OFCCP Issues Final Rule on Sex Discrimination

On June 14, 2016, the Office of Federal Contract Compliance Programs (OFCCP) announced publication of its long-awaited final rule on sex discrimination. This rule, in the form of regulations, updates the OFCCP’s 1970 guidance on this topic. The final rule is focused on eliminating gender-based barriers to equal employment opportunity and covers a variety of topics, such as compensation discrimination, intentional gender discrimination, disparate impact gender discrimination, accommodations for pregnant workers, and the prohibition against sex-stereotyping, including discrimination based upon gender identity.

The final rule makes it clear that discrimination because of sex includes discrimination based upon gender identity. It also specifies that harassment because of sex includes harassment based on gender identity or transgender status.

The final rule requires contractors to allow workers to use restrooms, changing rooms, showers and similar facilities consistent with the gender with which the employee identifies. Failure to do so is an unlawful sex-based discriminatory practice under the final rule. In the preamble to the final rule, the OFCCP also states that an explicit, categorical exclusion of coverage for all care related to gender dysphoria or gender transition is facially discriminatory because it singles out services and treatments for individuals on the basis of their gender identity or transgender status.

Not surprisingly, the final rule includes a section titled, Discriminatory Compensation. The rule prohibits contractors from paying different compensation to “similarly situated” employees on the basis of sex. According to the OFCCP, relevant factors to consider in determining whether employees are similar include “tasks performed, skills, effort, levels of responsibility, working conditions, job difficulty, minimum qualifications, and other objective factors.” The rule states that the OFCCP may deem employees to be “similarly situated where they are comparable on some of these factors, even if they are not similar on others.” 

Several sections in the final rule contain specific examples of practices that the OFCCP considers to be gender discrimination. For instance, the OFCCP identifies the use of strength tests in hiring that exceed the actual demands of the job and that negatively impact women more than men as a practice that may violate Executive Order 11246 (EO 11246). The OFCCP also identifies “word-of-mouth” recruitment and “tap-on-the-shoulder” promotion decisions as problematic when they have an adverse impact on women and the contractor cannot establish that they are job-related and consistent with business necessity. Steering women into lower-paying or less desirable jobs on the basis of sex or based upon sex stereotypes also violates EO 11246. 

The OFCCP focuses considerable attention on the issue of sex stereotyping, citing the example of a male employee being harassed because he “is considered effeminate or insufficiently masculine” or treating applicants and employees adversely because of their actual or perceived gender identity or transgender status. Caregiver status discrimination also is covered in the context of sex stereotyping and the final rule includes an example where an employer treats a female employee adversely because of a sex-based assumption that she has or will have family caretaking responsibilities and that those responsibilities will interfere with her work performance.

The final rule states that it is a violation of EO 11246 “for a contractor to deny 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 in three circumstances.” These include “[w]here the contractor provides, or is required by its policy or by other relevant laws [such as the Americans with Disabilities Act] to provide, such assignments, modifications, or other accommodations to other employees whose abilities or inabilities to perform their job duties are similarly affected and the denial of accommodations imposes a significant burden on employees affected by pregnancy, childbirth, or related medical conditions, and the contractor’s asserted reasons for denying accommodations to such employees do not justify the burden.” Conversely, a contractor violates EO 11246 by “[l]imiting pregnant employees’ job duties based solely on the fact that they are pregnant, or requiring a doctor’s note in order for a pregnant employee to continue working.” Finally, “providing employees with health insurance that does not cover hospitalization and other medical costs for pregnancy, childbirth, or related medical conditions, including contraception coverage, to the same extent that such costs are covered for other medical conditions” is a violation of EO 11246.

The final rule is effective on August 15, 2016. The OFCCP also issued a fact sheet and answered a number of frequently asked questions about the final rule on its website. Contractors should use this time to review their policies, procedures, and practices to ensure that they do not amount to a sex-based barrier to equal employment opportunity under these new rules.