By Anthony M. Hohn and Ashley R. Brost, Summer Associate

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On June 15, 2016, the United States Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) released its Final Rule establishing that federal government contractors and subcontractors, as well as federally assisted construction contractors and subcontractors, are obligated to ensure employment-based nondiscrimination on the basis of gender or sex. This Rule further establishes that contractors must take affirmative action by identifying and eliminating sex-based discrimination to ensure that employees, as well as applicants, are treated the same regardless of sex. This Final Rule was enacted to conform to Title VII of the Civil Rights Act, specifically focusing on preventing discrimination based on pregnancy, transgender, sexual stereotypes, and gender identity issues.

Prior to the Final Rule, the last amendment made to the OFCCP’s Sex Discrimination Guidelines occurred in 1970. In the last forty-six years, however, the United States Supreme Court has outlined numerous practices that constitute unlawful sexual discrimination under Title VII, including: sex-differentiated employee pension fund contributions, exclusion of pregnancy related hospital coverage for spouses of male employees, retaliation for filing charges of sexual discrimination, and discrimination based on sexual stereotyping. The Court has also recognized certain protections to eliminate sex-based discrimination, including: the need for upholding job-guaranteed leave for pregnant employees, the need for a cause of action for same-sex-based harassment claims, and the need for holding employers vicariously liable under Title VII for the harassing conduct of supervisors. In the past several years, the OFCCP has found several instances of sex-based discrimination when reviewing federal contractor compliance evaluations, and therefore recognized the need to adapt to a modern employment landscape.

Final Rule Replaces Outdated Information

The Final Rule replaces outdated information with new sex discrimination guidelines. The Rule does not change a contractor’s duty, but instead reiterates a contractor’s obligation to ensure nondiscrimination. Divided into eight sections, the Rule sets forth the general prohibition of sex discrimination arising from pregnancy, childbirth, gender identity, transgender status, and sexual stereotypes. It also covers instances when sexual discrimination may be acceptable (i.e. specific instances where gender is a “bona fide” qualification necessary to the contractor’s business; examples of sex based discrimination). It includes a prohibition of sex-based discrimination regarding fringe benefits, and also sets forth gender norms that may result in sex-based discrimination. Finally, the rule outlines the prohibition of the creation of a hostile work environment caused by sex. If a contractor is found to be in violation of the Rule, he or she may be held liable, which may result in suspension, cancellation, termination, and/or debarment of the contract.

Final Rule is Intended to Benefit Contractors and Employees

The Final Rule is said to benefit both contractors and employees by providing clear applications of the law. The goal is to help contractors understand how to comply with the regulations and therefore reduce a contractor’s costs by eliminating ambiguities. The Rule is also intended to benefit applicants by enhancing the promise of equal employment opportunities. In addition to protecting pregnant women from losing their jobs, the Rule is drafted to protect both male and female employees from sexual discrimination or adverse treatment based on gender stereotypical treatment.

While this Final Rule currently applies only to federal contractors, the Rule is indicative of how the Equal Employment Opportunity Commission, the federal agency responsible for overseeing the enforcement of equal opportunity employment, will interpret Title VII claims going forward. It is therefore important for non-government employers to similarly take note of the modern shift in ensuring that sex-based discrimination is absent from the workforce. Thus, all employers should be cognizant to avoid any employment practices that may trigger sex-based discrimination treatment, specifically in relation to pregnancy, transgender, or gender stereotypical treatment.

Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the state’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit