July 6, 2016Client Alert

OFCCP Announces Final Rule on Sex Discrimination

On June 14, 2016, the OFCCP announced its final rule, “Discrimination on the Basis of Sex” (Final Rule), replacing the OFCCP’s 1970 Sex Discrimination Guidelines. The Final Rule goes into effect on August 15, 2016, giving federal contractors and subcontractors 60 days to comply with the changes. A link to the Final Rule can be found here. The Final rule applies to federal contractors and subcontractors covered by Executive Order 11246.

In general, the Final Rule incorporates provisions from Title VII, Lily Ledbetter, the Family and Medical Leave Act, and the Pregnancy Discrimination Act. The OFCCP’s stated purpose is to align OFCCP requirements with the “developments and interpretations of existing Title VII principles and to clarify OFCCP’s corresponding interpretations of the Executive Order [11246].”  Some of the key developments include equal treatment for employees affected by pregnancy, childbirth and related medical conditions, workplace protections for caregivers, fair pay practices, protections for transgender workers and prohibition of discrimination based on sex stereotypes. The Final Rule defines “sex” as including, but not limited to “pregnancy, childbirth, or related medical conditions; gender identity; transgender status; and sex stereotyping.” 

Highlights of the changes include:

  • Pregnancy discrimination/Accommodation
    • Family Caregiver Protections
  • Language from the Pregnancy Discrimination Act requiring contractors to “treat people of childbearing capacity and those 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[,]” is incorporated.
  • Fair Pay (not Equal Pay)
  • The OFCCP adopts the Lilly Ledbetter Fair Pay Act language regarding compensation discrimination.
  • Protections for Transgender Employees and LGBT
    • Contractors cannot deny transgender employees access to the restrooms, changing rooms, showers, and similar facilities designated for use by the gender with which they identify.
    • Contractors are not required to cover gender identity related health care services and procedures, but are prohibited from categorically excluding coverage for gender dysphoria treatment or gender transition procedures, or otherwise denying health care due to gender identity discrimination.  This provision will generally take effect in 2017.
  • The OFCCP adopts the Title VII “bona fide occupational qualification (“BFOQ”)” language to determine whether sex is a BFOQ.
  • Religious Freedom Restoration Act (RFRA). Contractors can seek RFRA exemptions from the Final Rule.
  • Some OFCCP recommended best practices include:
    • Avoid use of gender-specific job titles
    • Designate single-user restrooms, changing rooms, showers
    • Provide anti-harassment training
    • Encourage men and women equally to engage in caregiver-related activities
  • Review Policies and Practices and eliminate those which have a disparate impact
    • Example: relying on “word-of-mouth” recruitment or “tap-on-the-shoulder” promotion methods that have an adverse impact on women and are not job-related or consistent with business necessity.

The Final Rule is not meant to conflict with contractors’ good faith efforts in executing affirmative action plans. The Final Rule does not include any new reporting, posting or listing requirements or changes in affirmative action plans. Rather, the Final Rule is directed at prohibiting discrimination based on sex.

The OFCCP notes that full compliance may take longer than the August 15, 2016 effective date. However, contractors and subcontractors should be taking good faith steps toward compliance to avoid enforcement sanctions.

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