covered employers to allow transgendered individuals to use the restroom of their choosing;
  • Requiring covered employers to make light duty work available to employees based on pregnancy, childbirth or related medical conditions in the same manner that they provide light duty work under other circumstances (e.g. as an accommodation for a workplace injury); and
  • Prohibiting covered employers from discriminating on the basis of sex with regard to fringe benefits, which are defined as “medical, hospital, accident, life insurance, and retirement benefits; profit-sharing and bonus plans; leave; and other terms, conditions, and privileges of employment.”

The Final Rule also includes several provisions that will require covered employers to re-evaluate their policies, procedures and compensation programs on a broader level. Relative to compensation, similar to state laws recently passed in California, New York and Vermont, the Final Rule expands the pool of potential “comparators” for purposes of determining whether gender-based pay disparity exists. It also increases the potential recovery available to an employee who is found to have been a victim of gender-based pay discrimination. Further, where a covered employer’s policy or practice adversely impacts one group of employees based on gender, the Final Rule imposes on the employer an affirmative burden to show that the policy or procedure is job-related and consistent with business necessity.

Undoubtedly, once effective, these new provisions will be a focus of OFCCP audits and other enforcement initiatives. As a result, all federal contractors, subcontractors and other entities covered by the Final Rule should pay close attention to the Final Rule and partner with counsel to evaluate and, where appropriate, revise their internal policies, practices, and procedures to ensure full compliance.

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