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OFCCP’s new sex discrimination regulations include compensation, pregnancy, caregiver, and gender identity provisions

June 15th, 2016  |  Cynthia L. Hackerott

Replacing its outdated sex discrimination guidelines from 1970, the OFCCP announced on June 14, 2016 a final rule on new sex discrimination regulations that the agency says align with current law and address the realities of today’s workplaces. Topics addressed in the final rule—which updates the provisions at 41 CFR Part 60-20 for the first time in more than four and a half decades— include compensation discrimination, harassment, accommodations for pregnant workers, gender identity bias, and family caregiving discrimination. The final rule was published in the Federal Register on June 15, 2016 (81 FR 39108-39169), and is scheduled to take effect on August 15, 2016.

The OFCCP website has a page regarding the final rule that contains frequently asked questions, a fact sheet, a chart comparing the final rule to the 1970 sex discrimination guidelines, and other resources.

“We have made progress as a country in opening career opportunities for women that were, for decades, the province of men. Yet, there is more work that lies ahead to eradicate sex discrimination. This is why it is important that we bring these old guidelines from the ‘Mad Men’ era to the modern era, and align them with the realities of today’s workplaces and legal landscape,” said OFCCP Director Patricia A. Shiu in the June 14, 2016 statement announcing the final rule.

The agency’s announcement of the rule was made in conjunction with the start of the White House Council on Women and Girls first “United State of Women” Summit.

“The rule adopted today will mean that long debunked stereotypes will not keep workers from getting a new job or a promotion,” said DOL Women’s Bureau Director Latifa Lyles. “This is an important reminder that there is no such thing as ‘women’s work’ or ‘men’s work,’ there is only work.”

Outdated guidelines. The guidance in Part 60-20 was first published in the Federal Register on June 9, 1970 (35 FR 8888) and became effective as reissued (43 FR 49258) on October 20, 1978. The new final rule marks the first update to Part 60-20 since it was first published. Since that time, the nature and extent of women’s participation in the labor force and employer policies and practices have changed significantly. In addition, extensive changes in the law regarding sex-based employment discrimination have taken place, the OFCCP points out, noting that Title VII has been amended twice. Indeed, some of the guidelines’ provisions deviate from well-established law, and the agency no longer enforces outdated provisions. Thus, the OFCCP published a Notice of Proposed Rulemaking (NPRM) in the Federal Register on January 30, 2015 (80 FR 5246–5279) designed to clarify contractors’ obligations under current law and remove conflicting regulatory provisions.

The original public comment deadline for the NPRM was March 31, 2015. However, on March 27, 2015, the OFCCP announced an extension of the deadline to April 14, 2015 to allow the public time to comment on the impact of the U.S. Supreme Court’s March 25, 2015 decision in Young v United Parcel Serv (98 EPD ¶45,276). A notice of this extension was published in the Federal Register on April 1, 2014 (80 FR 17373). In Young, the Court held that an individual pregnant worker who seeks to show disparate treatment under Title VII through indirect evidence may do so through application of the McDonnell Douglas framework, but such plaintiffs are not required to show that the employer’s policy rationale was intentionally biased; rather, the employee can satisfy her burden of showing pretext by demonstrating that the policy put a “significant burden” on pregnant employees, and that the employer’s reasoning was not sufficient to justify that burden. According to the OFCCP, it follows “Title VII principles” when enforcing Executive Order (EO) 11246.

The OFCCP received 553 comments on the proposed rule. It submitted the final rule to the Office of Budget and Management (OMB) for review on October 29, 2015. The OMB approved the final rule on June 13, 2016.

Overview. In the final rule, the OFCCP replaces in significant part the guidelines at Part 60-20 with new sex discrimination regulations, intended to align with existing law and policy, that set forth federal contractors’ obligations under EO 11246 in regard to promoting and ensuring equal opportunities for all persons employed or seeking employment with government contractors and subcontractors without regard to sex. This nondiscrimination requirement also applies to contractors and subcontractors performing under federally assisted construction contracts. The preamble to the final rule notes that, in addition to removing outdated provisions in the current guidelines, the final rule also adds, restates, reorganizes, and clarifies other provisions to incorporate legal developments that have arisen since 1970 and to address contemporary problems with implementation.

Under the final rule, the current title of Part 60-20 has been changed from “Sex Discrimination Guidelines” to “Discrimination on the Basis of Sex,” to make clear that the provisions in part 60-20 are regulations implementing EO 11246 with the full force and effect of law.

General provisions (Section 60-20.2). The final rule sets forth the general prohibition of sex discrimination, including discrimination on the bases of pregnancy, childbirth, or related medical conditions. It also describes employment practices that may unlawfully treat men and women disparately and describes employment practices (such as height or weight qualifications) that are unlawful if they have a disparate impact on the basis of sex and are not job-related and consistent with business necessity.

Of note, the final rule incorporates the Obama administration’s current legal interpretations that discrimination based on sex includes discrimination based on gender identity and transgender status. As such, the provisions of the final rule reflect the OFCCP’s view that adverse treatment of employees on the basis of failure to conform to particular gender norms and expectations about their appearance, attire, or behavior is unlawful sex discrimination. Accordingly, the rule requires contractors to allow workers to use bathrooms, changing rooms, showers, and similar facilities consistent with the gender with which the workers identify. On top of that, the preamble to the rule states that an explicit, categorical exclusion of coverage for all care related to gender dysphoria or gender transition is facially discriminatory because such an exclusion singles out services and treatments for individuals on the basis of their gender identity or transgender status.

BFOQ defense (Section 60-20.3). Consolidating in one provision the current references to the BFOQ defense available to employers and updating the language set forth in Title VII, the new Section 60-20.8 replaces the previous section entitled, “Job policies and practices” with “Sex as a bona fide occupational qualification.”

Compensation (Section 60-20.4). For purposes of evaluating compensation differences, the final rule states that the determination of similarly situated employees is case-specific. Relevant factors in determining similarity may include tasks performed, skills, effort, levels of responsibility, working conditions, job difficulty, minimum qualifications, and other objective factors. In some cases, employees are similarly situated where they are comparable on some of these factors, even if they are not similar on others, according to the OFCCP.

In addition, the rule explains that unlawful compensation discrimination can result from job segregation or classification on the basis of gender, not just unequal pay for equal work. It provides that contractors may not grant or deny opportunities for overtime work, training, apprenticeships, better pay, or higher-paying positions or opportunities that may lead to advancement to higher-paying positions because of a worker’s sex.

Notably, the final rule also includes a provision that states a contractor violates EO 11246 and these regulations “any time it pays wages, benefits, or other compensation that is the result in whole or in part of the application of any discriminatory compensation decision or other practice.is the result of discrimination, not only when the decision to discriminate is made” (Part 60-20.4(e)).

Pregnancy, childbirth, and related medical conditions (Section 60-20.5). The final rule requires that contractors provide workplace accommodations, such as extra bathroom breaks and light-duty assignments, to an employee who needs such accommodations because of pregnancy, childbirth, or related medical conditions, in certain circumstances where those contractors provide comparable accommodations to other workers, such as those with disabilities or occupational injuries. It also provides a non-exhaustive list of examples of unlawful pregnancy discrimination, including: refusing to hire pregnant applicants; firing an employee or requiring an employee to go on leave because the employee becomes pregnant; limiting a pregnant employee’s job duties based on pregnancy or requiring a doctor’s note in order for a pregnant employee to continue employment; providing employees with health insurance that does not cover hospitalization and other medical costs related to pregnancy, childbirth, or related medical conditions when hospitalization is provided for other medical conditions; and denying an alternative job assignment, modified duties or other accommodations to a pregnant employee when such accommodations are provided or are required to be provided by a contractor’s policy or by other relevant laws to other employees whose abilities or inabilities to work are similar.

Benefits (Section 60-20.6). Under the final rule, contractors must provide equal benefits and equal contributions for male and female employees participating in fringe-benefit plans, such as medical, hospital, accident, life insurance, and retirement benefits. The term “fringe benefits” also includes leave, profit-sharing and bonus plans, and other terms, conditions, and privileges of employment. The rule provides that 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.

Note that the final rule replaces the current Section 60-20.6, entitled, “Affirmative action” with the new section entitled “Other fringe benefits.” The previous section on affirmative action is unnecessary because the requirements related to affirmative action programs are set forth in parts 60-2 and 60-4, the OFCCP explained.

Sex-based stereotypes (Section 60-20.7). The final rule incorporates the Obama administration’s current legal interpretations that discrimination based on sex includes discrimination based on gender identity and transgender status. As such, it reflects the OFCCP’s view that adverse treatment of employees on the basis of failure to conform to particular gender norms and expectations about their appearance, attire, or behavior is unlawful sex discrimination.

The final rule also clarifies that adverse treatment of an employee because of gender-stereotyped assumptions relating to family caretaking responsibilities is discrimination, and that leave for childcare must be available to men on the same terms as it is available to women. For example, contractors may not deny mothers employment opportunities that are available to fathers based on the faulty assumption that mothers’ childcare responsibilities will conflict with their job performance. Along the same lines, contractors may not deny fathers flexible workplace arrangements that are available to mothers based on the faulty assumption that men do not have and do not assume childcare responsibilities.

Harassment (Section 60-20.8). Addressing both quid pro quo and hostile-environment sexual harassment, the final rule prohibits 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 such conduct unreasonably interferes with an individual’s work performance, becomes the basis for employment decisions, or creates a hostile working environment. The rule also clarifies that sexual harassment includes: (1) harassment based on gender identity or expression, (2) harassment based on pregnancy, childbirth, or related medical conditions, and (3) sex-based harassment that is not sexual in nature but that is because of sex or where one sex is targeted for the harassment.

Appendix offers best practices. An appendix to the final rule identifies best practices designed to help contractors develop and implement procedures to ensure an environment in which all employees feel safe and welcomed, are treated fairly, and are not harassed because of sex.

Religious exemptions. While there is no formal process for invoking the Religious Freedom Restoration Act (RFRA) as a basis for an exemption from EO 11246, the preamble to the final rule explains that insofar as the application of any requirement under this part would violate RFRA, such application shall not be required. Also, the OFCCP notes that EO 11246 specifically allows religiously affiliated contractors (religious corporations, associations, educational institutions, or societies) to favor individuals of a particular religion when making employment decisions. The agency also notes that it follows Supreme Court precedent recognizing that the First Amendment to the Constitution requires a “ministerial exception” from employment discrimination laws, which prohibits the government from interfering with the ability of a religious organization to make employment decisions about its “ministers,” a category that includes, but is not limited to, clergy.

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