I. INTRODUCTION
The Office of Federal Contract Compliance Programs (OFCCP) has published a final rule substantially revising the sex discrimination guidelines for federal contractors and subcontractors.
The final rule applies to any business or organization that (1) holds a single federal contract, subcontract or federally assisted construction contract in excess of $10,000; (2) has federal contracts or subcontracts that, combined, total in excess of $10,000 in any 12-month period; or (3) holds government bills of lading, serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount.
The effective date of the final rule was August 15, 2016.
II. DISCRIMINATION IN COMPENSATION – FAIR PAY PRACTICES
The rule's fair pay practices dictate that "similarly situated employees" must be paid similarly, and may not be otherwise discriminated against in wages, benefits, or any other forms of compensation or …access to earnings opportunities, regardless of sex. To aid in determining whether employees in a given case are "similarly situated," the OFCCP has articulated relevant factors such as tasks performed, skills, effort, level of responsibility, working conditions, job difficulty and minimum qualifications.
III. DISPARATE TREATMENT/DISPARATE IMPACT
The final rule provides examples of disparate treatment, which include:
• Making distinctions between married and unmarried persons that are not applied equally to men and women;
• Denying transgender employees access to the restrooms, changing rooms, showers, and similar facilities designated for use by the gender with which they identify;
• Treating employees or applicants adversely because they have received, are receiving, or are planning to receive transition-related medical services designed to facilitate the adoption of a sex or gender other than the individual’s designated sex at birth;
• Restricting job classifications and maintaining seniority lines or lists on the basis of sex;
• Recruiting or advertising for certain jobs on the basis of sex;
• Imposing any differences in terms, conditions, or privileges of retirement on the basis of sex.
The final rule codifies the disparate impact theory of sex discrimination as it relates to compensation practices. “Disparate impact” is defined as “[e]mployment policies or practices that have an adverse impact on the basis of sex, and are not job-related and consistend with business necessity.
The Rule also gives the following examples of practices which may have a disparate impact:
• Relying on recruitment or promotion methods, such as ‘‘word-of mouth’’ recruitment or ‘‘tap-on-the shoulder’’ promotion, that have an adverse impact on women where the contractor cannot establish that they are job-related and consistent with business necessity.
• Using height or weight qualifications that are not necessary to the performance of a job, and that negatively affects women more than men.
• Requiring strength, agility, or other physical requirements that exceed the actual requirements necessary to perform the job in question and that negatively impact women substantially more than men.
• Providing no medical or family leave (or insufficient leave) that has an adverse impact on the basis of sex (male or female), unless the policy is job related and consistent with business necessity.
IV. DISCRIMINATION ON THE BASIS OF PREGNANCY, CHILDBIRTH, OR RELATED MEDICAL CONDITIONS
The Rule prohibits contractors from discriminating on the basis of pregnancy, childbirth, or related medical conditions. It requires contractors to “treat people of childbearing capacity and those affected by pregnancy, childbirth, or related medical conditions the same for all employment-related purposes, including receipt of benefits under fringe-benefit programs, as other persons not so affected, but similar in their ability or inability to work.” Contractors must provide health insurance that covers pregnancy, childbirth and related costs to the same extent other medical conditions are covered.
The following are examples of unlawful pregnancy discrimination:
• Refusing to hire pregnant workers or workers of childbearing capacity;
• Firing female employees or requiring them to go on leave simply because they become pregnant or have a child;
• Requiring a doctor’s note in order for a pregnant employee to continue or resume working;
The Final Rule specifies that denying accommodations for pregnancy, childbirth, or related medical conditions constitutes unlawful disparate treatment where (i) the contractor denies accommodations only to employees affected by pregnancy, childbirth, or related conditions; (ii) the contractor provides accommodations to other employees whose abilities or inabilities to perform their job duties are similarly affected, the denial of accommodations to employees affected by pregnancy, childbirth, or related medical conditions imposes a significant burden on those employees, and the contractor’s asserted reasons for denying accommodations do not justify that burden; or (iii) intent to discriminate is otherwise shown.
The Rule also clarifies that the OFCCP will apply a disparate-impact analysis to policies and practices that 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. If such policies or practices have an adverse impact on the basis of sex, contractors must show that they are job-related and consistent with business necessity.
V. FRINGE BENEFITS
The Final Rule clarifies that contractors may not discriminate on the basis of sex with regard to the provision of fringe benefits such as medical, hospital, accident, life insurance, retirement benefits, bonus plans and leave, even if the cost of providing a fringe benefit to the members of one sex is greater than the cost of providing it to members of the other sex.
The OFCCP opens the door for claims against contractors who categorically exclude coverage for care related to gender dysphoria or gender transition. The OFCCP takes the position that such exclusion is facially discriminatory because it singles out services and treatments for individuals on the basis of their gender identity or transgender status, which constitutes discrimination based on sex. In evaluating whether the denial of coverage of a particular service (as opposed to a categorical exclusion) where an individual is seeking the service as part of a gender transition is discriminatory treatment, the OFCCP states it will review whether there is a legitimate, nondiscriminatory reason for such denial or limitation that is not a pretext for discrimination.
VI. SEX-BASED STEREOTYPES
The rule provides that employment decisions made on the basis of stereotypes — including failure to conform to gender norms and expectations for dress, appearance, and/or behavior; actual or perceived gender identity or transgender status; and caregiver responsibilities — are a form of sex discrimination. Examples given include:
• Adverse treatment of employees or applicants based on their sexual orientation where the evidence establishes that the discrimination is based on gender stereotypes.
• Adverse treatment of a female employee or applicant because she does not conform to a sex stereotype about women working in a particular job, sector, or industry.
• Adverse treatment of a male employee because he has taken leave to care for his newborn or recently adopted child based on the sex-stereotyped belief that women and not men should care for children.
VII. BEST PRACTICES
The Final Rule also includes an Appendix of "Best Practices." These are not required of contractors, but may serve as evidence of a contractor's good faith efforts toward affirmative action compliance. Some of the "Best Practices" include:
• Designating single-user restrooms or similar facilities as sex-neutral;
• Using gender-neutral terminology instead of "foreman" or "lineman," where gender-neutral alternatives are available;
• Providing, as part of broader accommodations policies, light duty, modified job duties or assignments, or other reasonable accommodations to employees who are unable to perform some of their job duties because of pregnancy, childbirth, or related medical conditions;
• Encouraging men and women equally to engage in caregiving-related activities;
• Providing appropriate time off and flexible workplace policies for men and women.
VIII. CONCLUSION
The final rule may not ultimately change customary business practices as federal contractors are already likely to be complying with the guidelines since they are consistent with current Title VII and Equal Employment Opportunities Commission interpretations of sex discrimination.