Merle M. DeLancey Jr. and Lyndsay A. Gorton
On June 15, 2016, the Department of Labor (“DOL”) Office of Federal Contract Compliance Programs (“OFCCP”) issued a final rule updating its 1970 sex discrimination guidelines. The final rule, available here, enforces Executive Order 11246, which prohibits federal contractors and subcontractors from employment discrimination based on race, color, religion, sex, sexual orientation, gender identity, or national origin. The rule applies to companies that have federal government contracts of $10,000 or more and will be effective on August 15, 2016.
The new rule requires numerous changes to the 1970 sex discrimination guidelines. The new rule:
- Provides additional protections for conditions related to pregnancy and childbirth, including required workplace accommodations, additional restroom breaks, and light duty assignments;
- Prohibits companies from paying workers differently based on sex;
- Provides equal benefits to male and female workers who participate in fringe benefit programs, including medical, life insurance, and retirement and profit-sharing and bonus plans;
- Prohibits sexual harassment, which includes conduct that unreasonably interferes with an individual’s work performance or becomes the basis for employment decisions;
- Prohibits employers from setting job requirements based on sex unless the employer can meet the high bar for a bona fide exception or demonstrate a business necessity;
- Prohibits employers from treating employees differently based on assumptions that caregiving responsibilities are the responsibility of one sex;
- Prohibits discrimination based on an employee’s gender identity and allows employees to use restrooms and changing rooms of the gender of which the employee identifies; and
- Prohibits discrimination based on expectations of how male and female employees “should” act in stereotypical male and female roles.
While the new rule appears to make widespread changes, for large contractors who are already subject to Title VII of the Civil Rights Act of 1964, the final rule will not substantially change their requirements. The new final rule will, however, increase administrative costs for the companies it covers. The OFCCP estimates that each contractor company will have to pay a one-time cost of $83 for regulatory familiarization and increased costs of accommodations for pregnant women of $19 annually. The final rule characterizes these costs as “fairly modest,” but for very large contractors with many employees, the pregnancy accommodation-related costs could multiply quickly. Further, there is also a potential for increased costs based on other changes to the sex discrimination guidelines. For example, the requirement that fringe benefits be offered equally to male and female workers may increase costs that employers pay for equal health insurance benefits for men and women.