By Laurie Meyer
On June 14, 2016 the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) issued a final rule (set forth in 41 C.F.R. Part 60-20), which for the first time since 1970, updated the sex discrimination guidelines applicable to federal government contractors and subcontractors as well as contractors and subcontractors operating under federally assisted construction contracts. The agency noted that because the original guidelines were published more than four and a half decades ago, women have become far more represented in the workplace and this “changing reality of the modern workforce” needed to be recognized with updated guidance and aligned with later law and policy. The updated rule replaces significant portions of the old guidelines, and addresses such concerns as compensation discrimination, harassment, accommodations for pregnant employees, gender identity bias, and family caregiver discrimination.
Contractors and subcontractors subject to the rule should be aware of significant changes with regard to a number of obligations under the new rule:
- Pregnancy-Related Accommodations and Benefits. The new rule requires federal contractors to treat pregnant workers the same as other workers who are similarly-situated in their inability to work. Specifically, employers subject to the rule must provide accommodations to pregnant workers, such as light-duty or alternative job assignments, modified duties, breaks and paid medical or sick leave, if the employer grants comparable accommodations to other employees who are similarly unable to perform their regular job duties because of work injuries or disabilities. The rule also provides a list of other examples of unlawful pregnancy discrimination, including refusal to hire pregnant employees, firing an employee or requiring her to take leave when she becomes pregnant, and arbitrarily limiting a pregnant employee’s job duties or requiring a doctor’s note in order for a pregnant employee to continue working.
- Gender-Neutral Fringe Benefits. All employees, regardless of sex, who participate in fringe benefit plans must be provided equal benefits, even if it costs more to provide certain benefits to members of one sex. Male employees must also be given family leave on the same terms (including pay) that family leave is provided to female employees.
- Non-discriminatory Pay. The new rule provides that unlawful compensation discrimination exists where similarly-situated employees are paid differently for comparable work because of their sex, but recognizes that wages do not have to be equal. Differences in pay based on neutral-job related factors, like tenure or experience, are permitted. The factors considered in determining if employees are similarly-situated include, but are not limited to, tasks performed, skills, effort, levels of responsibility, working conditions, job difficulty and minimum qualifications. The employees do not have to be identical in all respects, but comparable on some of these factors. The rule notes that unlawful compensation discrimination can also be caused by job segregation or classification based on gender, not just unequal pay for equal work. Employers subject to the rule may not grant or deny opportunities for overtime, training, apprenticeships, compensation raises, or higher-paying positions or better opportunities because of sex.
- Expanded Prohibition on Sexual Harassment and Hostile Work Environments. The rule explains that prohibited sexual harassment includes harassment based on sex, sex-based stereotypes, gender identity, transgender status or pregnancy, childbirth, or related medical conditions. Harassment includes unwelcome sexual advances, offensive remarks or verbal or physical conduct that unreasonably interferes with an employee’s work, becomes the basis for employment decisions (hiring, firing, promoting, etc.) or otherwise creates a hostile work environment.
- Protections for Transgender Workers. The new rule incorporates the Obama administration’s interpretation of “sex discrimination” to extend to discrimination on the basis of gender identity or transgender status. According to the new rule, treating an employee adversely based on the employee’s failure to conform to gender norms or expectations about their appearance, attire, or behavior is unlawful sex discrimination. Further, the rule requires contractors to allow workers to use bathroom and changing facilities consistent with their gender identity. Equal fringe benefits, such as medical insurance and medical leave, must be provided regardless of sex assigned at birth, and the agency specifically noted that explicit, categorical exclusion of coverage for all health care related to gender dysphoria or gender transition is sex discrimination on its face.
- Prohibition On Discrimination Based On Sex Stereotypes. Employment decisions based on sex stereotypes is also a prohibited form of sex discrimination. Therefore, the rule precludes federal contractors from making employment decisions based on what is considered the proper gender roles for men and women or whether or not a person meets “expectations” for how men or women should look or act. For example, federal contractors may not exclude women from certain positions that are typically considered positions for men or treat female or male employees differently based on the assumption that women are more likely to have caregiving responsibilities that may impact job performance. Also, men and women must have access to the same flexibility in work arrangements. However, sex can be a bona fide occupational qualification (BFOQ) if it is reasonably necessary to the normal operation of an employer’s particular business or enterprise. Essentially, sex-based job classifications are prohibited unless there is a job-specific BFOQ. A contractor cannot set requirements, such as height or weight qualifications, that have a disparate impact on one sex over another unless the employer can demonstrate it is a BFOQ.
- Religious Protections. The preamble to the final rule explains that insofar as the application of any requirement would violate the Religious Freedom Restoration Act, such application shall not be required. The rule does not provide any procedural details about how an employer would invoke this protection, however. The agency did note that the Executive Order 11246 (which is implemented by the rule) specifically provides that religiously affiliated contractors may favor individuals of a particular religion when making employment decisions.
The updated rules go into effect on August 15th. However, the rule essentially reflects how courts and the Equal Employment Opportunity Commission have been interpreting Title VII of the Civil Rights Act of 1964, so most contractors are already subject to many of the provisions of the rule. Also, the rule does not alter a contractor’s obligations under any other OFCCP regulations, such as those related to ensuring equal employment opportunities or to affirmative action.
If you have questions about whether or not your policies or practices comply with the new rule, please contact Laurie Meyer at 414.225.1419 / laurie.meyer@dkattorneys.com.