Discrimination on the Basis of Sex

Federal RegisterJun 15, 2016

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DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

41 CFR Part 60-20

RIN 1250-AA05

Discrimination on the Basis of Sex

AGENCY:

Office of Federal Contract Compliance Programs, Labor.

ACTION:

Final rule.

SUMMARY:

The U.S. Department of Labor's Office of Federal Contract Compliance Programs publishes this final rule to detail obligations that covered Federal Government contractors and subcontractors and federally assisted construction contractors and subcontractors must meet under Executive Order 11246, as amended, to ensure nondiscrimination in employment on the basis of sex and to take affirmative action to ensure that applicants and employees are treated without regard to their sex. This rule substantially revises the existing Sex Discrimination Guidelines, which have not been substantively updated since 1970, to align them with current law and legal principles and address their application to contemporary workplace practices and issues. The provisions in this final rule articulate well-established case law and/or applicable requirements from other Federal agencies and therefore the requirements for affected entities are largely unchanged by this rule.

DATES:

Effective Date:

These regulations are effective August 15, 2016.

FOR FURTHER INFORMATION CONTACT:

Debra A. Carr, Director, Division of Policy and Program Development, Office of Federal Contract Compliance Programs, 200 Constitution Avenue NW., Room C-3325, Washington, DC 20210. Telephone: (202) 693-0104 (voice) or (202) 693-1337 (TTY). Copies of this rule in alternative formats may be obtained by calling (202) 693-0104 (voice) or (202) 693-1337 (TTY). The rule also is available on the

Regulations.gov

Web site at

http://www.regulations.gov

and on the OFCCP Web site at

http://www.dol.gov/ofccp.

SUPPLEMENTARY INFORMATION:

Executive Summary

Purpose of the Regulatory Action

The U.S. Department of Labor's (DOL) Office of Federal Contract Compliance Programs (OFCCP) is promulgating regulations that set forth the obligations that covered

Federal Government contractors and subcontractors and federally assisted construction contractors and subcontractors (contractors) must meet under Executive Order 11246, as amended

(the Executive Order or E.O. 11246). These regulations detail the obligation of contractors to ensure nondiscrimination in employment on the basis of sex and to take affirmative action to ensure that they treat applicants and employees without regard to their sex.

Employers with Federal contracts or subcontracts totaling $10,000 or more over a 12-month period, unless otherwise exempt, are covered by the Executive Order.

See

41 CFR 60-1.5(a)(1). Exemptions to this general coverage are detailed at 41 CFR 60-1.5.

E.O. 11246, September 24, 1965, 30 FR 12319, 12935, 3 CFR, 1964-1965, as amended.

OFCCP is charged with enforcing E.O. 11246, which prohibits employment discrimination by contractors on the basis of race, color, religion, sex, sexual orientation, gender identity,

or national origin, and requires them to take affirmative action to ensure that applicants and employees are treated without regard to these protected bases. E.O. 11246 also prohibits contractors from discharging or otherwise discriminating against employees or applicants because they inquire about, discuss, or disclose their compensation or the compensation of other applicants or employees.

OFCCP interprets the nondiscrimination provisions of the Executive Order consistent with the principles of title VII of the Civil Rights Act of 1964 (title VII),

which is enforced, in large part, by the Equal Employment Opportunity Commission (EEOC), the agency responsible for coordinating the Federal Government's enforcement of all Federal statutes, executive orders, regulations, and policies requiring equal employment opportunity.

Executive Order 13672, issued on July 21, 2014, added sexual orientation and gender identity to E.O. 11246 as prohibited bases of discrimination. It applies to covered contracts entered into or modified on or after April 8, 2015, the effective date of the implementing regulations promulgated thereunder.

Executive Order 13665, issued on April 8, 2014, added this prohibition to E.O. 11246. It applies to covered contracts entered into or modified on or after January 11, 2016, the effective date of the implementing regulations promulgated thereunder.

Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e-2000e-17; U.S. Department of Labor, Office of Federal Contract Compliance Programs, Federal Contract Compliance Manual, ch. 2, § 2H01,

available at http://www.dol.gov/ofccp/regs/compliance/fccm/FCCM_FINAL_508c.pdf

(last accessed March 25, 2016)

(FCCM); see also OFCCP

Greenwood Mills, Inc.,

No. 00-044, 2002 WL 31932547, at *4 (Admin. Rev. Bd. December 20, 2002).

Executive Order 12067, 43 FR 28967, 3 CFR 206 (1978 Comp.). The U.S. Department of Justice also enforces portions of title VII, as do state Fair Employment Practice Agencies (FEPAs).

OFCCP's Sex Discrimination Guidelines at 41 CFR part 60-20 (Guidelines) have not been substantively updated since they were first promulgated in 1970.

The Guidelines failed to conform to or reflect current title VII jurisprudence or to address the needs and realities of the modern workplace. Since 1970, there have been historic changes to sex discrimination law, in both Federal statutes and case law, and to contractor policies and practices as a result of the nature and extent of women's participation in the labor force. Issuing these new regulations should resolve ambiguities, thus reducing or eliminating any costs that such contractors previously may have incurred to reconcile conflicting obligations.

35 FR 8888, June 9, 1970. The Guidelines were reissued in 1978. 43 FR 49258, October 20, 1978. The 1978 version substituted or added references to E.O. 11246 for references to E.O. 11375 in paragraphs 60-20.1 and 60-20.5(c), but otherwise did not change the 1970 version.

It is long overdue for part 60-20 to be updated. Consequently, OFCCP issued a Notice of Proposed Rulemaking (NPRM) on January 30, 2015 (80 FR 5246), to revise this part to align the sex discrimination standards under E.O. 11246 with developments and interpretations of existing title VII principles and to clarify OFCCP's corresponding interpretation of the Executive Order. This final rule adopts many of those proposed changes, with modifications, and adds some new provisions in response to issues implicated in, and comments received on, the NPRM.

Statement of Legal Authority

Issued in 1965, and amended several times during the intervening years—including once in 1967, to add sex as a prohibited basis of discrimination, and most recently in 2014, to add sexual orientation and gender identity to the list of protected bases—E.O. 11246 has two purposes. First, it prohibits covered contractors from discriminating against employees and applicants because of race, color, religion, sex, sexual orientation, gender identity, or national origin; it also prohibits discrimination against employees or applicants because they inquire about, discuss, or disclose their compensation or the compensation of other employees or applicants. Second, it requires covered contractors to take affirmative action to ensure that applicants are considered, and that employees are treated during employment, without regard to their

race, color, religion, sex, sexual orientation, gender identity, or national origin. The nondiscrimination and affirmative action obligations of contractors cover a broad range of employment actions.

The Executive Order generally 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 requirements of the Executive Order promote the goals of economy and efficiency in Government contracting, and the link between them is well established.

See, e.g.,

E.O. 10925, 26 FR 1977 (March 8, 1961) (nondiscrimination and affirmative employment programs ensure “the most efficient and effective utilization of all available manpower”). The sex discrimination regulations adopted herein outline the sex-based discriminatory practices that contractors must identify and eliminate, and they clarify how contractors must choose applicants for employment, and treat them while employed, without regard to sex.

See, e.g.,

§ 60-20.2 (clarifying that sex discrimination includes discrimination on the bases of pregnancy, childbirth, related medical conditions, gender identity, transgender status,

and sex stereotyping, and that disparate treatment and disparate impact analyses apply to sex discrimination); § 60-20.3 (clarifying application of the

bona fide

occupational qualification (BFOQ) defense to the rule against sex discrimination); § 60-20.4, § 60-20.5, § 60-20.6, and § 60-20.8 (clarifying that discrimination in compensation; discrimination based on pregnancy, childbirth, or related medical conditions; discrimination in other fringe benefits; and sexual harassment, respectively, can be unlawful sex-discriminatory practices); and § 60-20.7 (clarifying that contractors must not make employment decisions based on sex stereotypes).

A transgender individual is an individual whose gender identity is different from the sex assigned to that person at birth. Throughout this final rule, the term “transgender status” does not exclude gender identity, and the term “gender identity” does not exclude transgender status.

Each of these requirements ultimately reduces the Government's costs and increases the efficiency of its operations by ensuring that all employees and applicants, including women, are fairly considered and that, in its procurement, the Government has access to, and ultimately benefits from, the best qualified and most efficient employees.

Cf. Contractors Ass'n of E. Pa.

Sec'y of Labor,

442 F.2d 159, 170 (3d Cir. 1971) (“[I]t is in the interest of the United States in all procurement to see that its suppliers are not over the long run increasing its costs and delaying its programs by excluding from the labor pool available minority [workers].”). Also increasing efficiency by creating a uniform Federal approach to sex discrimination law, the regulations' requirements to eliminate discrimination and to choose applicants without regard to sex are consistent with the purpose of title VII to eliminate discrimination in employment.

Pursuant to E.O. 11246, the award of a Federal contract comes with a number of responsibilities. Section 202 of this Executive Order requires every covered contractor to comply with all provisions of the Executive Order and the rules, regulations, and relevant orders of the Secretary of Labor. A contractor in violation of E.O. 11246 may be liable for make-whole and injunctive relief and subject to suspension, cancellation, termination, and debarment of its contract(s) after the opportunity for a hearing.

E.O. 11246, sec. 209(5); 41 CFR 60-1.27.

Major Revisions

OFCCP replaces in significant part the Guidelines at part 60-20 with new sex discrimination regulations that set forth Federal contractors' obligations under E.O. 11246, in accordance with existing law and policy. The final rule clarifies OFCCP's interpretation of the Executive Order as it relates to sex discrimination, consistent with title VII case law and interpretations of title VII by the EEOC. It is intended to state clearly contractor obligations to ensure equal employment opportunity on the basis of sex.

The final rule removes outdated provisions in the current Guidelines. It also adds, restates, reorganizes, and clarifies other provisions to incorporate legal developments that have arisen since 1970 and to address contemporary problems with implementation.

The final rule does not in any way alter a contractor's obligations under any other OFCCP regulations. In particular, a contractor's obligations to ensure equal employment opportunity and to take affirmative action, as set forth in parts 60-1, 60-2, 60-3, and 60-4 of this title, remain in effect. Similarly, inclusion of a provision in part 60-20 does not in any way alter a contractor's obligations to ensure nondiscrimination on the bases of race, color, religion, sexual orientation, gender identity, and national origin under the Executive Order; on the basis of disability under Section 503 of the Rehabilitation Act of 1973 (Section 503);

or on the basis of protected veteran status under 38 U.S.C. 4212 of the Vietnam Era Veterans' Readjustment Assistance Act.

Finally, it does not affect a contractor's duty to comply with the prohibition of discrimination because an employee or applicant inquires about, discusses, or discloses his or her compensation or the compensation of other applicants or employees under part 60-1.

29 U.S.C. 793.

38 U.S.C. 4212.

The final rule is organized into eight sections and an Appendix.

The first section (§ 60-20.1) covers the rule's purpose.

The second section (§ 60-20.2) sets forth the general prohibition of sex discrimination, including discrimination on the bases of pregnancy, childbirth, related medical conditions, gender identity, transgender status, and sex stereotypes. It also describes employment practices that may unlawfully treat men and women disparately. Finally, the second section describes employment practices that are unlawful if they have a disparate impact on the basis of sex and are not job-related and consistent with business necessity.

The third section (§ 60-20.3) covers circumstances in which disparate treatment on the basis of sex may be lawful—

i.e.,

those rare instances when being a particular sex is a

bona fide

occupational qualification reasonably necessary to the normal operation of the contractor's particular business or enterprise.

The fourth section (§ 60-20.4) covers sex-based discrimination in compensation and provides illustrative examples of unlawful conduct. As provided in paragraph 60-20.4(e) of the final rule, compensation discrimination violates E.O. 11246 and this regulation “any time [contractors] pay[ ] 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.”

The fifth section (§ 60-20.5), discrimination on the basis of pregnancy, childbirth, and related medical conditions, recites the provisions of the Pregnancy

Discrimination Act of 1978 (PDA);

lists examples of “related medical conditions;” and provides four examples of discriminatory practices. This section also discusses application of these principles to the provision of workplace accommodations and leave.

Amendment to Title VII of the Civil Rights Act of 1964 to Prohibit Sex Discrimination on the Basis of Pregnancy, Public Law 95-555, 995, 92 Stat. 2076 (1978),

codified at

42 U.S.C. 2000e(k).

The sixth section (§ 60-20.6) sets out the general principle that sex discrimination in the provision of fringe benefits is unlawful, with pertinent examples, and clarifies that the increased cost of providing a fringe benefit to members of one sex is not a defense to a contractor's failure to provide benefits equally to members of both sexes.

The seventh section (§ 60-20.7) covers employment decisions on the basis of sex stereotypes and discusses four types of gender norms that may form the basis of a sex discrimination claim under the Executive Order: Dress, appearance, and/or behavior; gender identity; jobs, sectors, or industries within which it is considered appropriate for women or men to work; and caregiving roles.

The eighth section (§ 60-20.8), concerning sexual harassment, including hostile work environments based on sex, articulates the legal standard for sexual harassment based on the EEOC's guidelines and relevant case law and explains that sexual harassment includes harassment based on gender identity; harassment based on pregnancy, childbirth, or related medical conditions; and harassment that is not sexual in nature but that is because of sex or sex-based stereotypes.

Finally, the final rule contains an Appendix that sets forth, for contractors' consideration, a number of practices that contribute to the establishment and maintenance of workplaces that are free of unlawful sex discrimination. These practices are not required.

Benefits of the Final Rule

The final rule will benefit both contractors and their employees in several ways. First, by updating, consolidating, and clearly and accurately stating the existing principles of applicable law, including developing case law and interpretations of existing law by the EEOC and OFCCP's corresponding interpretation of the Executive Order, the final rule will facilitate contractor understanding and compliance and potentially reduce contractor costs. The existing Guidelines are extremely outdated and fail to provide accurate or sufficient guidance to contractors regarding their nondiscrimination obligations. For this reason, OFCCP no longer enforces part 60-20 to the extent that it departs from existing law. Thus, the final rule should resolve ambiguities, reducing or eliminating costs that some contractors may previously have incurred when attempting to comply with part 60-20.

The final rule will also benefit employees of and job applicants to contractors. This final rule will increase and enhance the promise of equal employment opportunity envisioned under E.O. 11246 for the millions of women and men who work for contractor establishments. Sixty-five million employees work for the contractors and other recipients of Federal monies that are included in the U.S. General Service Administration's (GSA) System for Award Management (SAM) database.

U.S. General Services Administration, System for Award Management, data released in monthly files,

available at https://www.sam.gov/portal/SAM/#1.

More specifically, the final rule will advance the employment status of the more than 30 million female employees of contractors in several ways.

For example, it addresses both

quid pro quo

and hostile work environment sexual harassment. It clarifies that adverse treatment of an employee resulting from gender-stereotypical assumptions about family caretaking responsibilities is discrimination. It also confirms the requirement that contractors provide equal retirement benefits to male and female employees, even if the contractor incurs greater expense by doing so.

Bureau of Labor Statistics data establishes that 47 percent of the workforce is female.

Women in the Labor Force: A Databook

2, BLS Reports,

available at http://www.bls.gov/cps/wlf-databook-2012.pdf

(last accessed March 27, 2016) (Women in the Labor Force). Based on these data, OFCCP estimates that 30.6 million of the employees who work for contractors and other recipients of Federal monies in the SAM database are women.

In addition, by establishing when workers affected by pregnancy, childbirth, and related medical conditions are entitled to workplace accommodations, the final rule will protect such employees from losing their jobs, wages, and health-care coverage. OFCCP estimates that 2,046,850 women in the contractor workforce are likely to become pregnant each year.

OFCCP's methodology for arriving at this estimate was described in the preamble to the NPRM. 80 FR at 5262.

The final rule will benefit male employees of contractors as well. Male employees, too, experience sex discrimination such as sexual harassment, occupational segregation, and adverse treatment resulting from gender-stereotypical assumptions such as notions about family caregiving responsibilities. The final rule includes several examples of such gender-stereotypical assumptions as they affect men. For example, final rule paragraph 60-20.5(d)(2)(ii) clarifies that family leave must be available to fathers on the same terms as it is available to mothers, and final rule paragraph 60-20.7(d)(4) includes adverse treatment of a male employee who is not available to work overtime or on weekends because he cares for his elderly father as an example of potentially unlawful sex-based stereotyping.

Moreover, by clarifying that discrimination against an individual because of her or his gender identity is unlawful sex discrimination, the final rule ensures that contractors are aware of their nondiscrimination obligations with respect to transgender employees and provide equality of opportunity for transgender employees, the vast majority of whom report that they have experienced discrimination in the workplace.

Jaime M. Grant, Lisa M. Mottet, & Justin Tanis, National Center for Transgender Equality & National Gay and Lesbian Task Force, Injustice at Every Turn: A Report of the National Transgender Discrimination Survey 3 (2011),

available at http://www.transequality.org/issues/resources/national-transgender-discrimination-survey-executive-summary

(last accessed March 25, 2016) (

Injustice at Every Turn

Finally, replacing the Sex Discrimination Guidelines with the final rule will benefit public understanding of the law. As reflected in Section 6(a) of E.O. 13563, which requires agencies to engage in retrospective analyses of their rules “and to modify, streamline, expand, or repeal [such rules] in accordance with what has been learned,” removing an “outmoded” and “ineffective” rule from the Code of Federal Regulations is in the public interest.

Costs of the Final Rule

A detailed discussion of the costs of the final rule is included in the section on Regulatory Procedures,

infra.

In sum, the final rule will impose relatively modest administrative and other cost burdens for contractors to ensure a workplace free of sex-based discrimination.

The only new administrative burden the final rule will impose on contractors is the one-time cost of regulatory familiarization—the estimated time it takes to review and understand the instructions for compliance—calculated at $41,602,500, or $83 per contractor company, the first year.

The only other new costs of this rule that contractors may incur are the costs

of pregnancy accommodations, which OFCCP calculates to be $9,671,000 annually or less, or a maximum of $19 per contractor company per year.

Together, these costs amount to a maximum of $51,273,500, or $103 per contractor company, in the first year, and a maximum of $9,671,000, or $19 per contractor company, each subsequent year. These costs are summarized in Table 1, “New Requirements,”

infra.

Overview

Reasons for Promulgating This New Regulation

As described in the NPRM, since OFCCP's Sex Discrimination Guidelines were promulgated in 1970, there have been dramatic changes in women's participation in the workforce. Between 1970 and February, 2016, women's participation in the labor force grew from 43 percent to 57 percent.

This included a marked increase of mothers in the workforce: The labor force participation of women with children under the age of 18 increased from 47 percent in 1975 to 70 percent in 2014.

In 2014, both adults worked at least part time in 60 percent of married-couple families with children under 18, and 74 percent of mothers heading single-parent families with children under 18 worked at least part time.

U.S. Census Bureau, Statistical Abstract of the United States: 2012, Table 588,

Civilian Population—Employment Status by Sex, Race, and Ethnicity: 1970-2009, available at https://www.census.gov/library/publications/2011/compendia/statab/131ed/labor-force-employment-earnings.html

(last accessed March 27, 2016) (1970 figure); Bureau of Labor Statistics, U.S. Department of Labor Statistics,

Data Retrieval: Labor Force Statistics (Current Population Survey),

Household Data, Table A-1, Employment status of the civilian population by sex and age,

available at http://www.bls.gov/news.release/empsit.t01.htm

(last accessed March 25, 2016) (2016 figure).

Bureau of Labor Statistics, U.S. Department of Labor, TED: The Economics Daily, Labor force participation rates among mothers,

available at http://www.bls.gov/opub/ted/2010/ted_20100507.htm

(last accessed March 26, 2016) (1975 data); Press Release, Bureau of Labor Statistics, U.S. Department of Labor, Employment Characteristics of Families—2013 (April 23, 2015),

available at http://www.bls.gov/news.release/famee.nr0.htm

(last accessed February 21, 2016) (Employment Characteristics of Families—2014) (2014 data).

Employment Characteristics of Families—2014,

supra

note 18.

Since 1970, there have also been extensive changes in the law regarding sex-based employment discrimination and in contractor policies and practices governing workers. For example:

• Title VII, which generally governs the law of sex-based employment discrimination, has been amended four times: In 1972, by the Equal Employment Opportunity Act;

in 1978, by the PDA; in 1991, by the Civil Rights Act;

and in 2009, by the Lilly Ledbetter Fair Pay Act (FPA).

Equal Employment Opportunity Act of 1972, Public Law 92-261, 86 Stat. 103 (1972).

Civil Rights Act of 1991, Public Law 102-166, 1745, 105 Stat. 1071 (1991).

Lilly Ledbetter Fair Pay Act of 2009, Public Law 111-2, 123 Stat. 5 (2009).

• State “protective laws” that had explicitly barred women from certain occupations or otherwise restricted their employment conditions on the basis of sex have been repealed or are unenforceable.

See, e.g.,

Conn. Gen. Stat. § 31-18 (

repealed

1973) (prohibition of employment of women for more than nine hours a day in specified establishments); Mass. Gen. Laws ch. 345 (1911) (

repealed

1974) (outright prohibition of employment of women before and after childbirth); Ohio Rev. Code Ann. § 4107.43 (

repealed

1982) (prohibition of employment of women in specific occupations that require the routine lifting of more than 25 pounds);

See also Wiseman

Wal-Mart Stores, Inc.,

No. 08-1244-EFM, 2009 WL 1617669 (D. Kan. June 9, 2009) (pregnant retail employee with recurring urinary and bladder infections caused by dehydration alleged she was denied permission to carry a water bottle despite doctor's note),

available at http://www.gpo.gov/fdsys/pkg/USCOURTS-ksd-6_08-cv-01244/pdf/USCOURTS-ksd-6_08-cv-01244-0.pdf

(last accessed March 27, 2016).

In one comment submitted on the NPRM, three organizations that provide research, policy, advocacy, or consulting services to promote workplace gender equality and work-life balance for employees state that they “have seen numerous . . . cases where women are pushed out of work simply because they wish to avoid unnecessary risks to their pregnancy” when doctors advise them to avoid exposure to toxic chemicals, dangerous scenarios, or physically strenuous work to prevent problems from occurring in their pregnancies. “Pregnant workers in physically demanding, inflexible, or hazardous jobs are particularly likely to need accommodations at some point during their pregnancies to continue working safely.”

National Women's Law Center & A Better Balance, It Shouldn't Be a Heavy Lift: Fair Treatment for Pregnant Workers 5 (2013),

available at http://www.nwlc.org/sites/default/files/pdfs/pregnant_workers.pdf

(last accessed March 25, 2016) (

Heavy Lift

Meanwhile, more women today continue to work throughout their pregnancies and therefore are more likely to need accommodations of some sort. Of women who had their first child between 1966 and 1970, 49 percent worked during pregnancy; of those, 39 percent worked into the last month of their pregnancy. For the period from 2006 to 2008, the proportion of pregnant women working increased to 66 percent, and the proportion of those working into the last month of their pregnancy increased to 82 percent.

U.S. Census Bureau,

Maternity Leave and Employment Patterns of First-Time Mothers: 1961-2008,

at 4, 7 (2011),

available at http://www.census.gov/prod/2011pubs/p70-128.pdf

(last accessed March 25, 2016) (tables 1 and 3).

Several commenters provided evidence of continued discriminatory practices in the provision of family or medical leave. One explained that

“[w]orkplaces routinely offer fewer weeks of ‘paternity’ leave than ‘maternity’ leave” and that such policies “can be particularly detrimental to LGBT [lesbian, gay, bisexual, and transgender] people, who are more likely to be adoptive parents and, as such, may not be able to access traditional ‘maternity’ leave frequently reserved for workers who have given birth to a child.” Another, a provider of legal services to low-income clients, stated that “[l]ow wage workers are often put on leave before they want or need it” and that such workers, “when not covered by FMLA, . . . are frequently denied leave despite a disparate impact based on gender without business necessity.”

Sexual Harassment

The EEOC adopted sexual harassment guidelines in 1980, and the Supreme Court held that sexual harassment is a form of sex discrimination in 1986.

Nevertheless, as several commenters report, sexual harassment continues to be a serious problem for women in the workplace and a significant barrier to women's entry into and advancement in many nontraditional occupations, including the construction trades

and the computer and information technology industries.

In fact, in FY 2015, the EEOC received 6,822 sexual harassment charges—7.6 percent of the total of 89,385 charges filed.

This percentage is hardly different from FY 2010, when the number of sexual harassment charges the EEOC received was 8.0 percent of the total charges filed.

EEOC Guidelines on Discrimination Because of Sex, 29 CFR 1604.11 (1980),

available at http://www.gpo.gov/fdsys/pkg/CFR-2014-title29-vol4/xml/CFR-2014-title29-vol4-part1604.xml

(last accessed March 25, 2016) (provision on harassment);

Meritor Sav. Bank

Vinson,

477 U.S. 57 (1986). The Court reaffirmed and extended that holding in 1993.

Harris

Forklift Sys.,

510 U.S. 17 (1993). Lower courts had held that sexual harassment is a form of sex discrimination since the late 1970s.

See, e.g.,

Barnes

Costle,

561 F.2d 983 (D.C. Cir. 1977).

See

National Women's Law Center,

Women in Construction: Still Breaking Ground

8 (2014),

available at http://nwlc.org/wp-content/uploads/2015/08/final_nwlc_womeninconstruction_report.pdf

(last accessed March 17, 2016).

See

Women in Tech, Elephant in the Valley (2016),

http://elephantinthevalley.com/

(last accessed March 16, 2016) (60% of respondents to survey of women who worked in the technology industry experienced unwanted sexual advances).

EEOC,

Enforcement & Litigation Statistics, Sexual Harassment Charges FY 2010-2015, available at

http://www.eeoc.gov/eeoc/statistics/enforcement/sexual_harassment_new.cfm

(last accessed March 17, 2016);

EEOC Charge Statistics, supra

note 34.

Id.

Sex-Based Stereotyping

In some ways, the nature of sex discrimination has also changed since OFCCP promulgated the Sex Discrimination Guidelines. Explicit sex segregation, such as facial “male only” hiring policies, has been replaced in many workforces by less overt mechanisms that nevertheless present real equal opportunity barriers.

One of the most significant barriers is sex-based stereotyping. Decades of social science research have documented the extent to which sex-based stereotypes about the roles of women and men and their respective capabilities in the workplace can influence decisions about hiring, training, promotions, pay raises, and other conditions of employment.

As the Supreme Court recognized in 1989, an employer engages in sex discrimination where the likelihood of promotion for female employees depends on whether they fit their managers' preconceived notions of how women should dress and act.

Research clearly demonstrates that widely held social attitudes and biases can lead to discriminatory decisions, even where there is no formal sex-based (or race-based) policy or practice in place.

One commenter on the NPRM highlights a study showing, through both a laboratory experiment and a paired-resume audit, that stereotypes about caregiving responsibilities affect women's employment opportunities significantly. In the experimental study, only 47 percent of mothers were recommended for hire, compared to 84 percent of female non-mothers (

i.e.,

non-mothers were recommended for hire 1.8 times more frequently than mothers); mothers were offered starting salaries $11,000 (7.4 percent) less than those offered to non-mothers; mothers were less likely to be recommended for promotion to management positions; and being a parent lowered the competence ratings for women but not for men. In the audit, non-mothers received 2.1 times as many call-backs as equally qualified mothers.

Sex-based stereotyping may have even more severe consequences for transgender, lesbian, gay, and bisexual applicants and employees, many of whom report that they have experienced discrimination in the workplace.

See, e.g.,

Susan Fiske

et al., Controlling Other People: The Impact of Power on Stereotyping,

48 a.m. Psychol. 621 (1993),

available at https://www.researchgate.net/publication/14870029_Controlling_Other_People_The_Impact_of_Power_on_Stereotyping

(last accessed March 27, 2016); Anthony Greenwald and Mahzarin Banaji,

Implicit Social Cognition: Attitudes, Self-Esteem and Stereotypes,

102 Psychol. Rev. 4 (1995); Brian Welle & Madeline Heilman,

Formal and Informal Discrimination Against Women at Work,

in Managing Social and Ethical Issues in Organizations 23 (Stephen Gilliland, Dirk Douglas Steiner & Daniel Skarlicki eds., 2007); Susan Bruckmüller, Michelle Ryan, Floor Rink, and S. Alexander Haslam,

Beyond the Glass Ceiling: The Glass Cliff and Its Lessons for Organizational Policy,

8 Soc. Issues & Pol. Rev. 202 (2014) (describing the role of sex-based stereotypes in the workplace).

Price Waterhouse,

490 U.S. at 235, 250-51. Men, too, can experience adverse effects from sex-based stereotyping.

See, e.g.,

Kevin Lang & Jee-Yeon K. Lehmann,

Racial Discrimination in the Labor Market: Theory and Empirics

(NBER Working Paper No. 17450, 2010),

available at http://www.nber.org/papers/w17450

(last accessed March 27, 2016); Marianne Bertrand & Sendhil Mullainathan,

Are Emily and Brendan More Employable Than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination,

94(4) American Econ. Rev. (2004); Ian Ayres & Peter Siegelman,

Race and Gender Discrimination in Bargaining for a New Car,

85(3) Am. Econ. Rev. (1995); Marc Bendick, Charles Jackson & Victor Reinoso,

Measuring Employment Discrimination Through Controlled Experiments,

23 Rev. of Black Pol. Econ. 25 (1994).

One commenter expressed concern that this statement, which was made originally in the NPRM, demonstrates an OFCCP enforcement approach contrary to

Wal-Mart Stores, Inc.

Dukes,

131 S. Ct. 2541 (2011). Although the plaintiffs in

Wal-Mart

raised sex discrimination claims under title VII, the Supreme Court's decision was based on plaintiffs' failure to satisfy procedural requirements under the Federal Rules of Civil Procedure (FRCP) regarding class action lawsuits. Unlike private plaintiffs, who must prevail on class certification motions to bring suit on behalf of others, OFCCP is a governmental agency that is authorized to act in the public's interest to remedy discrimination. It is not subject to the limitations and requirements of class certification under the FRCP. To the extent that the Supreme Court's decision in

Wal-Mart

addresses title VII principles that apply outside the context of class certification, OFCCP follows those principles in its enforcement of Executive Order 11246.

Motherhood Penalty, supra

note 50, at 1316, 1318, 1330.

Injustice at Every Turn, supra

note 16; Center for American Progress and Movement Advancement Project, Paying an Unfair Price: The Financial Penalty for Being LGBT in America 18-19 (September 2014; updated November 2014),

available at http://www.lgbtmap.org/policy-and-issue-analysis/unfair-price

(last accessed March 27, 2016) (discussing studies showing LGBT-based employment discrimination); Brad Sears & Christy Mallory, The Williams Institute, Documented Evidence of Employment Discrimination & Its Effects on LGBT People (2011),

available at http://williamsinstitute.law.ucla.edu/wp-content/uploads/Sears-Mallory-Discrimination-July-20111.pdf

(last accessed March 27, 2016). Further discussion of discrimination on the basis of sexual orientation and gender identity can be found

infra

in the passages on paragraph 60-20.2(a) and § 60-20.7.

In sum, with the marked increase of women in the labor force, the changes in employment practices, and numerous key legal developments since 1970, many of the provisions in the Guidelines are outdated, inaccurate, or both. At the same time, there are important and current areas of law that the Guidelines fail to address at all. For those reasons, OFCCP is replacing the Guidelines with a new final rule that addresses these changes.

Overview of the Comments

Prior to issuing an NPRM, OFCCP consulted a small number of individuals from the contractor community, women's groups, and other stakeholders to understand their views on the provisions in the Sex Discrimination Guidelines, specifically which provisions should be removed, updated, or added. There was substantial overlap in opinion among these experts about these matters. In particular, they stated that the second sentence in § 60-20.3(c) of the Guidelines, addressing employer contributions for pensions and other fringe benefits, is an incorrect statement of the law; that the references to State “protective” laws in § 60-20.3(f) of the Guidelines are outmoded; that § 60-20.3(g) of the Guidelines, concerning pregnancy, should be updated to reflect the PDA; and that the reference to the Wage and Hour Administrator in § 60-20.5(c) of the Guidelines should be removed, as the Wage and Hour Administrator no longer enforces the Equal Pay Act.

OFCCP received 553 comments on the NPRM. They include 445 largely identical form-letter comments from 444 individuals expressing general support, apparently as part of an organized comment-writing effort.

The 108 remaining comments, representing diverse perspectives, include comments filed by one small business contractor; one construction contractor; two law firms representing contractors; three contractor associations; four associations representing employers (including contractors); one contractor consultant; 23 civil rights, women's, and LGBT organizations; one union; a provider of legal services to low-income individuals; one religious organization; a state credit-union association that has 400 credit-union members; and many individuals.

One of these individuals submitted virtually identical comments twice.

Many additional organizations express their views by signing on to comments filed by other organizations, rather than by separately submitting comments.

For example, 70 national, regional, state, and local women's, civil rights, LGBT, and labor organizations and coalitions of such organizations, all co-sign one comment filed by a women's organization. Similarly, three major organizations representing employers join a comment filed by one of them. Altogether, 101 unique organizations file or join comments generally supportive of the rule; 14 unique organizations file or join comments generally opposed to the rule.

The result is that eight comments are co-signed by multiple organizations.

For this count, OFCCP includes state and regional chapters and affiliates of national organizations individually as commenters, separate from those national organizations.

The commenters raise a range of issues. Among the common or significant suggestions are those urging OFCCP:

• To add sexual orientation discrimination as a form of sex discrimination;

• to prohibit single-user restrooms from being segregated by sex;

• to clarify application of the BFOQ defense to gender identity discrimination;

• to require contractor-provided health insurance to cover gender-transition-related health care;

• to clarify that contractors' good faith affirmative action efforts after identifying underrepresentation of women in job groups are not inconsistent with the final rule;

• to specify factors that are legitimate for the purposes of setting pay;

• to remove the requirements that contractor-provided health insurance cover contraception and abortion (where the life of the mother would be endangered if the fetus were carried to term or medical complications have arisen from an abortion), and further arguing that application of some provisions in the proposed rule to contractors with religious objections are contrary to the Religious Freedom Restoration Act (RFRA);

• to clarify application of

Young

UPS, supra,

to the section addressing pregnancy-related accommodations;

• to require reasonable accommodation for pregnancy as a form of affirmative action;

• to clarify the relationship of FMLA leave to any leave that may be required by this rule;

• to add language concerning vicarious liability and negligence involving sexual harassment perpetrated by lower-level supervisors; and

• to add various examples of disparate-treatment or disparate-impact discrimination to the examples in the NPRM.

OFCCP's responses to these comments are discussed in connection with the relevant sections in the Section-by-Section Analysis.

There were also comments associated with the cost and burden of the proposed rule. OFCCP's responses to these comments are discussed in the section on Regulatory Procedures.

OFCCP carefully considered all of the comments in development of this final rule. In response to comments, or in order to clarify and focus the scope of one or more provisions while not increasing the estimated burden, the final rule revises some of the NPRM's provisions.

Overview of the Final Rule

Like the proposed rule, the final rule is organized quite differently than the Guidelines. One change is that while discussion of the BFOQ defense was repeated in several different sections of the Guidelines, the final rule consolidates this discussion into one section covering BFOQs.

Another major change is the reorganization of § 60-20.2 in the Guidelines, which addressed recruitment and advertisement. Guidelines paragraph 60-20.2(a), which required recruitment of men and women for all jobs unless sex is a BFOQ, is subsumed in § 60-20.2 of the final rule, which states and expands on the general principle of nondiscrimination based on sex and sets forth a number of examples of discriminatory practices. Guidelines paragraph 60-20.2(b) prohibited “[a]dvertisement in newspapers and other media for employment” from “express[ing] a sex preference unless sex is a

bona fide

occupational qualification for the job.” This statement does not have much practical effect, because few job advertisements today express a sex preference. It is therefore omitted from the final rule. Recruitment for individuals of a certain sex for particular jobs, including recruitment by advertisement, is covered in final rule paragraph 60-20.2(b)(10).

A third major change is the reorganization of § 60-20.3 in the Guidelines. Entitled “Job policies and practices,” this section addressed a contractor's general obligations to ensure equal opportunity in employment on the basis of sex (Guidelines paragraphs 60-20.3(a), 60-20.3(b), and 60-20.3(c)); examples of discriminatory treatment (Guidelines paragraph 60-20.3(d)); the provision of physical facilities, including bathrooms (Guidelines paragraph 60-20.3(e)); the impact of state protective laws (Guidelines paragraph 60-20.3(f)); leave for childbearing (Guidelines paragraph 60-20.3(g)); and specification of retirement age (Guidelines paragraph 60-20.3(h)). Guidelines paragraph 60-20.3(i) stated that differences in capabilities for job assignments among individuals may be recognized by the employer in making specific assignments.

As mentioned above, the final rule relocates the general obligation to ensure equal employment opportunity

and the examples of discriminatory practices to § 60-20.2. Guidelines paragraph 60-20.3(e), regarding gender-neutral provision of physical facilities, is now addressed in paragraphs 60-20.2(b)(12) and (13) and 60-20.2(c)(2) of the final rule. Guidelines paragraph 60-20.3(f), addressing state protective laws, is not included in the final rule because it is unnecessary and anachronistic. The example at paragraph 60-20.2(b)(8) in the final rule, prohibiting sex-based job classifications, clearly states the underlying principle that absent a job-specific BFOQ, no job is the separate domain of any sex.

One comment discusses the issue of state protective laws. It agrees with OFCCP's view that the provision is unnecessary and anachronistic, because “45 years of history have made clear that [state protective] laws violate Title VII and EO 11246 as amended.”

See Int'l Union, United Auto., Aerospace & Agric. Implement. Workers of Am.

Johnson Controls, Inc.,

499 U.S. 187 (1991) (holding that possible reproductive health hazards to women of childbearing age did not justify sex-based exclusions from certain jobs).

Guidelines paragraph 60-20.3(g), regarding leave for childbearing, is now addressed in § 60-20.5 of the final rule on discrimination on the basis of pregnancy, childbirth, or related medical conditions. Guidelines paragraph 60-20.3(h), which prohibited differential treatment between men and women with regard to retirement age, is restated and broadened in the final rule, at paragraph 60-20.2(b)(7); it prohibits the imposition of sex-based differences not only in retirement age but also in “other terms, conditions, or privileges of retirement.” Guidelines paragraph 60-20.3(i) stated that the Sex Discrimination Guidelines allowed contractors to recognize differences in capabilities for job assignments in making specific assignments and reiterated that the purpose of the Guidelines was “to insure that such distinctions are not based upon sex.” This paragraph is omitted from the final rule because it is unnecessary and because its second sentence is repetitive of § 60-20.1 in the final rule. Implicit in the provisions prohibiting discrimination on the basis of sex is the principle that distinctions for other reasons, such as differences in capabilities, are not prohibited. Distinguishing among employees based on their relevant job skills, for example, does not constitute unlawful discrimination.

Where provisions of the Guidelines are uncontradicted by the final rule but are omitted from it because they are, as a practical matter, outdated, their omission does not mean that they are not still good law. For example, the prohibition of sex-specific advertisements in newspapers and other media in Guidelines paragraph 60-20.2(b) remains a correct statement of the law.

Comments on Language Usage Throughout the Rule

A number of commenters make recommendations about the language that OFCCP should use throughout the rule. Two commenters suggest that the rule should refer to “gender discrimination” instead of “sex discrimination.” OFCCP follows Title VII case law in interpreting “sex” discrimination to include gender discrimination.

The NPRM used the word “sex” when referring to sex discrimination because “sex” is used in E.O. 11246, and the word “gender” in the phrase “gender identity” because “gender” is used in E.O. 13672. For these reasons, except where quoting or paraphrasing comments or references that use the terms differently, the final rule continues that usage.

Price Waterhouse

Hopkins,

490 U.S. 228, 250 (1989) (“In the context of sex stereotyping, an employer who acts on the basis of a belief that a woman cannot be aggressive, or that she must not be, has acted on the basis of gender.”); see,

e.g., Smith

City of Salem,

378 F. 3d 566, 572 (6th Cir. 2004).

Three comments (joined by four commenters) recommend that phrases such as “he or she” and “his or her” be replaced with gender-neutral language such as “they” and “their” in order to recognize that some gender-nonconforming individuals prefer not to be identified with either gender. OFCCP declines to make this change. While it acknowledges that grammatical rules on this point may evolve, OFCCP believes it would be less confusing to a lay reader to use the more commonly understood formulations “he or she” and “him or her,” rather than a singular “they.” However, in a number of places in the rule and preamble, OFCCP replaces the singular “he or she” forms of pronouns with the plural “they” forms where it is possible to make all the references in the sentence plural. For instance, the example of sex stereotyping in § 60-20.7(b) now reads: “Adverse treatment of employee

or applicant

for employment because of

their

actual or perceived gender identity or transgender status” (emphasis added), rather than “Adverse treatment of an employee or applicant for employment because of his or her actual or perceived gender identity or transgender status.” Where “his or her” or similar language does appear, it should be read to encompass people who do not identify as either gender.

Three comments (joined by five commenters) urge OFCCP to use gender-neutral terminology in the various illustrative examples throughout the rule. OFCCP intentionally drafted the examples that are not gender-neutral in this manner, because they are common types of discrimination:

e.g.

, (in the proposed rule), “Denying women with children an employment opportunity that is available to men with children” (paragraph 60-20.2(b)(2)); “Height and/or weight qualifications that are not necessary to the performance of the job and that negatively impact women substantially more than men” (paragraph 60-20.2(c)(1)); “Failure to promote a woman, or otherwise subjecting her to adverse employment treatment, based on sex stereotypes about dress, including wearing jewelry, make-up, or high heels” (paragraph 60-20.7(a)(1)); “A contractor must provide job-guaranteed family leave, including any paid leave, for male employees on the same terms that family leave is provided for female employees” (paragraph 60-20.5(c)(2)(ii)). OFCCP declines to change these examples to make them gender-neutral.

One commenter urges OFCCP to replace the terms “pregnant people” and “people of childbearing capacity” used in the NPRM with the terms “pregnant women” and “women of childbearing capacity.” Another commenter commends OFCCP for “recognizing that some persons who have the physiology necessary to have a chance of becoming pregnant do not identify as women.” OFCCP declines to make the suggested replacements.

Section-by-Section Analysis

This Section-by-Section Analysis describes each section in the proposed rule and identifies and discusses the significant comments received and any changes made.

Title of the Regulations

Four comments (joined by six commenters) question OFCCP's authority to issue regulations with the force of law. Specifically, these comments argue that Congress did not grant the EEOC authority to promulgate substantive title VII regulations and, further, that because OFCCP's regulations are enforced consistently with title VII, OFCCP cannot promulgate regulations having the force and effect of law. OFCCP did not propose substantive title VII regulations; it proposed regulations interpreting the Executive Order. Throughout the NPRM, OFCCP explained that E.O. 11246 grants the agency authority to promulgate these regulations. In

particular, Section 201 of the Executive Order states that “[t]he Secretary [of Labor] shall adopt such rules and regulations and issue such orders as are deemed necessary and appropriate to achieve the purposes of Parts II and III of this Order.” One stated purpose of E.O. 11246 is to prohibit discrimination against an employee or applicant for employment because of sex.

Although the EEOC does not have statutory authority to issue substantive regulations under title VII, OFCCP is clearly granted the authority to issue substantive rules and regulations to implement the nondiscrimination provisions of E.O. 11246. The Federal Property and Administrative Services Act of 1949 authorizes a broad array of government contracting requirements, including E.O. 11246's nondiscrimination requirements, to achieve that act's goal of economical and efficient procurement.

E.O. 11246 has the force and effect of law.

Regulations issued pursuant to E.O. 11246 also have the force and effect of law, as they are not plainly inconsistent with the Executive Order and are thus also entitled to deference.

OFCCP's decision to promulgate substantive regulations implementing the sex-based nondiscrimination provision is authorized by the Executive Order.

See

E.O. 11246 sec. 202(1).

See

40 U.S.C. 101 (establishing the act's goal of providing the Federal government “with an economical and efficient system for . . . (1) Procuring and supplying property and nonpersonal services, and performing related functions including contracting . . \.”); 40 U.S.C. 121(a) (authorizing the President to “prescribe policies and directives that the President considers necessary to carry out” the act).

See Liberty Mut. Ins. Co.

Friedman,

639 F.2d 164 (4th Cir. 1981);

United States

Miss. Power & Light Co.,

638 F.2d 899 (5th Cir. 1981);

Legal Aid Soc'y

Brennan,

608 F.2d 1319 (9th Cir. 1979);

Ne. Constr. Co.

Romney,

485 F.2d 752 (D.C. Cir. 1973);

Contractor's Ass'n

Sec'y of Labor,

442 F.2d 159, 166-71 (3d Cir. 1971);

Uniroyal Inc.

Marshall,

482 F. Supp. 364, 368 (D.D.C. 1979).

Id. See also

Beverly Enter.

Herman,

130 F. Supp. 2d 1, 9 n.4 (D.D.C. 2000).

The comments also state that OFCCP's promulgation of these substantive regulations governing discrimination on the basis of sex is an inappropriate departure from its prior Sex Discrimination Guidelines. While the former part 60-20 was titled “Sex Discrimination Guidelines,” these too were regulations with the force and effect of law, promulgated under the clear authority of E.O. 11246. OFCCP's decision to rename these regulations does not affect their legal status.

Therefore, OFCCP adopts the proposed change in the title of part 60-20 to “Discrimination on the Basis of Sex,” to make clear that its provisions are regulations implementing E.O. 11246 with the full force and effect of law.

Section 60-20.1 Purpose

The NPRM deleted the words “Title and” from the heading of § 60-20.1 in the Guidelines, as well as the second sentence of that section, which gave the reasons for adopting the Guidelines in 1970. The NPRM also clarified that this part is to be read in conjunction with all the provisions in OFCCP's regulations related to implementation of E.O. 11246 by listing them specifically. OFCCP received no comments on these proposed changes, and it adopts them.

The final rule also adds a sentence to § 60-20.1. This new sentence reads: “For instance, under no circumstances will a contractor's good faith efforts to comply with the affirmative action requirements of part 60-2 of this chapter be considered a violation of this part.” OFCCP adds this sentence to respond to the concern that five contractors express that the prohibitions of sex discrimination in the NPRM could be read to conflict with contractors' obligations to undertake good faith efforts to expand employment opportunities for women contemplated by part 60-2.

Two commenters recommend that OFCCP add a reference to contractors' duties as part of Joint Training Councils in recruiting, accepting, training, and employing apprentices in the first sentence of § 60-20.1. Joint Training Councils, committees composed of representatives of construction labor unions and construction management, jointly sponsor most registered apprenticeship programs in the construction industry.

OFCCP agrees that contractors' nondiscrimination obligations extend to the execution of their duties as part of Joint Training Councils in recruiting, accepting, training, and employing apprentices, and it will interpret the rule accordingly. OFCCP declines, however, to add the suggested language to this section, as it is too specific for a section delineating the overall purpose of a rule.

Center for Construction Research and Training,

The Construction Chart Book: The U.S. Construction Industry and Its Workers

(Fifth Edition), § 31,

available at http://www.cpwr.com/publications/construction-chart-book

(last accessed March 27, 2016).

Section 60-20.2 General Prohibitions

In the proposed rule, paragraph 60-20.2(a) set forth the general prohibition that contractors may not discriminate against any applicant or employee because of sex and stated that the term “sex” includes, but is not limited to, pregnancy, childbirth, or related medical conditions; gender identity; and transgender status. In the final rule, OFCCP adds “sex stereotyping” to this list. One comment requests this addition, on the ground that one of the most important aspects of the rulemaking is to clarify that sex stereotyping is a form of sex discrimination. OFCCP agrees with this reasoning and inserts the term “sex stereotyping” in the second sentence of paragraph 60-20.2(a).

A large number of commenters, including the 70 signers to the comment from a women's organization, as well as a contractor association, support inclusion of “gender identity” and “transgender status” in paragraph 60-20.2(a) as consistent with title VII law.

Two comments, the one from a religious organization and the joint comment from three employer groups mentioned above, do not support identification of gender identity and transgender status discrimination as forms of sex discrimination. The religious organization argues that inclusion of gender identity discrimination as a form of sex discrimination (either directly or as a form of sex-stereotyping discrimination) is inconsistent with title VII law and with Congressional efforts to ban gender identity discrimination in employment. The religious organization also claims that including gender identity discrimination would interfere with religious contractors' rights under RFRA.

The joint employer group comment argues that inclusion of gender identity discrimination as a form of sex discrimination is not settled under title VII law

and is inconsistent with E.O. 13672's separate amendment of E.O. 11246 adding gender identity discrimination; it recommends that OFCCP address gender identity discrimination only as part of guidance on the final rule implementing E.O. 13672.

The religious organization also claims that including gender identity discrimination would interfere with non-transgender employees' “legitimate expectation of privacy in workplace restrooms and locker rooms.” This argument is addressed in connection with proposed paragraph 60-20.2(b)(9),

infra.

Specifically, the comment states that while the theory that sex discrimination applies to discrimination based on gender identity (and sexual orientation) may be consistent with EEOC's interpretation of title VII, it is not fully embraced by the Federal judicial system.

As explained above, OFCCP is not adopting substantive title VII regulations; it is adopting regulations interpreting the Executive Order. OFCCP's inclusion of gender identity and transgender status in the rule is

consistent with the agency's prior interpretation of the Executive Order, as articulated in its August 19, 2014 directive, which states that OFCCP “will investigate and seek to remedy instances of sex discrimination that occur because of an employee's gender identity or transgender status.”

OFCCP Directive 2014-02 (August 19, 2014),

available at http://www.dol.gov/ofccp/regs/compliance/directives/dir2014_02.html

(last accessed March 27, 2016). The purpose of Directive 2014-02 is to clarify that existing agency guidance on discrimination on the basis of sex under E.O. 11246 includes discrimination on the bases of gender identity and transgender status. Further, this directive made clear that OFCCP's interpretation of the Executive Order is consistent with the EEOC's position that, under title VII, discrimination based on gender identity or transgender status is discrimination based on sex.

In addition, OFCCP does not find inclusion of gender identity and transgender status in the rule to be inconsistent with title VII law. As discussed in the preamble to the NPRM, in

Macy

Holder,

the EEOC commissioners unanimously concluded that discrimination on the basis of gender identity is, by definition, sex discrimination in violation of title VII, because the discriminatory act is “related to the sex of the victim.”

The EEOC cited both the text of title VII and the reasoning in

Schroer

Billington

for its conclusion. Similarly, it is the position of the U.S. Department of Justice that “[t]he most straightforward reading of Title VII is that discrimination `because of . . . sex' includes discrimination because an employee's gender identification is as a member of a particular sex, or because the employee is transitioning, or has transitioned, to another sex.”

Macy

Holder,

Appeal No. 0120120821, 2012 WL 1435995, at *7 (EEOC) (2012),

available at http://www.eeoc.gov/decisions/0120120821%20Macy%20v%20DOJ%20ATF.txt

(last accessed March 27, 2016), on remand, Department of Justice (DOJ) Final Agency Decision, Agency Complaint No. ATF-2011-00751, DJ No. 187-9-149 (July 8, 2013).

Schroer

Billington,

577 F. Supp. 2d 293 (D.D.C. 2008).

Memorandum from Attorney General Eric Holder to United States Attorneys and Heads of Department Components (December 15, 2014),

available at http://www.justice.gov/file/188671/download

(last accessed March 27, 2016).

Indeed, a number of Federal appellate and district court decisions establish that disparate treatment of a transgender employee may constitute discrimination because of the individual's non-conformity to sex-based stereotypes.

This principle is reflected in § 60-20.7 of the final rule.

See, e.g.,

Smith

City of Salem, supra

note 78, 378 F.3d at 575 (“discrimination against a plaintiff who is a transsexual—and therefore fails to act and/or identify with his or her gender—is no different from the discrimination directed against [the plaintiff] in

Price Waterhouse

who, in sex-stereotypical terms, did not act like a woman”);

Glenn

Brumby,

663 F.3d 1312 (11th Cir. 2011) (termination of a transgender employee on the basis of gender non-conformity is sex discrimination under Equal Protection Clause);

see also Palmore

Sidoti,

466 U.S. 429, 433 (1984) (“Private biases may be outside the reach of the law, but the law cannot, directly or indirectly, give them effect.”);

Lusardi,

2015 WL 1607756, at *9, (“supervisory or co-worker confusion or anxiety cannot justify discriminatory terms and conditions of employment . . . [a]llowing the preferences of co-workers to determine whether sex discrimination is valid reinforces the very stereotypes and prejudices that Title VII intended to overcome”).

One industry organization comments that few of its members have policies in place to address restroom access and asks OFCCP to provide more guidance to facilitate successful implementation of the final rule. OFCCP will provide general guidance and technical assistance to contractors as part of the final rule's implementation.

Paragraph 60-20.2(b)(11) in the proposed rule described the unlawful sex-based discriminatory practice of treating an employee adversely because “he or she has undergone, is undergoing, or is planning to undergo sex-reassignment surgery or other processes or procedures designed to facilitate the adoption of a sex or gender other than the individual's designated sex at birth.” OFCCP received two comments suggesting that this paragraph's focus on “sex-reassignment surgery” is too narrow. The comments point out that some transgender individuals are unable or do not wish to undergo surgical or other types of medical procedures as part of their gender transition. To clarify that disparate treatment because of an employee's gender transition is sex discrimination under E.O. 11246 regardless of whether the transition involves medical treatment, one comment suggests revising the paragraph as follows (emphasis added to show suggested revision): “Treating an employee or applicant adversely

because she or he has adopted a gender identity other than the one designated at birth,

or because he or she is undergoing . . .” a gender transition. The suggested language is, however, tantamount to saying “because she or he is transgender”—which is already provided in paragraph 60-20.1(a). For that reason, OFCCP declines to revise this example as suggested.

Another comment suggests replacing the term “sex-reassignment surgery or other processes or procedures” with “transition-related health care” to encompass non-surgical treatment, such as hormone therapy and other medical services, as well as surgical treatment. OFCCP adopts this suggestion with slight modifications, changing the provision in the final rule (now at paragraph 60-20.2(b)(14)) by replacing the clause “because he or she has undergone, is undergoing, or is planning to undergo sex-reassignment surgery or other processes or procedures” with the clause “because he or she has received, is receiving, or is planning to receive transition-related medical services.”

As noted

supra,

OFCCP adds, in an Appendix to the final rule, two examples of best practices to prevent sex-based disparate treatment. Section (1) of the Appendix recommends that contractors avoid the use of gender-specific job titles and use gender-neutral job alternatives where they are available. Section (2) recommends that contractors designate single-user restrooms and similar facilities sex-neutral. Neither of these practices is required.

Proposed paragraph 60-20.2(c) provided that employment policies or practices that have an adverse impact on the basis of sex, and are not job-related and consistent with business necessity, violate E.O. 11246 and the regulations at 41 CFR part 60-20. It also identified four examples of employment practices that may have an adverse impact on women, referencing case law as the source of those examples. OFCCP received 14 comments on these proposed provisions. In general, 12 of the comments support proposed paragraph 60-20.2(c), with 11 of them offering suggested changes. One comment opposes the proposed paragraph and recommends deleting it altogether; another generally opposes the paragraph with an overarching recommendation to make the examples less gender-specific.

Several supporting comments, highlighting the overlap between proposed paragraph 60-20.2(c) on disparate impact in general and proposed § 60-20.5, recommend that policies or practices that have a disparate impact on the basis of pregnancy—such as the practice of offering “light duty” only to employees with on-the-job injuries, thereby excluding employees affected by pregnancy, childbirth, or related medical conditions—be cross-referenced under paragraph 60-20.2(c). As

paragraph 60-20.2(c) states, disparate-impact analysis applies to all “[e]mployment policies or practices,” including those that affect pregnancy, childbirth, or related medical conditions, and proposed paragraph 60-20.5, which addresses pregnancy, childbirth, or related medical conditions, includes, in paragraph 20.5(c)(2), an example of the application of disparate-impact analysis to the provision of leave. OFCCP believes it is therefore unnecessary to add an example of a situation in which a contractor's policies or practices have an unjustified disparate impact on pregnancy to proposed paragraph 60-20.2(c). Instead, the final rule revises § 60-20.5 to apply disparate-impact analysis to contractors' failure to accommodate pregnancy. This revision is discussed in connection with § 60-20.5,

infra.

One comment recommends that OFCCP revise the example in proposed paragraph 60-20.2(c)(1) by removing the word “minimum” from “[m]inimum height and/or weight qualifications.” OFCCP agrees that the word “minimum” is unnecessary and deletes it from the example in the final rule. The same comment suggests making this example, as well as the example in proposed paragraph 60-20.2(c)(2), gender-neutral. For example, the commenter suggests replacing the phrase “negatively impact women substantially more than men” with “negatively impact one gender more than the other” in proposed paragraph 60-20.2(c)(1). OFCCP declines to make these examples gender-neutral. As noted earlier, these examples are deliberately gender-specific to highlight common types of sex discrimination.

Five comments recommend that OFCCP insert the language “including in Notices of Openings for Registered Apprenticeship Programs,” in the example proposed in paragraph 60-20.2(c)(2). The purpose of this insertion would be to clarify that strength requirements for apprenticeship programs may have a disparate impact on women and be unlawful if the requirements actually exceed what is necessary to perform the job. OFCCP recognizes that job opening notices stating selection criteria such as strength requirements may have a chilling effect on women applicants; if the selection criteria have a disparate impact, unless the criteria are job-related and consistent with business necessity, they may violate E.O. 11246 and 41 CFR part 60-20. Because application of this principle to selection procedures for apprenticeship programs is stated clearly in the final rule, at paragraph 60-20.2(c)(4), OFCCP declines to add another reference to apprenticeship programs to paragraph 60-20.2(c)(2).

Two comments also recommend that OFCCP broaden the first phrase in proposed paragraph 60-20.2(c)(2) by making the example less specific to “strength” requirements. One comment suggests use of the phrase “physical requirements”; the other, “physical agility tests,” noting that such physical agility tests have served to exclude women from such sectors as construction, industrial work, transportation, and law enforcement and that those tests are frequently not necessary to the performance of the job in question. In light of these two comments, OFCCP alters this example to include any type of physical requirement that may have a discriminatory impact based on sex. Instead of being limited to strength, the example in the final rule encompasses “[s]trength, agility, or other physical requirements.”

One comment disputes whether the example in proposed paragraph 60-20.2(c)(3) is factual or based on a stereotype that women require the use of restrooms more than men. As indicated in the NPRM, the proposed example—on employer policies effectively prohibiting restroom usage—reflects the fact scenario of

Johnson

AK Steel Corp.,

No. 1:07-cv-291, 2008 WL 2184230 (S.D. Ohio May 23, 2008), in which the court found that the employer's policy requiring employees to urinate off the back of a crane (

i.e.,

not allowing restroom breaks) was evidence of a

prima facie

case of disparate-impact discrimination against women. Earlier, the Sixth Circuit similarly held that the “failure to furnish adequate and sanitary facilities to female workers who have been shown to suffer identifiable health risks” had a significant disparate impact on women.

112

As mentioned above in the Reasons for Promulgating this New Regulation section of the preamble, in 2014 OFCCP found a construction contractor to have violated the Executive Order when it failed to provide restroom facilities to female carpenters.

113

112

Lynch

Freeman,

817 F.2d 380, 388 (6th Cir. 1987). In

Lynch,

the district court found that the plaintiff introduced “credible medical expert testimony to demonstrate that women are more vulnerable to urinary tract infections than are men” but rejected her disparate-impact case.

Id.

The appeals court reversed, holding that the plaintiff had made out a

prima facie

case of disparate-impact discrimination. The court found that “all females were placed at a higher risk of urinary tract infections by using unsanitary portable toilets or by avoiding the use of such toilets and holding their urine” and that men were not exposed to the same risks from using the toilets because of “anatomical differences between the sexes.”

Id.

113

See supra

note 41 and accompanying text.

To address the issue of whether women require the use of the restroom more than men, OFCCP surveyed medical literature in this area. While there was evidence supporting the position OFCCP took in the NPRM, the overall results were inconclusive. While some courts have recognized that an employer's policies relating to use of sanitary facilities may have a disparate impact against women, OFCCP is sensitive to this commenter's concern that such an example “perpetuates an unproven stereotype.” Accordingly, OFCCP deletes this proposed example from the text of the final rule. However, in certain circumstances, consistent with other courts addressing the issue under title VII, disparate-impact claims based on restroom facility access may be cognizable under the Executive Order.

Five comments recommend broadening the example in proposed paragraph 60-20.2(c)(4) by adding “physical tests” and “interviews” as selection criteria that may have an adverse impact on women seeking to gain entrance to an apprenticeship program. As several of these comments note, some apprenticeship programs utilize physical tests and interview scoring methods that disproportionately exclude women. Because the final rule already addresses “physical requirements” that may have an adverse impact on women at paragraph 60-20.2(c)(2), OFCCP declines to add “physical tests” to the example in proposed paragraph (c)(4). However, OFCCP adds “interview, or other selection procedure” to this example in the final rule, at paragraph 60-20.2(c)(3). As a result of expanding the proposed language to include “performance on a written test, interview, or other selection procedure,” OFCCP rephrases the remaining text in final rule paragraph (c)(3) from “the validity of the test” to “the validity of the selection procedure consistent with the Uniform Guidelines on Employee Selection Procedures.” OFCCP also expands paragraph (c)(3) to encompass “entry into an apprenticeship

or training

program” (emphasis added) as a disparate-impact corollary to the example at paragraph 60-20.2(b)(11) in the final rule addressing disparate treatment of women in formal and informal training programs.

Some supporting comments also recommend that OFCCP provide more examples of disparate impact in the contexts of compensation, leave, and the

“lack of appropriate physical facilities in the workplace.” OFCCP declines to add particular examples of disparate-impact discrimination in these contexts because the final rule contains separate provisions that discuss compensation, leave, physical facilities, and entry into training programs, at paragraphs 60-20.4(d), 60-20.5(c)(2), 60-20.5(d)(3), and 60-20.2(c)(3), respectively. However, OFCCP inserts one new example in the final rule, at paragraph 60-20.2(c)(4), based on one comment's specific suggestion to include an example of disparate impact due to the policy or practice of relying on “short-lists” and “word-of-mouth” or “tap-on-the-shoulder” recruiting.

Finally, one comment opposes proposed paragraph 60-20.2(c) in its entirety, stating that it is unnecessary because the prohibition against disparate impact already exists in 41 CFR 60-2.14(b)(4), 41 CFR 60-1.20(a), and 41 CFR 60-3. 41 CFR part 60-20 is intended to supplement contractors' other obligations in 41 CFR chapter 60. Additionally, in the last four decades, disparate impact analysis has been applied to new circumstances under title VII, and numerous comments commend OFCCP for updating part 60-20 to reflect current law. For these reasons, OFCCP opts to retain proposed paragraph 60-20.2(c).

Section 60-20.3 Sex as a Bona Fide Occupational Qualification

Proposed § 60-20.3, entitled “Sex as a

bona fide

occupational qualification,” consolidates in one provision the various references to the BFOQ defense available to employers in the Sex Discrimination Guidelines. It adopts the BFOQ language set forth in title VII, 42 U.S.C. 2000e-2(e).

After considering the comments it received, OFCCP adopts § 60-20.3 as proposed. One comment, from a contractor association, supports the proposed changes to § 60-20.3 as an approach that simplifies the regulations and makes obligations under 41 CFR part 60-20 easier to understand.

Four comments recommend that OFCCP explain in plain language that factors other than sex must be business-related and actually account for the discrimination that occurred. OFCCP declines to provide this explanation in § 60-20.3 of the final rule because, as a matter of practice, OFCCP already follows these title VII principles.

Seven comments recommend that language be added to § 60-20.3 to make clear that when sex is a valid BFOQ, transgender employees should be treated in a manner consistent with their gender identity. Commenters cited the Los Angeles County Sheriff's Department (LASD) as an example of an employer applying a sex-based BFOQ in a way that meets its legitimate needs without discriminating against transgender workers: LASD's Transgender Employee Guide states that transgender employees will be “classified and assigned in a manner consistent with their gender identity, not their sex assigned at birth” for sex-segregated job assignments. OFCCP agrees that, where otherwise valid, a sex-based BFOQ may not be applied in a discriminatory manner to transgender workers. Because case law on application of sex discrimination principles, including those relating to the BFOQ exception, to transgender discrimination is developing, OFCCP declines to incorporate a statement about application of the BFOQ exception to transgender workers, but it will continue to follow relevant title VII case law and administrative interpretations.

Finally, one women's rights organization encourages OFCCP to provide additional guidance for contractors in the form of specific examples of valid and invalid BFOQ defenses in proposed § 60-20.3. OFCCP follows title VII principles in assessing a contractor's use of the BFOQ defense—including the EEOC's view that the BFOQ exception should be “interpreted narrowly”

114

and its explanation that the exception applies “where it is necessary for the purpose of authenticity or genuineness.”

115

OFCCP declines to add examples to the final rule.

114

EEOC Guidelines on Discrimination Because of Sex,

supra

note 64 (§ 1604.2, provision on BFOQ defense).

115

Id.

at § 1604.2(2).

Section 60-20.4 Discriminatory Compensation

Proposed section 60-20.4 covers sex discrimination in compensation. The section is organized into paragraphs describing various types of discriminatory compensation practices under E.O. 11246. This portion of the Section-by-Section Analysis first addresses comments on the entire section generally, followed by comments specifically addressing each paragraph.

A law firm comments that proposed § 60-20.4 is unnecessary and redundant, because the existing regulation at paragraph 60-2.17(b)(3) requires contractors to evaluate their compensation systems to determine whether there are any sex-, national origin-, or race-based disparities. The commenter asserts that the section does not change contractors' obligations with regard to assessing their compensation systems or the compliance evaluation procedures that OFCCP uses to assess compliance and that it therefore has no purpose. OFCCP concludes that the section should remain in the final rule. The section does not create new obligations for contractors, but it does provide specific examples based in title VII law to help contractors assess their compliance. OFCCP's rulemaking authority is not constrained to issuing regulations that create new obligations for contractors or that necessitate new enforcement mechanisms to assess contractor compliance. Since § 60-20.4 provides more clarity regarding the types of practices that can form the basis of a compensation discrimination violation of E.O. 11246, it should not be eliminated from the final rule.

The joint employer organization comment also argues that proposed section 60-20.4 is unnecessary, on the ground that proposed paragraph 60-20.2(b) on disparate treatment already generally states that a “contractor may not make any distinction based on sex in recruitment, hiring, firing, promotion,

compensation,

hours, job assignments, training, benefits, or other terms, conditions, or privileges of employment” (emphasis added). The comment asserts that proposed § 60-20.4 only reiterates that contractors may not discriminate on the basis of sex in compensation. OFCCP disagrees that proposed § 60-20.4 is redundant. Paragraph 60-20.2(b) merely states that contractors may not discriminate on the basis of sex when making employment decisions, including in compensation. Section 60-20.4 elaborates on this basic principle, describing the various types of practices that can result in sex-based pay discrimination under E.O. 11246, in accordance with title VII law. As stated above, this section provides added clarity about contractors' obligations in this area, and OFCCP retains it in the final rule.

Another law firm commenter expresses concern that proposed § 60-20.4 will impact the self-evaluation of compensation systems that contractors are already required to conduct pursuant to the existing regulation at paragraph 60-2.17(b)(3). As noted previously, paragraph 60-2.17(b)(3) requires contractors to evaluate their compensation systems to determine whether there are sex-, race-, or national origin-based disparities. Because the regulation does not specify any particular analysis method that contractors must follow to comply with this regulation, contractors have

substantial discretion to decide how to evaluate their compensation systems. Specifically, the commenter cites the statement in the preamble of the NPRM that proposed paragraphs 60-20.4(a), (b), and (c) were intended “to provide more guidance to contractors about the kinds of practices that they should undertake to assess their compliance.” The commenter is concerned that this statement might mean that proposed paragraph 60-20.4 will establish new, mandatory assessment techniques for the self-evaluation of compensation and asks that OFCCP clarify its intent on this issue. OFCCP appreciates the opportunity to clarify that § 60-20.4 does not create any new obligations with regard to the self-evaluation of compensation systems required by paragraph 60-2.17(b)(3). Each contractor may continue to choose the assessment method that best fits with its workforce and compensation practices. To the extent that § 60-20.4 provides guidance regarding various forms of compensation discrimination, it may inform contractors' efforts to identify sex-based disparities in compensation, as well as the policies or practices that are causing them.

116

Fully understanding the source as well as the scope of the problem is important because sex-, race-, and national origin-based disparities found as part of a self-evaluation must be corrected pursuant to paragraph 60-2.17(c).

116

If EEOC's Proposed Revision of the Employer Information Report (EEO-1) is adopted, it may also provide assistance to contractors that have 100 or more employees as they attempt to identify sex-based disparities in compensation and the policies or practices that cause such disparities.

See

EEOC, Agency Information Collection Activities: Proposed Revision of the Employer Information Report (EEO-1) and Comment Request, 81 FR 5113, 5115 (February 1, 2016) (“EEOC and OFCCP anticipate that the process of reporting pay data may encourage employers to self-monitor and comply voluntarily if they uncover pay inequities.”). In any event, contractors remain free to choose the assessment method that best fits with their workforces and compensation practices to accomplish the self-evaluation of compensation systems required by paragraph 60-2.17(b)(3).

Many commenters suggest that § 60-20.4 should be revised to clarify that punitive pay secrecy policies that interfere with enforcement of wage discrimination protections violate antidiscrimination law. OFCCP declines to add this prohibition to § 60-20.4, because pay secrecy policies are already addressed in OFCCP's regulations.

117

See

OFCCP, Government Contractors, Prohibitions Against Pay Secrecy Policies and Actions, 80 FR 54934 (September 11, 2015).

Many of the same commenters also suggest that OFCCP should encourage contractors to implement transparent pay practices and clear methodologies for setting pay. As OFCCP recognized in the preamble to the NPRM on prohibiting pay secrecy policies, research shows that workers without access to compensation information are less satisfied and less productive.

118

Greater transparency about compensation and how it is determined can translate into real benefits for employers, including decreased turnover and higher productivity. Additionally, as mentioned above, greater pay transparency may help prevent or resolve sex-based compensation discrimination by allowing workers to become informed and better able to exercise their right to fair pay by filing a complaint. While OFCCP recognizes the potential value of greater pay transparency to contractors and employees, specifically advising employers to develop more transparent pay practices is beyond the scope of the current rulemaking.

118

79 FR at 55715 (September 17, 2014).

Another commenter asserts that OFCCP's approach to pattern-or-practice pay discrimination claims is inconsistent with title VII case law, including

Wal-Mart Stores, Inc.

Dukes,

131 S. Ct. 2541 (2011). This comment is outside the scope of the proposed rule, which makes no changes to OFCCP's approach to pattern-or-practice pay discrimination claims. Moreover, the Supreme Court's decision in

Wal-Mart

was based on the private plaintiffs' failure to satisfy procedural requirements under the Federal Rules of Civil Procedure (FRCP) regarding class-action lawsuits. Unlike private plaintiffs, who must prevail on class-certification motions to bring suit on behalf of others, OFCCP is a governmental agency that is authorized to act in the public's interest to remedy discrimination. It is not subject to the limitations and requirements of class certification under the FRCP.

119

Nonetheless, to the extent that

Wal-Mart

addressed principles of title VII law that apply outside the class-certification context, OFCCP follows those principles in its enforcement of E.O. 11246.

119

See OFCCP

Bank of Am.,

1997-OFC-16, Order Den. Def.'s Req. to Strike the Pl.'s Expert Report, & for Recons. of Denial of Req. for Issuance of Subpoenas (ALJ November 2, 2011).

Cf. Gen. Tel. Co. of the Nw., Inc.

Equal Emp't Opportunity Comm'n,

446 U.S. 318, 334 n.16 (1980) (“[T]he nature of the EEOC's enforcement action is such that it is not properly characterized as a `class action' subject to the procedural requirements of Rule 23.”);

Dep't of Fair Emp't & Hous.

Law Sch. Admission Council, Inc.,

941 F. Supp. 2d 1159, 1166 (N.D. Cal. 2013) (“The principle that has emerged is that where a governmental agency is authorized to act in the public's interest to obtain broad relief . . . and the authorizing statute confers such power without reference to class certification, Rule 23 may not apply.”).

Three comments suggest that the term “equal wages” in the introductory paragraph to proposed § 60-20.4 is misleading and does not accurately state the law under title VII and E.O. 11246. Specifically, the second sentence in proposed § 60-20.4 states that “Contractors may not engage in any employment practice that

denies equal wages,

benefits, or other forms of compensation . . . .” (emphasis added). All three commenters point out that title VII prohibits discrimination in compensation but does not require employers to provide equal pay for all employees, as is implied by the term “equal wages.” One commenter notes that the term “equal wages” may be especially confusing to contractors because it could be interpreted as a reference to the Equal Pay Act, which OFCCP does not enforce. OFCCP agrees that the term “equal wages” may create confusion about the legal framework relevant to sex-based compensation discrimination under E.O. 11246. Accordingly, OFCCP revises the second sentence of § 60-20.4 in the final rule to read as follows: “Contractors may not engage in any employment practice that

discriminates in wages,

benefits, or any other forms of compensation . . . .” (emphasis added).

Proposed paragraph 60-20.4(a) prohibits contractors from paying “different compensation to similarly situated employees on the basis of sex.” It notes that the determination of which employees are similarly situated is case specific and lists the following factors as among those potentially relevant to determining similarity: Tasks performed, skills, effort, levels of responsibility, working conditions, job difficulty, minimum qualifications, and other objective factors. Lastly, it states that in some cases, employees are similarly situated where they are comparable on some of these factors, even if they are not similar on others.

One commenter states that proposed paragraph 60-20.4(a) is inconsistent with title VII case law governing whether employees are similarly situated. OFCCP disagrees with this characterization of proposed paragraph 60-20.4(a), which as described above states that the determination of similarly situated employees is case specific and lists several examples of potentially relevant factors. Under the proposed provision, OFCCP treats employees as similarly situated only if they are comparable for purposes of the contractor's pay practices on factors relevant to the compensation issues presented. The proposed provision is therefore consistent with title VII's flexible, fact-specific approach to proof.

The commenter also objects to proposed § 60-20.4(a) as contrary to OFCCP's 2006 Systemic Compensation Discrimination Standards. However, as the commenter acknowledges, OFCCP rescinded those standards in February 2013.

120

See

Interpreting Nondiscrimination Requirements of Executive Order 11246 with Respect to Systemic Compensation Discrimination and Voluntary Guidelines for Self-Evaluation of Compensation Practices for Compliance with Nondiscrimination Requirements of Executive Order 11246 with Respect to Systemic Compensation Discrimination: Notice of Final Rescission, 78 FR 13508 (February 28, 2013) (Notice of Rescission).

Several commenters express concern that the definition of “similarly situated” in proposed paragraph 60-20.4(a) is too broad and allows the agency too much flexibility in determining which employees to compare in a given case. One commenter states that it does not provide specific enough guidance to contractors and that it permits the agency to compare employees “who are assigned to different jobs at different levels, in different units, and at different geographic locations.” Another commenter expresses concern about the statement in the last sentence of paragraph 60-20.4(a) that in some cases employees may be similarly situated if they are comparable on some but not all of the factors listed. The commenter interprets that sentence to mean that OFCCP will compare employees even though they are not similarly situated in all relevant respects, which is not supported by title VII case law.

In response to these comments, OFCCP clarifies the principles underlying the definition of “similarly situated” set out in proposed paragraph 60-20.4(a). The definition used in the final rule is identical to the definition provided in OFCCP's Directive 307, describing procedures for reviewing contractor compensation systems and practices, and the agency's rescission of the compensation guidance documents issued in 2006.

121

The definition is flexible because title VII law does not provide a static list of factors for determining which employees are similarly situated that can be applied in every case. Under the title VII discrimination framework, comparing employees to determine whether discrimination has occurred is highly case specific. When assessing compensation during a compliance evaluation, OFCCP inquires about the compensation systems and practices of the particular contractor under review and tailors its analyses and investigative approach to the facts of the case. This helps ensure that its compensation analyses compare employees who are in fact similarly situated.

121

OFCCP Directive 307 (renumbered on September 16, 2013, as 2013-03), Procedures for Reviewing Contractor Compensation Systems and Practices (February 28, 2013); Notice of Rescission.

Many of the commenters that express concern about the flexibility of the similarly situated standard set out in proposed paragraph 60-20.4(a) also question whether the paragraph indicates that OFCCP will use a “comparable worth” approach when assessing employee compensation—

i.e.,

whether the agency will compare jobs because they have comparable worth even if they do not in

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