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June 18, 2016 Practice Points

New Gender Antidiscrimination Laws for Federal Contractors

By Michael L. Huggins

For the first time in over 45 years, the U.S. Department of Labor has substantively amended its rules governing the employment practices of federal contractors and subcontractors to safeguard against sex discrimination. The revisions draw on case precedents and the regulations of other federal agencies. The final rules, 41 C.F.R. part 60-20, will be published in the June 15 Federal Register and go into effect August 15, 2016. 

The rules have two purposes: prohibiting discrimination and requiring affirmative action. And they apply to three categories of businesses and organizations, namely, (1) those with federal contracts, subcontracts, or federally-assisted construction contracts for more than $10,000; (2) those with federal contracts and subcontracts that total more than $10,000 combined in a year; and (3) those holding government bills of lading, serving as a depository of federal funds, or that serve issue and pay agencies for U.S. savings bonds and notes in any amount. 

It is anticipated that many contractors will have to make few, if any, changes to their current practices in order to comply with these new regulations. A contractor would not violate the rules, for example, by using targeted female recruitment efforts as part of its affirmative action obligations. And the rules explicitly state that pay does need not be equal. But rather, they allow for differences in compensation based on neutral, job-related factors, such as tenure. The rules recognize that pay or other employment practices, including selection criteria, that have a disparate impact based on sex are unlawful unless shown to be job-related and consistent with business necessity. 

Additionally, the rules require contractors to allow workers to use bathrooms, changing rooms, and similar facilities that are consistent with their gender identity. With respect to fringe benefits, employers must provide equal benefits regardless of an employee’s sex assigned at birth, gender identity, or recorded gender. Moreover, the rule prohibits stereotyping “based on an employee's nonconformity with norms about how people with the employee's assigned sex at birth should look, speak, and act.” And contractors may not make employment decisions based on stereotypes related to the “proper roles” of women and men regarding caregiving. 

At bottom, the rules prohibit sex-based job classifications and state the “underlying principle that, absent a job-specific BFOQ, no job is the separate domain of any sex.” 

Labor Secretary Thomas Perez has explained that it is time to “bring the rules against sex discrimination into the 21st century.” By passing these rules, the Department of Labor aims to reduce the Government’s costs and increase the efficiency of its operations by ensuring that employers consider all employees and applicants fairly. The Department also anticipates that through these efforts, the Government will benefit from the best qualified and most efficient employees.

Michael L. Huggins is Deputy Attorney General for the State of California in San Francisco, California.

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