By Michael Childers and Alissa Horvitz

The Office of Federal Contract Compliance Programs (OFCCP) has issued a notice of proposed rulemaking addressing the requirements covered federal government contractors and subcontractors must meet as part of their obligations under Executive Order 11246, which established nondiscrimination and affirmative action requirements for federal contractors.  This proposed rule will update the existing Sex Discrimination Guidelines to reflect legislative changes that have occurred since they were implemented in 1970 (e.g., Title VII amendments, Pregnancy Discrimination Act, Lilly Ledbetter Act) and the judicial rulings interpreting these laws.  While the proposed rule represents a complete restructuring of the regulations addressing the agency's Sex Discrimination Guidelines (41 CFR Part 60-20), the majority of the changes implement legislative updates to which contractors are already subject.  

Section 60-20.2 of the proposal clarifies that in addition to not engaging in discrimination on the basis of sex, contractors also must not discriminate based on pregnancy, childbirth, or related medical conditions because these traditionally are seen as a proxy for discrimination based on sex.  The proposed rule also extends sex discrimination protection to individuals based on gender identity and transgender status per OFCCP Directive 2014-02.  This section concludes by providing a non-exhaustive list of specific practices that are prohibited under the disparate treatment theory of discrimination and by reaffirming that contractors may also be found to have engaged in sex discrimination on the basis of practices that create a disparate impact on one sex. 

Section 60-20.3 incorporates the bona fide occupational qualification language from Title VII, which protects employers from charges of engaging in an unlawful employment practice if they hire, employ or classify jobs based on sex when doing so is reasonably necessary for the normal operation of the business.  

Section 60-20.4 prohibits sex discrimination in compensation and places an obligation on contractors to maintain data, conduct reviews and monitor pay practices for compensation disparities based on gender.  This section also notes that a contractor may be subject to liability under a disparate impact theory if its system of performance reviews is shown to have an adverse impact on one sex.  

Section 60-20.5 incorporates the protections of the Pregnancy Discrimination Act, which prohibits employers from treating employees differently on the basis of pregnancy.  This section also requires that comparable reasonable accommodations be given to pregnant employees if such accommodations are available to non-pregnant employees (Please note that this requirement may change depending on the Supreme Court’s impending decision in Young v. United Parcel Service, Inc.). 

Section 60-20.6 updates the regulatory language relating to fringe benefits to reflect the Supreme Court’s decision in City of Los Angeles v. Manhart (1978), requiring that employers must provide equal fringe benefits to both sexes even if doing so costs more for one sex than the other.  

Section 60-20.7 incorporates the Supreme Court decisions relating to sex stereotyping and prohibits employment actions taken based on stereotypes about how a particular sex looks, speaks, or acts.  This section also prohibits stereotype-based discrimination on the basis of gender identity.  

Finally, section 60-20.8 addresses the problems of harassment in the workplace and creates an affirmative obligation for contractors to make efforts to prevent it from happening as well as to investigate and remedy any instances which are reported. 

OFCCP anticipates publishing the proposed rule in the Federal Register on Friday January 30, 2015, which would make comments due on or before March 31, 2015. More information on this proposal can be found on the OFCCP's webpage.