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Compliance

OFCCP—Sex Discrimination Rules

PURPOSE

The purpose of the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) Sex Discrimination Rules is “to ensure nondiscrimination in employment on the basis of sex and to take affirmative action to ensure that [federal contractors] treat applicants and employees without regard to their sex.” The purpose of the latest iteration of the OFCCP’s Sex Discrimination Rules is to add sexual orientation and gender identity to the list of protected bases and to “clarify[y] OFCCP’s interpretation of [relevant executive orders] as [they] relate to sex discrimination.”

HISTORY

The Sex Discrimination Rules found in 41 C.F.R. Part 60-20 (“Sex Discrimination Rules”) were first published in 1970, and were based on Executive Order No. 11,246, which President Lyndon B. Johnson signed on September 24, 1965. For decades, no substantive changes were made to the Sex Discrimination Rules. On July 21, 2014, President Obama issued Executive Order (EO) 13,672, which amended EO 11,246 to prohibit discrimination based on sexual orientation and gender identity.6 The OFCCP issued a Notice of Proposed Rulemaking (NPRM) on January 30, 2015, noting that “it is long overdue for Part 60-20 to be updated . . . to revise this part to align the sex discrimination standards under EO 11,246 with developments and interpretations of existing title VII principles and to clarify OFCCP's corresponding interpretation of the Executive Order [as amended by EO 13,672].” On January 14, 2016, the OFCCP issued a final rule revising the Sex Discrimination Rules, which became effective on August 15, 2016.

APPLICABILITY TO BYU–HAWAII

The Sex Discrimination Rules apply to federal contractors who have federal contracts exceeding $10,000 invalue and are not subject to an exemption. Specifically, a business or organization generally must comply with the Sex Discrimination Rules if it (1) holds a single federal contract, subcontract, or federally assisted construction contract in excess of $10,000; (2) has federal contracts or subcontracts that have a combined total in excess of $10,000 in any twelve-month period; or (3) holds government bills of lading (a contract to ship government assets internationally), serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount. Those organizations that are not contractors, but merely recipients of grant funds, are not subject to the Sex Discrimination Rules.

Religious contractors may be exempt from the Sex Discrimination Rules under at least three possible grounds: (1) the Bush era exemption; (2) the Religious Freedom Restoration Act (RFRA); and (3) the First Amendment. While a thorough analysis of these religious exemptions and their application to BYU–Hawaii is beyond the scope of this memo, below is a description of these exemptions and the OFCCP’s public position on each.

The Bush-Era Exemption

In 2002, George W. Bush issued an executive order specifically exempting from coverage of the Sex Discrimination Rules “a religious corporation, association, education institution, or society, with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.” The same executive order stated that such contractors “are not exempted or excused from complying with the other requirements contained in this Order.” This language since has been adopted in the regulations. While the OFCCP recognizes that this exemption “permits religious organizations to prefer to employ only members of a particular religion,” the OFCCP still maintains that, “if a religious organization does hold a covered contract, it is prohibited from discriminating on any of the protected bases listed in Executive Order 11,246, as amended, including the newly added categories of sexual orientation and gender identity.”

The Religious Freedom Restoration Act

The Religious Freedom Restoration Act (RFRA) prohibits the federal government from placing a substantial burden on the free exercise of religions without (a) demonstrating a compelling government interest for doing so and (b) adopting the least restrictive means of achieving that compelling interest. OFCCP recognizes that “[i]f a contractor seeks an exemption to E.O. 11246 pursuant to RFRA, OFCCP will consider that request based on the facts of the particular case . . . in consultation with the Solicitor of Labor and the Department of Justice, as necessary.” The OFCCP has not established any formal process for invoking RFRA as an exemption.

First Amendment

Beyond the exemptions recognized under federal regulation or statute, religious contractors also may be able to claim an exemption based on their rights under the First Amendment to the U.S. Constitution, which prohibits any federal law “respecting an establishment of religion, or prohibiting the free exercise thereof.” Specifically, a religious organization may be able to rely on church autonomy doctrines under the First Amendment, including non-entanglement, non-interference, or even the ministerial exception, as established by case law. The OFCCP expressly recognizes the “ministerial exemption,” which “prohibits the [g]overnment 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.”

BYU–Hawaii does not have federal research contracts; therefore, the Sex Discrimination Rules likely would not apply to BYU–Hawaii. Should BYU–Hawaii decide to accept federal contracts greater than $10,000 in the aggregate, the Sex Discrimination Rules would likely apply unless BYU–Hawaii can establish that it meets one of the above referenced religious exemptions.

REQUIREMENTS

The Sex Discrimination Rules generally prohibits federal contractors “to discriminate against an employee or an applicant for employment because of sex.” Under the Sex Discrimination Rules updated in 2016, “the term sex includes, but is not limited to, pregnancy, childbirth, or related conditions; gender identity; transgender status; and sex stereotyping.” The regulations themselves do not define “gender identity” or “sexual orientation,” but the OFCCP has separately provided definitions for those terms. According to the OFCCP, “gender identity” means “one’s internal sense of one’s own gender,” which “may or may not correspond to the sex assigned to a person at birth, and may or may not be made visible to others.” The term “sexual orientation” refers to “an individual’s physical, romantic, and/or emotional attraction to people of the same and/or opposite gender,” such as “straight
(or heterosexual), lesbian, gay, and bisexual.”

Qualifications for Work

Under the Sex Discrimination Rules, contractors may not use or refer to sex as a qualification for work related decisions, including but not limited to recruiting, hiring, firing, promotion, and compensation. However, employers may hire applicants based on sex for jobs where sex is a bona fide occupational qualification (BFOQ) that is necessary for the operation of a business. Otherwise, the rules generally prohibit all forms of sex discrimination in employment, including the following examples:

  1. Unequally applying distinctions between unmarried and married persons on the basis of sex;
  2. Denying women with children an employment opportunity that is available to men with children;
  3. Treating men and women differently in determining flexible work arrangements;
  4. Adversely treating unmarried women (but not unmarried men) who become parents;
  5. Applying different standards in hiring or promoting men and women on the basis of sex;
  6. Steering individuals into lower-paying or less desirable jobs on the basis of sex;
  7. Making different requirements for retirement age, or other retirement benefits, on the basis of sex;
  8. Restricting job classifications on the basis of sex;
  9. Maintaining seniority lines and lists on the basis of sex;
  10. Recruiting or advertising for individuals for certain jobs on the basis of sex;
  11. Distinguishing in training, mentoring, sponsorship, or other programs on the basis of sex;
  12. Making any facilities (such as bathrooms, showers, changing rooms, etc.) and employment-related activities available only to members of one sex, and not others;29
  13. Denying transgender employees access to restrooms, changing rooms, showers, or similar facilities designated for use by the gender with which they identify; and
  14. Treating employees or applicants adversely because they have undergone, or plan to undergo, gender-transition medical services.

The Sex Discrimination Rules also prohibit employment policies or practices that have a disparate impact on the basis of sex, including the following:

  1. Qualifications for height and weight that are not necessary for the job and that negatively impact women substantially more than men;
  2. Strength, agility, or other physical requirements that exceed the requirements for the job and that negatively impact women substantially more than men;
  3. Using an employment selection procedure (e.g. test, interview) that is in violation of the
    Uniform Guidelines on Employee Selection Procedures; and
  4. Relying on recruitment or promotion methods that have an adverse impact on women where the contractor cannot establish that they are job-related and consistent with business necessity.

Compensation Requirements

Under the Sex Discrimination Rules, contractors may not establish differences in wages, benefits, or other compensation, or deny compensation opportunities, based on sex, whether such discrimination is individual or systemic in nature. The following are some examples of sex discrimination in compensation:

  1. Paying different compensation to similarly qualified or situated employees on the basis of sex;
  2. Granting or denying higher-paying wage rates, salaries, positions, job classifications, work assignments, shifts, development opportunities, or other opportunities on the basis of sex;
  3. Providing or denying additional earnings opportunities because of sex, such as regular and/or overtime hours, commissions, pay increases, incentive compensation; and
  4. Implementing compensation practices that have an adverse impact on the basis of sex and are not shown to be job-related and consistent with business necessity.

The regulations also include a catchall, which provides that “[a] contractor will be in violation of [the Sex Discrimination Rules] 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.”

Pregnancy, Childbirth, and Medically Related Discrimination

The Sex Discrimination Rules also prohibit discrimination against employees affected by pregnancy, childbirth, or related medical conditions. Those affected by such conditions must be treated in the same manner by their employers as those not affected, including but not limited to the receipt of benefits under fringe-benefit programs. For example, contractors may not fire a woman or require her to go on leave because she becomes pregnant or has a child.39 Contractors also must accommodate pregnancy-affected women with work appropriate for their condition if they are unable to perform their regular duties.

Because the Sex Discrimination Rules prohibit contractors from denying or providing family, medical, or other leave on the basis of sex, contractors also must provide medical and sick leave for persons affected by pregnancy, childbirth, or related conditions, on the same basis that such contractors provide medical and sick leave to persons with other medical conditions that affect an employee’s ability to work. In addition, contractors must give job-guaranteed family leave to male employees on the same terms that such contractors give family leave to female employees. In situations where a contractor provides no medical leave, the contractor must prove that such leave is not withheld on the basis of sex and that the withholding of medical leave is job-related.

Fringe Benefits

Under the Sex Discrimination Rules, contractors may not withhold, reduce, or changed benefits, such as health care, insurance, retirement benefits, on the basis of sex, even if the cost of such benefits is higher for one sex than it is for another.

Prohibited Discrimination Based on “Sex-Stereotypes”

The Sex Discrimination Rules also prohibit contractors from making “any employment decisions on the basis of sex-based stereotypes, such as stereotypes about how males and/or females are expected to look, speak, or act.” Specifically, the regulations prohibit adverse treatment of an employee or applicant because of that individuals’ failure to comply with “gender norms” and expectations for dress and appearance (e.g. clothing, makeup, jewelry). The regulations also prohibit “adverse treatment of employees or applicants because of their actual or perceived gender identity or transgender status.” The rules further expressly prohibit contractors from treating employees or applicants differently based on sex based stereotypes about caregiver responsibilities (e.g. motherhood).

Harassment and Hostile Work Environments

Finally, the Sex Discrimination Rules prohibit harassment on the basis of sex, including both sexual harassment and non-sexual harassment that is based on sex or sex-based stereotypes (including harassment based on gender identity or transgender status).50 Prohibited forms of harassment include, among other things, unwelcome sexual advances, requests for sexual favors, and offensive remarks about a person’s sex.

Best Practices

The OFCCP’s regulations establish “best practices” for contractors, even though the Sex Discrimination Rules do not necessarily require such practices:

  1. Avoiding gender-specific job titles;
  2. Designating single-user restrooms as sex-neutral;
  3. Providing light-duty jobs suitable for employees affected by pregnancy, childbirth, or similar medical conditions;
  4. Providing time-flexible working policies for men and women;
  5. Encouraging both men and women to be involved in caregiving-related activities;
  6. Creating a working environment where women are not assumed to be more involved in
    caregiving-related activities; and
  7. Fostering a work environment in which people feel safe, welcome, and treated fairly by (a) communicating that harassment will not be tolerated; (b) providing anti-harassment training; and (c) implementing procedures for handling and responding to sexual harassment complaints.

PENALTIES

If the OFCCP finds that a contractor is in violation of the Sex Discrimination Rules, the Secretary of Labor may do any or all of the following: (a) publish the name of the non-compliant contractor; (b) recommend that the Department of Justice or the Equal Employment Opportunity Commission take legal or other action against the contractor; and/or (c) cancel, terminate, suspend the contracts or provide that the contracting agency enter into no further contracts with the offending contractors.