OFCCP Revises Sex Discrimination Guidelines for the First Time Since 1970

On June 14, 2016, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), which enforces anti-discrimination laws covering federal government contractors and subcontractors, issued a final rule (Rule) that significantly updates the agency’s existing guidelines on sex discrimination. June 17, 2016
According to the OFCCP, the Rule seeks to align the guidelines—which had not been updated since they were first promulgated in 1970—"with current law and legal principles and address their application to contemporary workplace practices and issues."1

Significant changes to the guidelines include:
  • Expansion of the Definition of Sex Discrimination. The term "sex" has been expanded to include "pregnancy, childbirth, or related medical conditions; gender identity; transgender status; and sex stereotyping." 41 C.F.R. § 60-20.2(a).
  • Express Prohibition on Sexual Harassment. The Rule expressly prohibits sexual harassment, including a hostile work environment. The prior Guidelines did not address sexual harassment.
  • Clarification on Pay Discrimination. The Rule prohibits not only pay discrimination among similarly situated employees on the basis of sex, but also denial of access to increased earning opportunities, such as granting or denying overtime work, training, fringe benefits, or higher-paying positions because of a worker’s sex.
  • Protections for Transgender Workers. Transgender employees must be allowed access to restrooms, changing rooms, and showers or similar facilities designated for the gender with which they identify. Employees or applicants cannot be treated adversely because they have received, are receiving, or plan to receive transition-related medical services
  • Workplace Protections for All Caregivers. If a covered employer provides job-guaranteed family leave to female employees (including paid leave), the employer must provide such leave to male employees on the same terms.
  • Prohibition on Employment Decisions Based on Sex-Based Stereotypes. Covered employers may not make employment decisions based on sex-based stereotypes about how males and females are expected to look, speak, or act.
The Rule will take effect on August 15, 2016. The OFCCP estimates that the Rule will affect up to 500,000 federal contractors employing about 65 million employees.2

BACKGROUND


The OFCCP is charged with enforcing Executive Order 11246, as amended, which "prohibits employment discrimination by contractors on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin, and requires them to take affirmative action to ensure that employees and applicants are treated without regard to these protected bases."3 Executive Order 11246 also prohibits contractors from discharging or otherwise discriminating against employees or applicants because they inquire about, discuss, or disclose their compensation or the compensation of other applicants or employees.4

The OFCCP sex discrimination guidelines were first promulgated in 1970. The OFCCP states that the new rulemaking was needed in light of "dramatic changes in women’s participation in the workforce" and other legal developments in the intervening period, such as a series of amendments to Title VII and the enactment of the Family and Medical Leave Act and the Age Discrimination in Employment Act.5

THE KEY COMPONENTS

1. 
GENERAL PROHIBITION ON SEX DISCRIMINATION

The Rule establishes a general prohibition on sex discrimination in the workplace, defining discrimination because of "sex" as including, but not limited to, "pregnancy, childbirth, or related medical conditions; gender identity; transgender status; and sex stereotyping." 41 C.F.R. § 60-20.2(a). The Rule provides that, "unless sex is a bona fide occupational qualification," contractors may not make distinctions "based on sex in recruitment, hiring, firing, promotion, compensation, hours, job assignments, training, benefits, or other terms, conditions, or privileges of employment." 41 C.F.R. § 60-20.2(b).

T
he Rule also prohibits "[e]mployment policies or practices that have an adverse impact on the basis of sex, and are not job-related and consistent with business necessity." 41 C.F.R. § 60-20.2(c). It provides examples of such policies or practices, including "height and/or weight qualifications that are not necessary to the performance of the job and negatively impact women substantially more than men," and "strength, agility, or other physical requirements that exceed the actual requirements necessary to perform the job and that negatively impact women substantially more than men." 41 C.F.R. § 60-20.2(c).

2. PAY DISCRIMINATION

The Rule states that "[c]ompensation may not be based on sex." 41 C.F.R. § 60-20.4. In addition to barring contractors from granting or denying "higher-paying wage rates, salaries, positions, [and] job classifications" on the basis of sex, the Rule explicitly prohibits such discrimination in the granting or denial of opportunities with the potential to lead to career advancement, such as "training, apprenticeships, [or] work assignments," as well as other opportunities that impact overall earnings, such as access to overtime hours and incentive compensation. 41 C.F.R. § 60-20.4(b)-(c). Further, the Rule bars compensation practices that have an "adverse impact" on the basis of sex unless those practices are "shown to be job-related and consistent with business necessity." 41 C.F.R. § 60-20.4(d).


3. DISCRIMINATION ON THE BASIS OF PREGNANCY, CHILDBIRTH OR RELATED MEDICAL CONDITIONS

The Rule provides that contractors must treat women of childbearing capacity and people affected by pregnancy, childbirth, or related medical conditions the same for all employment-related purposes, including receipt of benefits under fringe-benefit programs, as "other persons not so affected, but similar in their ability or inability to work." 41 C.F.R. § 60-20.5(a)(1). The Rule provides illustrative examples of unlawful pregnancy discrimination, including "refusing to hire pregnant people or people of childbearing capacity . . . because of their pregnancy or childbearing capacity," "firing female employees or requiring them to go on leave because they become pregnant or have a child," "limiting pregnant employees’ job duties based solely on the fact that they are pregnant," and "providing employees with health insurance that does not cover hospitalization and other medical costs for pregnancy, childbirth, or related medical conditions." 41 C.F.R. § 60-20.5(b).

T
he Rule prohibits denying alternative job assignments, modified duties, or other reasonable accommodations to employees solely on the basis that they cannot perform their job duties due to pregnancy, childbirth, or related medical conditions. Denying those accommodations is also unlawful if (i) the contractor is required by its policies or relevant laws to provide such accommodations to "other employees whose abilities or inabilities to perform their job duties are similarly affected"; (ii) the denial of accommodations imposes a significant burden on employees affected by pregnancy, childbirth, or related medical conditions; and (iii) the burden is not justified by the contractor’s asserted justifications for denying the accommodations. 41 C.F.R. § 60-20.5(c)(1). Moreover, if a contractor has a policy or practice of denying alternative job assignments, modified duties, or other accommodations to employees who are unable to perform some of their job duties because of pregnancy, childbirth, or related medical conditions, the contractor must "ensure that such policies or practices do not have an adverse impact on the basis of sex unless they are shown to be job-related and consistent with business necessity." 41 C.F.R. § 60-20.5(c)(2).

4. OTHER FRINGE BENEFITS

The Rule further provides that discrimination on the basis of sex in the provision of fringe benefits is unlawful. 41 C.F.R. § 60-20.6. "Fringe benefits" include, but are not limited to, "medical, hospital, accident, life insurance, and retirement benefits; profit-sharing and bonus plans; leave; and other terms, conditions, and privileges of employment." 41 C.F.R. § 60-20.6(b). "The greater cost of providing a fringe benefit to members of one sex is not a defense to a contractor’s failure to provide benefits equally to members of both sexes." 41 C.F.R. § 60-20.6(c).

5. SEX-BASED STEREOTYPES

In compliance with Executive Order 11246, as amended, the Rule clarifies that sex discrimination includes employment decisions made on the basis of sex-based stereotypes, including "stereotypes about how males and/or females are expected to look, speak or act." 41 C.F.R. § 60-20.7. The amended Rule provides several examples of adverse treatment on the basis of sex-based stereotypes, including not hiring an applicant for "failure to comply with gender norms and expectations for dress or appearance"; harassment of a male employee for being effeminate or insufficiently masculine; and adverse treatment based on "actual or perceived gender identity or transgendered status." 41 C.F.R. § 60-20.7(a)-(b).


6. SEXUAL HARASSMENT

The Rule also forbids harassment on the basis of sex, which it defines generally as "unwelcome sexual advances, requests for sexual favors, offensive remarks about a person’s sex, and other verbal or physical conduct of a sexual nature" when (i) "submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment"; (ii) "submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual"; or (iii) "such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment." 41 C.F.R. § 60-20.8(a).

Under the amended Rule, sexual harassment now includes "harassment based on pregnancy, childbirth or related medical conditions"; "harassment based on gender identity or transgender status"; and "harassment that is not sexual in nature but that is because of sex or sex-based stereotypes." 41 C.F.R. § 60-20.8(b).

7. "BEST PRACTICES" APPENDIX

Finally, the Rule contains an Appendix, which provides a number of "best practices" for contractors, including
  • avoiding the use of gender-specific job titles such as "foreman" or "lineman" when gender-neutral alternatives are available;
  • designating single-user bathrooms, changing rooms, showers, and other similar single-user facilities as sex-neutral;
  • encouraging men and women equally to engage in caregiving activities; and
  • fostering a climate in which women are not assumed to be more likely to provide family care than men.

IMPLICATIONS

Although many of the changes to the guidelines reflect case law and EEOC developments under Title VII of the Civil Rights Act of 1964, other changes have not been well established in the courts (such as transgender access). Prior to the August 15, 2016 effective date, covered contractors should evaluate their policies, pay practices, and benefit plans to determine if they are consistent with the new guidelines. In doing so, contractors should consider adopting the recommended, voluntary "Best Practices" outlined in the Rule’s Appendix. The guidelines reflect the OFCCP’s interpretation of what constitutes sexual discrimination prohibited by Executive Order 11246 and what the agency will be assessing in connection with its compliance investigations.
 
ENDNOTES
  1. The Rule and related information are available at https://www.federalregister.gov/articles/2016/06/15/2016-13806/discrimination-on-the-basis-of-sex.
  2. 81 Fed. Reg. 39110 (June 15, 2016).
  3. Id. at 39108.
  4. Executive Order 11246 applies to any business or organization that “(1) holds a single Federal contract, subcontract, or federally assisted construction contract in excess of $10,000; (2) has Federal contracts or subcontracts that, 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.” Id. at 39109.
  5. Id. at 39111.

DOL