The Forgotten Regulations

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The last five years have been a time of monumental change for the U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP). Five major regulatory changes to the federal affirmative action regulations went into effect between 2014 and 2016, and 13 new directives have been issued since February of 2018. We have never seen a period at OFCCP when so many new initiatives have been announced and so many new responsibilities have been placed on federal contractors and subcontractors.

With all of the new initiatives involving OFCCP during the last few years, several of the agency's regulatory changes are being largely ignored, both by the agency and by the federal contractor community. However, federal contractors and subcontractors that fail to give any attention to these recent regulatory changes are open to unpleasant surprises should OFCCP decide to switch gears.
 
OFCCP's Regulations Regarding Sexual Orientation and Gender Identity
In April of 2015, new regulations that prohibited discrimination against applicants and employees on the basis of sexual orientation and gender identity came into effect. These regulations are associated with Executive Order 13672, which was issued on July 21, 2014. Executive Order 13672 modified Executive Order 11246 by adding sexual orientation and gender identity as protected classifications along with the categories that were previously covered (race, color, religion, sex, and national origin).

In the last number of months, the Trump administration has moved to curtail protections for individuals based on sexual orientation and gender identity in various arenas. For example, there are efforts to limit the participation of transgender persons in the military, and efforts to limit protections based on gender identity in higher education programs. While the Equal Employment Opportunity Commission has determined that sexual orientation is a protected classification under Title VII of the Civil Rights Act of 1964, the U.S. Department of Justice has taken the opposite position.

In light of these actions taken by the current administration, federal contractors and subcontractors may forget that the prohibitions against discrimination based on sexual orientation or gender identity found in Executive Order 13672 have not been withdrawn. The regulations under Executive Order 13672 will continue to be in effect until the President rescinds this executive order or the courts determine that sexual orientation and gender identity are not protected classifications under Title VII.1

The regulations implementing Executive Order 13672 have several specific requirements along with the general prohibition on discrimination based on sexual orientation and gender identity. For example, there is a requirement to ensure that an appropriate version of the federal “EEO is the Law” poster is made available to applicants and employees. The agency has also released a supplement to the currently approved version of the “EEO is the Law” poster that includes provisions regarding sexual orientation and gender identity. There is also a requirement to ensure that tag lines on advertisements have an appropriate equal opportunity clause. OFCCP has made available answers to frequently asked questions (FAQs) about Executive Order 13672 that provide insight into the agency's thinking about tag lines.

Along with the FAQs on tag lines, OFCCP has FAQs on accessibility to facilities and employee benefits. These may be the more critical issues for federal contractors and subcontractors to consider. The FAQs make it clear that organizations should be making restrooms and other facilities available to employees in a way that does not discriminate against employees on the basis of sexual orientation or gender identity. The FAQs also state that benefits plans may not discriminate against employees on the basis of sexual orientation or gender identity.

There are some federal contractors and subcontractors located in states and municipalities where discrimination based on sexual orientation and/or gender identity was already prohibited under state or local law. Any protections provided by Executive Order 13672 may have already been effectuated by organizations located in these areas. Federal contractors and subcontractors located outside of these areas may be surprised to learn that the current administration's antipathy towards protections regarding sexual orientation or gender identity does not relieve organizations of their obligations to prevent discrimination based on these classifications.
 
OFCCP's Regulations Regarding Sex Discrimination
In August of 2016, new regulations regarding sex discrimination came into effect. While there had previously been guidelines regarding sex discrimination, these guidelines were badly outdated and were in need of significant revision to bring them into conformity with current case law and legislation. OFCCP did that with the new sex discrimination regulations.

The new sex discrimination regulations have received little attention from the federal contractor community. This is due in part to the fact that OFCCP has other priorities that appear to be more pressing for employers, and in part to the fact that some of the new regulations simply bring OFCCP's guidance into conformity with other federal laws. However, federal contractors and subcontractors should not ignore some of the more significant elements in these regulations.

One of the sections in the new sex discrimination regulations addresses compensation. OFCCP has been interested in finding discrimination in compensation for more than 20 years, and this interest has accelerated during the last 10 years. While the federal contractor community might have expected that OFCCP would relent from its focus on compensation during the current presidential administration, this has not been the case. OFCCP is attempting to make its approach to investigating possible compensation discrimination more transparent, but the agency continues to search for compensation disparities.

OFCCP's thinking about compensation during the Obama administration was distilled in Directive 2013-03, which was issued in February of 2013. This directive gave OFCCP compliance officers significant latitude in evaluating compensation policies, practices, decisions, and data. Directive 2013-03 was rescinded in August of 2018 and was replaced by Directive 2018-05. The new directive provides federal contractors and subcontractors with a picture of what OFCCP currently expects and commits OFCCP to giving organizations involved in affirmative action compliance reviews more information about what the agency has found. However, the new directive does not significantly limit the agency's right to evaluate compensation in whatever manner the agency deems appropriate, and it does not require that the agency use an organization's existing compensation structures in evaluating how employees are paid.
 Thus, the agency would be within its rights to change course on how it will investigate compensation issues involving sex without issuing a new directive or additional guidance.
When there are discussions about how compensation will be reviewed by the agency, most of the federal contractor community's attention has been focused on the OFCCP directives noted above. However, OFCCP's directives are not law; they can be modified or withdrawn at any time. OFCCP's sex discrimination regulations, on the other hand, ARE law, and the sex discrimination regulations effectively codified much of what was in Directive 2013-03. Thus, the agency would be within its rights to change course on how it will investigate compensation issues involving sex without issuing a new directive or additional guidance. OFCCP could rely on the extensive latitude provided by the sex discrimination regulations to act in the manner the agency sees fit.

OFCCP's sex discrimination regulations have various other provisions that are important to employers. For example, there are prohibitions involving sex-based stereotyping and pregnancy discrimination. There are also prohibitions regarding discrimination on the basis of gender identity. While these provisions have been receiving little attention during OFCCP compliance reviews, agency priorities may change and the agency may begin to aggressively enforce these requirements.
 
Actions Associated with the Forgotten Regulations
It is understandable for organizations subject to the federal affirmative action laws and regulations to focus their efforts on items that are a priority for OFCCP. Currently, these items include outreach regarding individuals with disabilities, preventing compensation discrimination, and preventing discrimination in entry-level hiring. However, federal contractors and subcontractors should consider how they will implement the two sets of regulations discussed above. Among the actions that should be taken are the following:
 
  • Ensure there is no discrimination against applicants or employees based on sexual orientation or gender identity.

  • Review tag lines on job postings to ensure they meet the requirements under all of the affirmative action laws.

  • Ensure that there is access to facilities and benefits in a manner that does not discriminate based on sexual orientation or gender identity.

  • Recognize that OFCCP can change its approach on reviewing compensation at any time and that the agency has a regulatory tool to intensively investigate sex-based compensation disparities.

  • Ensure that there is no sex-based stereotyping or pregnancy discrimination.

OFCCP's regulations regarding sexual orientation and gender identity and the agency's regulations regarding sex discrimination may not be receiving much attention at the moment. Like all of the agency's regulations, though, federal contractors and subcontractors ignore these regulations at their peril.

Please note: Nothing in this article is intended as legal advice or as a substitute for any professional advice about your organization's particular circumstances. All original materials copyright © HR Analytical Services Inc. 2019

1. OFCCP has generally been bound by any limitations associated with Title VII because Executive Order 11246 and Executive Order 13672 derive their authority in part from the provisions of Title VII. Thus, a court ruling that Title VII does not cover sexual orientation or gender identity would likely limit protections provided under these executive orders.