[Federal Register Volume 81, Number 115 (Wednesday, June 15, 2016)]
[Rules and Regulations]
[Pages 39108-39169]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-13806]



[[Page 39107]]

Vol. 81

Wednesday,

No. 115

June 15, 2016

Part II





Department of Labor





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Office of Federal Contract Compliance Programs





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41 CFR Part 60-20





Discrimination on the Basis of Sex; Final Rule

  Federal Register / Vol. 81 , No. 115 / Wednesday, June 15, 2016 / 
Rules and Regulations  

[[Page 39108]]


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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.

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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 \1\ Federal Government contractors and 
subcontractors and federally assisted construction contractors and 
subcontractors (contractors) must meet under Executive Order 11246, as 
amended \2\ (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.
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    \1\ 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.
    \2\ E.O. 11246, September 24, 1965, 30 FR 12319, 12935, 3 CFR, 
1964-1965, as amended.
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    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,\3\ 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.\4\ 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),\5\ 
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.\6\
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    \3\ 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.
    \4\ 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.
    \5\ 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, 
Sec.  2H01, available at http://www.dol.gov/ofccp/regs/compliance/fccm/FCCM_FINAL_508c.pdf (last accessed March 25, 2016) (FCCM); see 
also OFCCP v. Greenwood Mills, Inc., No. 00-044, 2002 WL 31932547, 
at *4 (Admin. Rev. Bd. December 20, 2002).
    \6\ 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).
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    OFCCP's Sex Discrimination Guidelines at 41 CFR part 60-20 
(Guidelines) have not been substantively updated since they were first 
promulgated in 1970.\7\ 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.
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    \7\ 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.
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    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

[[Page 39109]]

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., Sec.  60-20.2 (clarifying that sex discrimination includes 
discrimination on the bases of pregnancy, childbirth, related medical 
conditions, gender identity, transgender status,\8\ and sex 
stereotyping, and that disparate treatment and disparate impact 
analyses apply to sex discrimination); Sec.  60-20.3 (clarifying 
application of the bona fide occupational qualification (BFOQ) defense 
to the rule against sex discrimination); Sec.  60-20.4, Sec.  60-20.5, 
Sec.  60-20.6, and Sec.  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 Sec.  60-20.7 (clarifying that contractors must not 
make employment decisions based on sex stereotypes).
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    \8\ 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.
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    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. v. 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.\9\
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    \9\ E.O. 11246, sec. 209(5); 41 CFR 60-1.27.
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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); \10\ or on the basis of 
protected veteran status under 38 U.S.C. 4212 of the Vietnam Era 
Veterans' Readjustment Assistance Act.\11\ 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.
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    \10\ 29 U.S.C. 793.
    \11\ 38 U.S.C. 4212.
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    The final rule is organized into eight sections and an Appendix.
    The first section (Sec.  60-20.1) covers the rule's purpose.
    The second section (Sec.  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 (Sec.  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 (Sec.  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 (Sec.  60-20.5), discrimination on the basis of 
pregnancy, childbirth, and related medical conditions, recites the 
provisions of the Pregnancy

[[Page 39110]]

Discrimination Act of 1978 (PDA); \12\ 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.
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    \12\ 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).
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    The sixth section (Sec.  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 (Sec.  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 (Sec.  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.\13\
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    \13\ U.S. General Services Administration, System for Award 
Management, data released in monthly files, available at https://www.sam.gov/portal/SAM/#1.
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    More specifically, the final rule will advance the employment 
status of the more than 30 million female employees of contractors in 
several ways.\14\ 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.
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    \14\ 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.
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    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.\15\
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    \15\ OFCCP's methodology for arriving at this estimate was 
described in the preamble to the NPRM. 80 FR at 5262.
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    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.\16\
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    \16\ 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).
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    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

[[Page 39111]]

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.\17\ 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.\18\ 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.\19\
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    \17\ 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).
    \18\ 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).
    \19\ Employment Characteristics of Families--2014, supra note 
18.
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    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; \20\ in 1978, by the PDA; in 1991, by 
the Civil Rights Act; \21\ and in 2009, by the Lilly Ledbetter Fair Pay 
Act (FPA).\22\
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    \20\ Equal Employment Opportunity Act of 1972, Public Law 92-
261, 86 Stat. 103 (1972).
    \21\ Civil Rights Act of 1991, Public Law 102-166, 1745, 105 
Stat. 1071 (1991).
    \22\ Lilly Ledbetter Fair Pay Act of 2009, Public Law 111-2, 123 
Stat. 5 (2009).
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     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.\23\
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    \23\ See, e.g., Conn. Gen. Stat. Sec.  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. Sec.  4107.43 (repealed 
1982) (prohibition of employment of women in specific occupations 
that require the routine lifting of more than 25 pounds); see also 
Nashville Gas Co. v. Satty, 434 U.S. 136, 142 (1977) (invalidating 
public employer requirement that pregnant employees take a leave of 
absence during which they did not receive sick pay and lost job 
seniority); Cleveland Bd. of Educ. v. LaFleur, 414 U.S. 632 (1974) 
(striking rules requiring leave from after the fifth month of 
pregnancy until three months after birth); Somers v. Aldine Indep. 
Sch. Dist., 464 F. Supp. 900 (S.D. Tex. 1979) (finding sex 
discrimination where school district terminated teacher for not 
complying with requirement that pregnant women take an unpaid leave 
of absence following their third month or be terminated).
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     In 1993, the Family and Medical Leave Act (FMLA) \24\ was 
enacted, requiring employers with 50 or more employees to provide a 
minimum of 12 weeks of annual, unpaid, job-guaranteed leave to both 
male and female employees to recover from their own serious health 
conditions (including pregnancy, childbirth, or related medical 
conditions); to care for a newborn or newly adopted or foster child; or 
to care for a child, spouse, or parent with a serious health condition.
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    \24\ 29 U.S.C. 2601 et seq.
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     In 1970, it was not uncommon for employers to require 
female employees to retire at younger ages than their male 
counterparts. However, the Age Discrimination in Employment Act was 
amended in 1986 to abolish mandatory retirement for all employees with 
a few exceptions.\25\
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    \25\ 29 U.S.C. 621-634.
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    Moreover, since 1970, the Supreme Court has determined that 
numerous practices that were not then widely recognized as 
discriminatory constitute unlawful sex discrimination under title VII. 
See e.g., City of Los Angeles v. Manhart, 435 U.S. 702 (1978) 
(prohibiting sex-differentiated employee pension fund contributions, 
despite statistical differences in longevity); Cnty. of Washington v. 
Gunther, 452 U.S. 161 (1981) (holding that compensation discrimination 
is not limited to unequal pay for equal work within the meaning of the 
Equal Pay Act); Newport News Shipbldg. & Dry Dock Co. v. EEOC, 462 U.S. 
669 (1983) (holding that employer discriminated on the basis of sex by 
excluding pregnancy-related hospitalization coverage for the spouses of 
male employees while providing complete hospitalization coverage for 
female employees, resulting in greater insurance coverage for married 
female employees than for married male employees); Meritor Sav. Bank v. 
Vinson, 477 U.S. 57 (1986) (recognizing cause of action for sexually 
hostile work environment); Cal. Fed. Sav. & Loan Ass'n v. Guerra, 479 
U.S. 272 (1987) (upholding California law requiring up to four months 
of job-guaranteed leave for pregnant employees and finding law not 
inconsistent with title VII); Price Waterhouse v. Hopkins, 490 U.S. 228 
(1989) (finding sex discrimination on basis of sex stereotyping); 
Oncale v. Sundowner Offshore Servs., 523 U.S. 75, 79 (1998) 
(recognizing cause of action for ``same sex'' harassment); Int'l Union, 
United Auto., Aerospace & Agric. Implement Workers of Am. v. 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); Burlington Indus., Inc. v. Ellerth, 524 
U.S. 742 (1998), and Faragher v. City of Boca Raton, 524 U.S. 775 
(1998) (holding employers vicariously liable under title VII for the 
harassing conduct of supervisors who create hostile working conditions 
for those over whom they have authority); Burlington N. & Santa Fe Ry. 
Co. v. White, 548 U.S. 53 (2006) (clarifying broad scope of prohibition 
of retaliation for filing charge of sex discrimination); and Young v. 
United Parcel Serv., Inc., 135 S. Ct. 1338 (2015) (Young v. UPS) 
(holding that the plaintiff created a genuine issue of material fact as 
to whether the employer accommodated others ``similar in their ability 
or inability to work'' when it did not provide light-duty 
accommodations for pregnancy, childbirth, or related medical 
conditions, but did provide them for on-the-job injuries, disabilities 
within the meaning of the Americans with Disabilities Act,\26\ and loss 
of certain truck driver certifications).
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    \26\ Americans with Disabilities Act of 1990, 42 U.S.C. 12101 et 
seq., as amended (ADA).
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    In response to these legal and economic changes, the landscape of 
employment policies and practices has

[[Page 39112]]

also changed. Contractors rarely adopt or implement explicit rules that 
prohibit hiring of women for certain jobs. Jobs are no longer 
advertised in sex-segregated newspaper columns. Women have made major 
inroads into professions and occupations traditionally dominated by 
men. For example, women's representation among doctors more than 
doubled, from approximately 16 percent in 1988 \27\ to 38 percent in 
2015.\28\ Executive suites are no longer predominantly segregated by 
sex, with all the executive positions occupied by men while women work 
primarily as secretaries. Indeed, in 2015, women accounted for 39 
percent of all managers.\29\ Moreover, the female-to-male earnings 
ratio for women and men working full-time, year-round in all 
occupations increased from 59 percent in 1970 to 79 percent in 
2014.\30\
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    \27\ E. More, ``The American Medical Women's Association and the 
role of the woman physician, 1915-1990,'' 45 Journal of the American 
Medical Women's Association 165, 178 (1990), available at 95th 
Anniversary Commemorative Booklet, https://www.amwa-doc.org/about-amwa/history/ (last accessed March 17, 2016).
    \28\ Bureau of Labor Statistics, U.S. Department of Labor, Labor 
Force Statistics from the Current Population Survey, Table 11, 
Employed persons by detailed occupation, sex, race, and Hispanic or 
Latino ethnicity, Household Data Annual Averages, available at 
http://www.bls.gov/cps/cpsaat11.htm (last accessed March 17, 2016) 
(BLS Labor Force Statistics 2015).
    \29\ Id.
    \30\ U.S. Census Bureau, Income and Poverty in the United 
States: 2014, Current Population Reports 10 (2015) 41 (Table A-4, 
Number and Real Median Earnings of Total Workers and Full-Time, 
Year-Round Workers by Sex and Female-to-Male Earnings Ratio: 1960 to 
2014), available at https://www.census.gov/content/dam/Census/library/publications/2015/demo/p60-252.pdf (last accessed March 25, 
2016) (Income and Poverty Report 2014).
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    Employer-provided insurance policies that provide lower-value or 
otherwise less comprehensive hospitalization or disability benefits for 
pregnancy-related conditions than for other medical conditions are now 
unlawful under title VII.\31\ Generous leave and other family-friendly 
policies are increasingly common. As early as 2000, even employers that 
were not covered by the FMLA routinely extended leave to their 
employees for FMLA-covered reasons: two-thirds of such employers 
provided leave for an employee's own serious health condition and for 
pregnancy-related disabilities, and half extended leave to care for a 
newborn child.\32\ In recent years, 13 percent of employees had access 
to paid family leave, and most employees received some pay during 
family and medical leave due to paid vacation, sick, or personal leave 
or temporary disability insurance.\33\
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    \31\ These practices, common before the PDA, were prohibited 
when the PDA became effective with respect to fringe benefits in 
1979. As the EEOC explained in guidance on the PDA issued in 1979:
    A woman unable to work for pregnancy-related reasons is entitled 
to disability benefits or sick leave on the same basis as employees 
unable to work for other medical reasons. Also, any health insurance 
provided must cover expenses for pregnancy-related conditions on the 
same basis as expenses for other medical conditions.
    Appendix to Part 1604--Questions and Answers on the Pregnancy 
Discrimination Act, 44 FR 23805 (April 20, 1979), 29 CFR part 1604. 
EEOC's recently issued guidance echoes this earlier interpretation 
and discusses recent developments on benefits issues affecting PDA 
compliance. EEOC Enforcement Guidance: Pregnancy Discrimination and 
Related Issues I.C.2-4 (2015), available at http://www.eeoc.gov/laws/guidance/pregnancy_guidance.cfm (last accessed March 25, 2016) 
(EEOC Pregnancy Guidance).
    \32\ Wage and Hour Division, U.S. Department of Labor, The 2000 
Survey Report ch. 5, Table 5-1. Family and Medical Leave Policies by 
FMLA Coverage Status, 2000 Survey Report available at http://www.dol.gov/whd/fmla/chapter5.htm (last accessed March 25, 2016).
    \33\ BLS, National Compensation Survey: Employee Benefits in the 
United States, March 2015 (September 2015), Table 32. Leave 
benefits: Access, civilian workers, National Compensation Survey, 
March 2015, available at http://www.bls.gov/ncs/ebs/benefits/2015/ownership/civilian/table32a.pdf (last accessed February 19, 2016). 
In addition, in 2012, most employees taking family or medical leave 
had some access to paid leave: ``48% Report[ed] receiving full pay 
and another 17% receive[d] partial pay, usually but not exclusively 
through regular paid vacation leave, sick leave, or other `paid time 
off' hours.'' Jacob Klerman, Kelly Daley, & Alyssa Pozniak, Family 
and Medical Leave in 2012: Executive Summary ii, http://www.dol.gov/asp/evaluation/fmla/FMLA-2012-Executive-Summary.pdf (last accessed 
March 27, 2016).
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    While these changes in policies and practices show a measure of 
progress, there is no doubt that sex discrimination remains a 
significant and pervasive problem. Many of the statistics cited above, 
while improvements to be sure, are far from evincing a workplace free 
of discrimination. Sex-based occupational segregation, wage 
disparities, discrimination based on pregnancy or family caregiving 
responsibilities, sex-based stereotyping, and sexual harassment remain 
widespread. Had the incidence of sex discrimination decreased, one 
would expect at least some decrease in the proportion of total annual 
EEOC charges that allege sex discrimination. But that proportion has 
remained nearly constant at around 30 percent since at least 1997.\34\
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    \34\ This rate has varied from a low of 28.5 percent in FY 2011 
to a high of 31.5 percent in FY 2000. U.S. Equal Employment 
Opportunity Commission, Enforcement and Litigation Statistics, 
Charge Statistics: FY 1997 Through FY 2015, available at http://eeoc.gov/eeoc/statistics/enforcement/charges.cfm (last accessed 
February 21, 2016) (EEOC Charge Statistics). In FY 2015, the EEOC 
received 26,396 charges alleging sex discrimination.
    One commenter, who nevertheless supports the NPRM, points out 
that the number of sex discrimination charges filed with the EEOC 
``decreased by 2000 from 2010 to 2013.'' It is true that the number 
of sex discrimination charges filed with the EEOC decreased during 
this particular time period (by 1342, not by 2000). However, the 
total number of charges filed decreased during this period (from 
99,922 to 88,778), while the percentage of charges alleging sex 
discrimination increased, from 29.1 percent to 29.5 percent. 
Moreover, since 1997, the general trend in the raw number of sex 
discrimination charges filed has been upwards, from 24,728 in FY 
1997 to 26,396 charges in FY 2015, with a high of 30,356 charges in 
FY 2012.
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Sex-Based Occupational Discrimination

    Sex-based occupational sex segregation remains widespread:

    In 2012, nontraditional occupations for women employed only six 
percent of all women, but 44 percent of all men. The same imbalance 
holds for occupations that are nontraditional for men; these employ 
only 5 percent of men, but 40 percent of women. Gender segregation 
is also substantial in . . . broad sectors where men and women work: 
three in four workers in education and health services are women, 
nine in ten workers in the construction industry and seven in ten 
workers in manufacturing are men.\35\
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    \35\ Ariane Hegewisch & Heidi Hartmann, Institute for Women's 
Policy Research, Occupational Segregation and the Gender Wage Gap: A 
Job Half Done (2014), available at http://www.iwpr.org/publications/pubs/occupational-segregation-and-the-gender-wage-gap-a-job-half-done (last accessed March 27, 2016) (citations omitted); see also 
Ariane Hegewisch et al., The Gender Wage Gap by Occupation, Fact 
Sheet #C350a, The Institute for Women's Policy Research, available 
at http://www.iwpr.org/publications/pubs/the-gender-wage-gap-by-occupation-2/at_download/file/ (last accessed March 25, 2016) (IWPR 
Wage Gap by Occupation).

    OFCCP has found unlawful discrimination in the form of sex-based 
occupational segregation in several compliance evaluations of Federal 
contractors.\36\ For example, OFCCP recently found evidence that a call 
center steered women into lower-paying positions that assisted 
customers with cable services rather than higher-paying positions 
providing customer assistance for Internet services because the latter 
positions were considered ``technical''; \37\ that a sandwich 
production plant steered men into dumper/stacker jobs and women into 
biscuit assembler jobs, despite the fact that the positions required 
the same qualifications; \38\ and that a parking company steered women 
into lower-paying cashier jobs and away from higher-paying jobs as 
valets.\39\ The

[[Page 39113]]

EEOC and at least one court have found discrimination in similar cases 
as well.\40\
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    \36\ The contractors that OFCCP reviewed did not admit that they 
engaged in unlawful discrimination.
    \37\ OFCCP Press Release, ``Comcast Corporation settles charges 
of sex and race discrimination'' (April 30, 2015), available at 
http://www.dol.gov/opa/media/press/ofccp/OFCCP20150844.htm (last 
accessed March 25, 2016).
    \38\ OFCCP Press Release, ``Hillshire Brands Co.'s Florence, 
Alabama, production plant settles charges of sex discrimination with 
US Labor Department'' (September 18, 2014), available at http://www.dol.gov/opa/media/press/ofccp/OFCCP20141669.htm (last accessed 
March 25, 2016).
    \39\ OFCCP Press Release, ``Central Parking System of Louisiana 
Inc. settles hiring and pay discrimination case with US Department 
of Labor'' (September 4, 2014), available at http://www.dol.gov/opa/media/press/ofccp/OFCCP20140920.htm (last accessed March 25, 2016).
    \40\ See, e.g., EEOC v. New Prime, Inc., 42 F. Supp. 3d 1201 
(W.D. Mo. 2014) (ruling that a trucking company discriminated 
against female truck driver applicants in violation of title VII by 
requiring that they be trained by female trainers, of whom there 
were very few); EEOC Press Release, ``Mavis Discount Tire to Pay 
$2.1 Million to Settle EEOC Class Sex Discrimination Lawsuit'' 
(March 25, 2016), available at http://www.eeoc.gov/eeoc/newsroom/release/3-25-16.cfm (last accessed April 4, 2016) (EEOC alleged that 
tire retailer refused to hire women as managers, assistant managers, 
mechanics, and tire technicians); EEOC Press Release, ``Merrilville 
Ultra Foods to Pay $200,000 to Settle EEOC Sex Discrimination Suit'' 
(July 10, 2015), available at http://www.eeoc.gov/eeoc/newsroom/release/7-10-15c.cfm (last accessed April 4, 2016) (EEOC alleged 
that grocer refused to hire women for night-crew stocking 
positions); EEOC Press Release, ``Unit Drilling to Pay $400,000 to 
Settle EEOC Systemic Sex Discrimination Suit'' (April 22, 2015), 
available at http://www.eeoc.gov/eeoc/newsroom/release/4-22-15a.cfm 
(last accessed April 4, 2016) (EEOC alleged that oil drilling 
company refused to hire women on its oil rigs).
---------------------------------------------------------------------------

    Sex discrimination and other barriers in the construction trades, 
on the part of both trade unions and employers, remain a particularly 
intractable problem. Several commenters described many ``barriers for 
women and girls attempting to access [construction careers] and 
thrive'' in them, both on the job and in apprenticeship programs: 
gender stereotyping; discrimination in hiring, training, and work and 
overtime assignments; hostile workplace practices and sexual 
harassment; insufficient training and instruction; and worksites that 
fail to meet women's basic needs. One commenter, a female worker in a 
construction union, recounted ``discrimination and sexual harassment so 
bad'' at the construction site that she had to quit. In 2014, OFCCP 
found sex discrimination by a construction contractor in Puerto Rico 
that involved several of these barriers: Denial of regular and overtime 
work hours to female carpenters comparable to those of their male 
counterparts, sexual harassment of the women, and failure to provide 
restroom facilities.\41\
---------------------------------------------------------------------------

    \41\ OFCCP Press Release, ``Puerto Rico construction contractor 
settles sexual harassment and discrimination case with US Department 
of Labor'' (April 2, 2014), available at http://www.dol.gov/opa/media/press/ofccp/OFCCP20140363.htm (last accessed March 25, 2016).
---------------------------------------------------------------------------

    Likewise, women continue to be underrepresented in higher-level and 
more senior jobs within occupations. For example, in 2015, women 
accounted for only 28 percent both of chief executive officers and of 
general/operations managers.\42\
---------------------------------------------------------------------------

    \42\ BLS Labor Force Statistics 2015, supra note 28.
---------------------------------------------------------------------------

Wage Disparities

    As mentioned above, in 2014, women working full time earned 79 
cents on the dollar compared to men, measured on the basis of median 
annual earnings.\43\ While this represents real progress from the 59 
cents on the dollar measured in 1970, the size of the gap is still 
unacceptable, particularly given that the Equal Pay Act was enacted 
over 50 years ago. In fact, it appears that the narrowing of the pay 
gap has slowed since the 1980's.\44\ At the rate of progress from 1960 
to 2011, researchers estimated it would take until 2057 to close the 
gender pay gap.\45\
---------------------------------------------------------------------------

    \43\ Income and Poverty Report 2014, supra note 30.
    \44\ From 1980 to 1989, the percentage of women's earnings 
relative to men's increased from 60.2 percent to 68.7 percent; from 
1990 to 1999, the percentage increased from 71.6 percent to just 
72.3 percent; and from 2000 to 2009, the percentage increased from 
76.9 percent to 78.6 percent. Id. See also Youngjoo Cha & Kim A. 
Weeden, Overwork and the Slow Convergence in the Gender Gap in 
Wages, Am. Soc. Rev. 1 (2014), available at http://www.asanet.org/journals/ASR/ChaWeedenJune14ASR.pdf (last accessed March 25, 2016); 
Francine D. Blau & Lawrence M. Kahn, The U.S. Gender Pay Gap in the 
1990s: Slowing Convergence, 60 Indus. & Lab. Rel. Rev. 45 (2006) 
(Slowing Convergence).
    \45\ Institute for Women's Policy Research, At Current Pace of 
Progress, Wage Gap for Women Expected to Close in 2057 (April 2013), 
available at http://www.iwpr.org/publications/pubs/at-current-pace-of-progress-wage-gap-for-women-expected-to-close-in-2057 (last 
accessed March 25, 2016).
---------------------------------------------------------------------------

    The wage gap is also greater for women of color and women with 
disabilities. When measured by median full-time annual earnings, in 
2014 African-American women made approximately 60 cents and Latinas 
made approximately 55 cents for every dollar earned by a non-Hispanic, 
white man.\46\ In 2014, median annual earnings for women with 
disabilities were only 47 percent of median annual earnings for men 
without disabilities.\47\
---------------------------------------------------------------------------

    \46\ Calculations from U.S. Census Bureau, Historical Income 
Tables: People, Table P-38, Full-Time, Year-Round Workers by Median 
Earnings and Sex, available at https://www.census.gov/hhes/www/income/data/historical/people/ (last accessed February 22, 2016).
    \47\ Calculation from U.S. Census Bureau, American Fact Finder, 
``Median earnings in the past 12 months (in 2014 inflation-adjusted 
dollars) by disability status by sex for the civilian 
noninstitutionalized population 16 years and over with earnings, 
2014 American Community Survey 1-Year Estimates'' available at 
http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_13_1YR_B18140&prodType=table (last 
accessed March 25, 2016).
---------------------------------------------------------------------------

    Of course, discrimination may not be the cause of the entire gap; 
these disparities can be explained to some extent by differences in 
experience, occupation, and industry.\48\ However, decades of research 
show these wage gaps remain even after accounting for factors like the 
types of work people do and qualifications such as education and 
experience.\49\ Moreover, while some women may work fewer hours or take 
time out of the workforce because of family responsibilities, research 
suggests that discrimination and not just choices can lead to women 
with children earning less; \50\ to the extent that the potential 
explanations such as type of job and length of continuous labor market 
experience are also influenced by discrimination, the ``unexplained'' 
difference may understate the true effect of sex discrimination.\51\
---------------------------------------------------------------------------

    \48\ Equal Pay for Equal Work? New Evidence on the Persistence 
of the Gender Pay Gap: Hearing Before United States Joint Economic 
Comm., Majority Staff of the Joint Econ. Comm., 111th Cong., Invest 
in Women, Invest in America: A Comprehensive Review of Women in the 
U.S. Economy 78, 81-82 (Comm. Print 2010), available at http://jec.senate.gov/public/?a=Files.Serve&File_id=9118a9ef-0771-4777-9c1f-8232fe70a45c (last accessed March 25, 2016) (statement of Randy 
Albelda, Professor of Economics and Senior Research Associate, 
University of Massachusetts--Boston Center for Social Policy) (Equal 
Pay for Equal Work?).
    \49\ A 2011 White House report found that while earnings for 
women and men typically increase with higher levels of education, a 
male-female pay gap persists at all levels of education for full-
time workers (35 or more hours per week), according to 2009 BLS wage 
data. U.S. Department of Commerce, Economics and Statistics 
Administration, and Executive Office of the President, Office of 
Management and Budget, Women in America: Indicators of Social and 
Economic Well-Being 32 (2011), available at https://www.whitehouse.gov/sites/default/files/rss_viewer/Women_in_America.pdf (last accessed March 25, 2016). As noted above, 
potentially nondiscriminatory factors can explain some of the gender 
wage differences; even so, after controlling for differences in 
skills and job characteristics, women still earn less than men. 
Equal Pay for Equal Work?, supra note 48, at 80-82. Ultimately, the 
research literature still finds an unexplained gap exists even after 
accounting for potential explanations and finds that the narrowing 
of the pay gap for women has slowed since the 1980s. Joyce P. 
Jacobsen, The Economics of Gender 44 (2007); Slowing Convergence, 
supra note 44.
    \50\ Shelley J. Correll, Stephen Benard, & In Paik, Getting a 
Job: Is There a Motherhood Penalty? 112 American Journal of 
Sociology 1297, 1334-1335 (2007), available at http://gender.stanford.edu/sites/default/files/motherhoodpenalty.pdf (last 
accessed March 25, 2016) (Motherhood Penalty).
    \51\ Strengthening the Middle Class: Ensuring Equal Pay for 
Women: Hearing Before H. Comm. on Educ. and Labor, 110th Cong. 
(2007), available at http://www.gpo.gov/fdsys/pkg/CHRG-110hhrg34632/html/CHRG-110hhrg34632.htm (last accessed March 25, 2016) (statement 
of Heather Boushey, Senior Economist, Center for Economic and Policy 
Research) (``there are many aspects of women's employment patterns 
and pay that cannot reasonably be attributed to choice'').
---------------------------------------------------------------------------

    Male-dominated occupations generally pay more than female-dominated 
occupations at similar skill levels. But even within the same

[[Page 39114]]

occupation, women earn less than men on average. For example, in 2012, 
full-time earnings for female auditors and accountants were less than 
74 percent of the earnings of their male counterparts.\52\ Among the 20 
most common occupations for women, the occupation of retail sales faced 
the largest wage gap; women in this occupation earned only 64 percent 
of what men earned.\53\ Likewise, in the medical profession, women earn 
less than their male counterparts. On average, male physicians earn 13 
percent more than female physicians at the outset of their careers, and 
as much as 28 percent more eight years later.\54\ This gap cannot be 
explained by practice type, work hours, or other characteristics of 
physicians' work.\55\
---------------------------------------------------------------------------

    \52\ IWPR Wage Gap by Occupation, supra note 35, at 2.
    \53\ Id.
    \54\ Constanca Esteves-Sorenson & Jason Snyder, The Gender 
Earnings Gap for Physicians and Its Increase over Time 4 (2011), 
available at http://faculty.som.yale.edu/ConstancaEstevesSorenson/documents/Physician_000.pdf (last accessed March 25, 2016).
    \55\ Id. A 2008 study on physicians leaving residency programs 
in New York State also found a $16,819 pay gap between male and 
female physicians. Anthony T. LoSasso, Michael R. Richards, Chiu-
Fang Chou & Susan E. Gerber, The $16,819 Pay Gap For Newly Trained 
Physicians: The Unexplained Trend Of Men Earning More Than Women, 30 
Health Affairs 193 (2011), available at http://content.healthaffairs.org/content/30/2/193.full.pdf+html (last 
accessed March 25, 2016).
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Discrimination Based on Pregnancy or Family Caregiving Responsibilities

    Despite enactment of the PDA, women continue to report that they 
have experienced discrimination on account of pregnancy. Between FY 
1997 and FY 2011, the number of charges of pregnancy discrimination 
filed with the EEOC and state and local agencies annually was 
significant, ranging from a low of 3,977 in 1997 to a high of 6,285 in 
2008.\56\ The Chair of the EEOC recently testified before a 
Congressional committee:
---------------------------------------------------------------------------

    \56\ EEOC, Pregnancy Discrimination Charges, EEOC & FEPAs 
Combined: FY 1997-FY 2011, available at http://www.eeoc.gov/eeoc/statistics/enforcement/pregnancy.cfm (last accessed March 16, 2017). 
FY 2011 is the last year for which comparable data are available. 
For each of the years FY 2012-FY 2015, four percent of the charges 
filed with the EEOC alleged pregnancy discrimination. OFCCP 
calculations made from data from EEOC, Pregnancy Discrimination 
Charges, FY 2010-FY 2015, available at http://www.eeoc.gov/eeoc/statistics/enforcement/pregnancy_new.cfm (last accessed March 17, 
2016), and EEOC Charge Statistics, supra note 34.

    Still today, when women become pregnant, they continue to face 
harassment, demotions, decreased hours, forced leave, and even job 
loss. In fact, approximately 70 percent of the thousands of 
pregnancy discrimination charges EEOC receives each year allege 
---------------------------------------------------------------------------
women were fired as a result of their pregnancy.\57\

Low-income workers, in particular, face ``extreme hostility to 
pregnancy.'' \58\
---------------------------------------------------------------------------

    \57\ Testimony of EEOC Chair Jenny Yang Before the Senate 
Committee on Health, Education, Labor and Pensions 4 (May 19, 2015), 
available at http://www.help.senate.gov/imo/media/doc/Yang.pdf (last 
accessed March 25, 2016) (Yang Testimony).
    \58\ Stephanie Bornstein, Center for WorkLife Law, UC Hastings 
College of the Law, Poor, Pregnant and Fired: Caregiver 
Discrimination Against Low-Wage Workers 2 (2011), available at 
http://worklifelaw.org/pubs/PoorPregnantAndFired.pdf (last accessed 
March 27, 2016).
---------------------------------------------------------------------------

    One commenter provides examples of recent cases to illustrate the 
prevalence of discrimination against women who are breastfeeding. In 
one, Donnicia Venters lost her job after she disclosed to her manager 
that she was breastfeeding and would need a place to pump breast 
milk.\59\ In another, Bobbi Bockoras alleged she was forced to pump 
breast milk under unsanitary or insufficiently private conditions, 
harassed, and subjected to retaliation.\60\
---------------------------------------------------------------------------

    \59\ See EEOC v. Houston Funding II, Ltd., 717 F.3d 425, 427 
(5th Cir. 2013) (reversing summary judgment for defendant and 
holding that discrimination on the basis of lactation is sex 
discrimination under title VII).
    \60\ See Amended Complaint, Bockoras v. St. Gobain Containers, 
No. 1:13-cv-0334, Document No. 44 (W.D. Pa. March 6, 2014). The 
commenter reported that the company denied the allegations, but the 
case settled.
---------------------------------------------------------------------------

    In addition, some workers affected by pregnancy, childbirth, or 
related medical conditions face a serious and unmet need for workplace 
accommodations, which are often vital to their continued employment 
and, ultimately, to their health and that of their children. OFCCP is 
aware of a number of situations in which women have been denied 
accommodations with deleterious health consequences. For example:

    In one instance, a pregnant cashier in New York who was not 
allowed to drink water during her shift, in contravention of her 
doctor's recommendation to stay well-hydrated, was rushed to the 
emergency room after collapsing at work. As the emergency room 
doctor who treated her explained, because ``pregnant women are 
already at increased risk of fainting (due to high progesterone 
levels causing blood vessel dilation), dehydration puts them at even 
further risk of collapse and injury from falling.'' Another pregnant 
worker was prohibited from carrying a water bottle while stocking 
grocery shelves despite her doctor's instructions that she drink 
water throughout the day to prevent dehydration. She experienced 
preterm contractions, requiring multiple hospital visits and 
hydration with IV fluids. . . . [Another] woman, a pregnant retail 
worker in the Midwest who had developed a painful urinary tract 
infection, supplied a letter from her doctor to her employer 
explaining that she needed a short bathroom break more frequently 
than the store's standard policy. The store refused. She later 
suffered another urinary tract infection that required her to miss 
multiple days of work and receive medical treatment.\61\
---------------------------------------------------------------------------

    \61\ Brief of Health Care Providers, the National Partnership 
for Women & Families, and Other Organizations Concerned with 
Maternal and Infant Health as Amici Curiae in Support of Petitioner 
in Young v. United Parcel Service, at 9-10, 11 (citations omitted), 
available at http://www.americanbar.org/content/dam/aba/publications/supreme_court_preview/BriefsV4/12-1226_pet_amcu_hcp-etal.authcheckdam.pdf (last accessed March 25, 2016). See also 
Wiseman v. 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.'' \62\
---------------------------------------------------------------------------

    \62\ 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.\63\
---------------------------------------------------------------------------

    \63\ 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

[[Page 39115]]

``[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.\64\ 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 \65\ and the computer and information technology 
industries.\66\ In fact, in FY 2015, the EEOC received 6,822 sexual 
harassment charges--7.6 percent of the total of 89,385 charges 
filed.\67\ 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.\68\
---------------------------------------------------------------------------

    \64\ 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 v. 
Vinson, 477 U.S. 57 (1986). The Court reaffirmed and extended that 
holding in 1993. Harris v. 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 v. Costle, 
561 F.2d 983 (D.C. Cir. 1977).
    \65\ 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).
    \66\ 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).
    \67\ 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.
    \68\ Id.
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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.\69\ 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.\70\ 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.\71\ 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.\72\ 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.\73\
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    \69\ 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 Bruckm[uuml]ller, 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).
    \70\ Price Waterhouse, 490 U.S. at 235, 250-51. Men, too, can 
experience adverse effects from sex-based stereotyping.
    \71\ 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. v. 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.
    \72\ Motherhood Penalty, supra note 50, at 1316, 1318, 1330.
    \73\ 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 Sec.  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.

[[Page 39116]]

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 Sec.  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 Sec.  60-20.3(f) of the Guidelines are 
outmoded; that Sec.  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 Sec.  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.\74\ 
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.
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    \74\ One of these individuals submitted virtually identical 
comments twice.
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    Many additional organizations express their views by signing on to 
comments filed by other organizations, rather than by separately 
submitting comments.\75\ 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.\76\
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    \75\ The result is that eight comments are co-signed by multiple 
organizations.
    \76\ 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 v. 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 Sec.  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 Sec.  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 Sec.  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

[[Page 39117]]

and the examples of discriminatory practices to Sec.  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.\77\
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    \77\ 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. v. 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 Sec.  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 Sec.  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.\78\ 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.
---------------------------------------------------------------------------

    \78\ Price Waterhouse v. 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 v. 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 Sec.  60-20.7(b) now reads: ``Adverse treatment of 
employees or applicants 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

[[Page 39118]]

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.\79\ 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.\80\ E.O. 11246 has 
the force and effect of law.\81\ 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.\82\ OFCCP's decision to promulgate substantive regulations 
implementing the sex-based nondiscrimination provision is authorized by 
the Executive Order.
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    \79\ See E.O. 11246 sec. 202(1).
    \80\ 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).
    \81\ See Liberty Mut. Ins. Co. v. Friedman, 639 F.2d 164 (4th 
Cir. 1981); United States v. Miss. Power & Light Co., 638 F.2d 899 
(5th Cir. 1981); Legal Aid Soc'y v. Brennan, 608 F.2d 1319 (9th Cir. 
1979); Ne. Constr. Co. v. Romney, 485 F.2d 752 (D.C. Cir. 1973); 
Contractor's Ass'n v. Sec'y of Labor, 442 F.2d 159, 166-71 (3d Cir. 
1971); Uniroyal Inc. v. Marshall, 482 F. Supp. 364, 368 (D.D.C. 
1979).
    \82\ Id. See also Beverly Enter. v. 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 Sec.  
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 Sec.  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 Sec.  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.\83\ 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.
---------------------------------------------------------------------------

    \83\ Center for Construction Research and Training, The 
Construction Chart Book: The U.S. Construction Industry and Its 
Workers (Fifth Edition), Sec.  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.\84\ 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 \85\ 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.
---------------------------------------------------------------------------

    \84\ 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.
    \85\ 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

[[Page 39119]]

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.'' \86\
---------------------------------------------------------------------------

    \86\ 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 v. 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.'' \87\ The EEOC cited both the text of title VII and the 
reasoning in Schroer v. Billington \88\ 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.'' \89\
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    \87\ Macy v. 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).
    \88\ Schroer v. Billington, 577 F. Supp. 2d 293 (D.D.C. 2008).
    \89\ 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.\90\ This principle is reflected in Sec.  60-20.7 
of the final rule.
---------------------------------------------------------------------------

    \90\ See, e.g., Smith v. 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 v. 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 United States v. Se. Okla. State Univ., No. 5:15-cv-00324, 
2015 WL 4606079, *2 (W.D. Okla. July 10, 2015); Finkle v. Howard 
County, Md., 12 F. Supp. 3d 780 (D. Md. 2014); Hart v. Lew, 973 F. 
Supp. 2d 561 (D. Md. 2013). This principle--that discrimination 
against a transgender individual based on non-conformity to sex-
based stereotypes is sex discrimination--has also been adopted under 
the Gender-Motivated Violence Act, Schwenk v. Hartford, 204 F.3d 
1187, 1201-02 (9th Cir. 2000), and the Equal Credit Opportunity Act, 
Rosa v. Park W. Bank & Trust Co., 214 F.3d 213, 215-16 (1st Cir. 
2000). Other recent district court cases have held that 
discrimination on the basis of transgender identity is sex 
discrimination under the plain language of title VII. See Fabian v. 
Hosp. of Cent. Conn., 2016 WL 1089178, *14 (D. Conn. Mar. 18, 2016); 
Doe v. Arizona, 2016 WL 1089743, *2 (D. Ariz. Mar. 21, 2016) 
(transgender status satisfied the ``protected status'' element of a 
gender discrimination claim).
---------------------------------------------------------------------------

    OFCCP also does not find inclusion of gender identity and 
transgender status in the rule to be inconsistent with Congressional 
efforts to ban gender identity discrimination in employment or with 
E.O. 13672's separate amendment of E.O. 11246 adding gender identity to 
the list of protected categories. Overlapping prohibitions of 
discrimination are not uncommon. When President Johnson amended E.O. 
11246 in 1967 to add sex to the list of prohibited categories, for 
example, title VII already prohibited sex discrimination in employment 
by most covered contractors. The fact that gender identity is both a 
stand-alone protected category and subsumed under the term ``sex'' 
simply means that Federal contractor employees and applicants can 
pursue claims of gender identity discrimination in two ways, and OFCCP 
can address violations either as sex discrimination or as gender 
identity discrimination (or both).
    Therefore, OFCCP declines to depart from the ``most straightforward 
reading of Title VII'' by removing the terms ``gender identity'' and 
``transgender status'' from paragraph 60-20.2(a). OFCCP also declines 
to remove any of the references to gender identity discrimination as a 
form of sex stereotyping from the final rule. Nor does OFCCP accept the 
suggestion that it address gender identity discrimination only under 
the final rule implementing Executive Order 13672. If contractors or 
workers are confused about the two avenues, OFCCP will consider 
developing additional guidance materials to be posted on its Web site, 
as it regularly does.
    On the subject of RFRA, the religious organization commenter asks 
OFCCP to clarify in the final rule that RFRA forbids application of 
this paragraph, as well as proposed paragraphs 60-20.7(a)(3) (regarding 
adverse treatment based on failure to conform to sex-role expectations 
by being in a relationship with a person of the same sex) and 60-
20.7(b) (regarding adverse treatment based on gender identity or 
transgender status), to contractors with religious objections to those 
provisions.\91\
---------------------------------------------------------------------------

    \91\ The religious organization commenter also asks OFCCP to 
clarify that RFRA forbids application of paragraphs 60-20.5(a) 
(regarding abortion coverage) and 60-20.5(b)(4) (regarding 
contraceptive coverage) to contractors with religious objections to 
those provisions. This comment is addressed separately in the 
relevant portions of the Section-by-Section Analysis, infra.
---------------------------------------------------------------------------

    OFCCP declines to implement a blanket exemption from these 
provisions because claims under RFRA are inherently individualized and 
fact specific. There is no formal process for invoking RFRA 
specifically as a basis for an exemption from E.O. 11246. Insofar as 
the application of any requirement under this part would violate RFRA, 
such application shall not be required.
    If a contractor seeks an exemption to E.O. 11246 pursuant to RFRA, 
OFCCP will consider that request based on the facts of the particular 
case. OFCCP will do so in consultation with the Solicitor of Labor and 
the Department of Justice, as necessary. OFCCP will apply all relevant 
case law to the facts of a given case in considering any invocation of 
RFRA as a basis for an exemption.
    OFCCP also notes that the Supreme Court has recognized that the 
First Amendment to the Constitution requires a ``ministerial 
exception'' from employment discrimination laws, which prohibits the 
government from interfering with the ability of a religious 
organization to make employment decisions about its ``ministers,'' a 
category that includes, but is not limited to, clergy. OFCCP follows 
this precedent.
    Finally, OFCCP notes that E.O. 11246 contains an exemption that 
specifically allows religiously affiliated contractors (religious 
corporations, associations, educational institutions, or societies) to 
favor individuals of a particular religion when making employment 
decisions.\92\ The regulation implementing that exemption states that 
the nondiscrimination obligations of E.O. 11246 ``shall not apply to a 
Government contractor or subcontractor that is a religious corporation, 
association, educational institution, or society, with respect to the 
employment of individuals of a particular religion to perform work 
connected with the

[[Page 39120]]

carrying on by such corporation, association, educational institution, 
or society of its activities. Such contractors and subcontractors are 
not exempted or excused from complying with the other requirements 
contained in this Order.'' OFCCP has already published guidance 
regarding the application of the religious exemption in Executive Order 
11246 in connection with the recent Executive Order 13672 
rulemaking.\93\ If, however, a contractor is unsure about whether its 
employment practices are shielded by this exemption, it can seek 
guidance from OFCCP.
---------------------------------------------------------------------------

    \92\ 41 CFR 60-1.5(a)(5).
    \93\ See OFCCP, Frequently Asked Questions: E.O. 13672 Final 
Rule, available at http://www.dol.gov/ofccp/LGBT/LGBT_FAQs.html#Q9 
(last accessed May 31, 2016).
---------------------------------------------------------------------------

    Ten comments from civil rights, women's, and LGBT organizations, 
and a credit union, including the comment that 70 organizations signed, 
urge OFCCP to add sexual orientation discrimination to the list of 
kinds of sex discrimination in paragraph 60-20.2(a).\94\ OFCCP supports 
this view as a matter of policy. Federal agencies have taken an 
increasing number of actions to ensure that lesbian, gay, and bisexual 
individuals are protected from discrimination,\95\ and court decisions 
have repeatedly made clear that individuals and couples deserve equal 
rights regardless of their sexual orientation.\96\ OFCCP further notes 
that E.O. 13672 amended E.O. 11246 to prohibit employment 
discrimination by contractors based on sexual orientation.
---------------------------------------------------------------------------

    \94\ The commenters similarly urge OFCCP to add discrimination 
because of sexual orientation to Sec.  60-20.7(b) and Sec.  60-
20.8(b), which, like Sec.  60-20.2(a), list forms of sex 
discrimination.
    \95\ See, e.g., 80 FR 9989 (February 25, 2015) (DOL amendment of 
the regulatory definition of spouse under the Family and Medical 
Leave Act (FMLA) so that eligible employees in legal same-sex 
marriages are treated the same way for FMLA purposes as employees in 
opposite-sex marriages); 45 CFR 155.120(c)(1)(ii) and 156.200(e) 
(HHS regulations barring discrimination on the basis of sexual 
orientation by Health Insurance Marketplaces and issuers offering 
qualified health plans); U.S. Citizenship and Immigration Services, 
Same Sex Marriages, https://www.uscis.gov/family/same-sex-marriages 
(last accessed May 13, 2016) (treating immigration visa petitions 
filed on behalf of same-sex spouses in the same manner as those 
filed on behalf of opposite-sex spouses).
    \96\ For example, in 1996, the Supreme Court struck down an 
amendment to the Colorado constitution that prohibited the State 
government from providing any legal protections to gay, lesbian, and 
bisexual individuals. Romer v. Evans, 517 U.S. 620 (1996). And, just 
last year, the Supreme Court ruled in Obergefell v. Hodges, 135 S. 
Ct. 2584 (2015), that states may not prohibit same-sex couples from 
marrying and must recognize the validity of same-sex couples' 
marriages. See also United States v. Windsor, 133 S. Ct. 2675 (2013) 
(declaring unconstitutional the federal Defense of Marriage Act's 
definition of ``marriage'' as only a legal union between a man and a 
woman); Lawrence v. Texas, 539 U.S. 558 (2003) (declaring 
unconstitutional a state statute criminalizing consensual same-sex 
sexual conduct).
---------------------------------------------------------------------------

    Because E.O. 11246 expressly includes ``sexual orientation'' in the 
list of prohibited bases of discrimination, OFCCP finds it unnecessary 
to add the term ``sexual orientation'' to paragraph 60-20.2(a).\97\ 
OFCCP further notes that this area of title VII law is still 
developing. In a recent Federal-sector decision, the EEOC--the lead 
Federal agency responsible for administering and enforcing title VII--
offered a legal analysis and review of the title VII case law and its 
evolution, concluding that sexual orientation is inherently a ``sex-
based consideration'' and that discrimination on the basis of sexual 
orientation is therefore prohibited by title VII as one form of sex 
discrimination.\98\ As the EEOC noted in that case, in Oncale v. 
Sundowner Offshore Services, a unanimous Supreme Court stated that 
``statutory prohibitions often go beyond the principal evil [they were 
passed to combat] to cover reasonably comparable evils, and it is 
ultimately the provisions of our laws rather than the principal 
concerns of our legislators by which we are governed.'' \99\ More than 
fifty years after the passage of the Civil Rights Act of 1964, the 
contours of the law governing sex discrimination in the workplace have 
changed significantly. Indeed, a number of courts have found that 
discrimination related to sexual orientation, particularly in the forms 
of sex stereotyping and same-sex harassment, is a form of sex 
discrimination.\100\ OFCCP will continue to monitor the developing law 
on sexual orientation discrimination as sex discrimination under title 
VII. OFCCP will also consider issuing further guidance on this subject 
as appropriate.
---------------------------------------------------------------------------

    \97\ Similarly, OFCCP declines to add the term to Sec.  60-
20.7(b) or Sec.  60-20.8(b).
    \98\ Baldwin v. Dep't of Transp., EEOC Appeal No. 0120133080, 
slip op. at 6-7 (July 16, 2015). The EEOC relied on several analyses 
to reach this conclusion: A plain reading of the term ``sex'' in the 
statutory language, an associational analysis of discrimination 
based on ``sex,'' and the gender stereotype analysis announced in 
Price Waterhouse.
    \99\ Id. at 13 (quoting Oncale v. Sundowner Offshore Servs., 523 
U.S. 75, 79 (1998) (alteration in original) (internal quotation 
marks omitted)).
    \100\ This recognition is reflected by paragraph 60-20.7(a)(2), 
which addresses harassment of a man because he is considered 
effeminate or insufficiently masculine, and paragraph 60-20.7(a)(3), 
which provides that adverse treatment of an employee or applicant 
who is in a relationship with a person of the same sex may be a form 
of sex-stereotyping discrimination, depending on the facts of the 
case. See cases cited in notes 163-167, infra.
---------------------------------------------------------------------------

    In the proposed rule, paragraph 60-20.2(b) prohibited contractors 
from making distinctions based on sex in employment decisions unless 
sex is a BFOQ reasonably necessary to the normal operation of a 
contractor's particular business or enterprise. It also provided 
contractors and workers with a non-exhaustive list of scenarios that 
would constitute unlawful sex-based discriminatory practices. OFCCP 
received dozens of comments recommending revisions to the proposed 
examples from women's rights organizations, contractor and employer 
associations, consulting firms, law firms, organizations representing 
LGBT individuals, and individuals. The comments also suggest new 
examples for OFCCP to include in the final rule. As explained below, in 
consideration of the comments, OFCCP alters seven of the proposed 
paragraphs and adds three examples in the final rule.
    The first three paragraphs in proposed paragraph 60-20.2(b) state 
that, unless sex is a BFOQ, it is unlawful disparate treatment (1) to 
make a distinction between married and unmarried persons that is not 
applied equally to both sexes; (2) to deny women with children an 
employment opportunity that is available to men with children; and (3) 
to fire, or otherwise treat adversely, unmarried women, but not 
unmarried men, who become parents. A contractor organization comments 
that these provisions appear to expand title VII and E.O. 11246 to 
protect against discrimination on the basis of marital or parental 
status and requests that OFCCP clarify whether these provisions extend 
protections on these bases. Neither the proposed paragraphs nor their 
corresponding provisions in the final rule create new protected bases 
under E.O. 11246. Rather, these examples illustrate situations when 
treating men and women differently would constitute discriminatory 
practices. These sex-based discriminatory practices occur in connection 
with marital or parental status, not because of marital or parental 
status. OFCCP retains these examples in the final rule, with two minor 
modifications: Paragraph (1) contains the phrase ``men and women'' 
instead of ``both sexes,'' and proposed paragraph (3) is renumbered to 
(4).
    One comment suggests changing proposed paragraphs 60-20.2(b)(2) and 
60-20.2(b)(3) to be gender-neutral, recommending that OFCCP state that 
it is an unlawful discriminatory practice to deny ``an employment 
opportunity to any employee with children based on the employee's 
gender'' in paragraph (b)(2) and to fire ``unmarried employees who 
become parents because of the gender of the employees'' in paragraph 
(b)(3). OFCCP declines to make the suggested changes because these 
gender-specific examples were deliberately

[[Page 39121]]

drafted to highlight common forms of sex discrimination. The use of 
gender-specific language in these examples does not override E.O. 11246 
or this part to permit discrimination against male applicants or 
employees.
    In light of a comment regarding sex-based disparate treatment in 
permitting flexible work arrangements, OFCCP adds an example at 
paragraph 60-20.2(b)(3) of the final rule. The comment recommends that 
OFCCP add ``flexible work arrangements'' to Sec.  60-20.6 (on fringe 
benefits). Employees increasingly see flexible work arrangements, such 
as flexible or alternative work schedules, as a valuable benefit,\101\ 
and one commenter specifically states that providing time off and 
flexible workplace policies for men and women can help to combat 
caregiver stereotyping. Because of these policies' growing importance 
in the workplace, and the concern that contractors might treat men and 
women differently when authorizing such arrangements based on sex 
stereotypes, OFCCP agrees with the commenter that it would be useful to 
refer to flexible work arrangements in the final rule. Instead of doing 
so in Sec.  60-20.6, however, OFCCP inserts the example--``treating men 
and women differently with regard to the availability of flexible work 
arrangements''--as new paragraph 60-20.2(b)(3) in the final rule.
---------------------------------------------------------------------------

    \101\ Patricia Schaefer, ``Flexible Work Arrangements: Employer 
Solutions to Common Problems'' [no date], available at http://www.businessknowhow.com/manage/flex-work.htm (last accessed March 
27, 2016).
---------------------------------------------------------------------------

    After considering one comment that requests additional examples to 
highlight barriers that commonly impact women in a variety of sectors, 
OFCCP adds two more examples at paragraphs 60-20.2(b)(5) and 60-
20.2(b)(6) in the final rule. The comment discusses several 
discriminatory hiring and promotion practices, including ``applying 
different standards for hiring men and women'' and ``requiring more 
experience when promoting women as opposed to men.'' The commenter also 
describes several steering practices as examples of discrimination, 
including ``steering or pigeonholing women into feminized sub-sectors 
of an industry, and keeping women in lower-paying jobs within sectors 
based on sex stereotyping and other disparate treatment.'' The final 
rule's new examples are intended to educate workers and contractors on 
how sex discrimination arises in today's workforce. In the final rule, 
subparagraphs (b)(5) and (b)(6) provide ``applying different standards 
in hiring or promoting men and women on the basis of sex'' and 
``steering women into lower-paying or less desirable jobs on the basis 
of sex'' as examples of unlawful sex-based discriminatory practices.
    OFCCP makes no substantive changes in the final rule to the 
examples in proposed paragraphs 60-20.2(b)(4), 60-20.2(b)(5), or 60-
20.2(b)(6), although the last of these paragraphs is reworded from 
``based upon sex'' to ``on the basis of sex'' for consistency of 
language in the final rule. Also, OFCCP renumbers those provisions to 
paragraphs (b)(7), (b)(8), and (b)(9) in the final rule.
    Proposed paragraph 60-20.2(b)(7) provided ``recruiting or 
advertising for individuals for certain jobs on the basis of sex, 
including through use of gender-specific terms for jobs (such as 
`lineman')'' as an example of an unlawful practice. OFCCP received four 
comments on this proposed paragraph, three of which criticize OFCCP for 
making the use of gender-specific job titles an example of disparate 
treatment because, as one comment puts it, ``the requirement to use 
gender-neutral job titles is inconsistent with the way in which job 
titles are used by the federal government.'' Two comments from employer 
associations recommend clarification of the proposed paragraph, 
because, as written, it implies that using gender-specific job terms is 
per se an unlawful sex-based discriminatory practice. One comment 
points out that the EEOC permits gender-specific job titles in 
advertisements if they are clearly used as terms of art rather than as 
means for deterring applicants on the basis of sex. Several comments 
cite widespread use of certain gender-specific job titles and explain 
that contractors would incur costs to change their human resources 
systems and to negotiate new job titles with unions if they could not 
use certain gender-specific job titles; fully half of the member 
respondents to one industry association's survey think that there would 
be an impact if the use of gender-specific job titles were prohibited. 
One commenter suggests revising the example to make using gender-
neutral job terms a best practice.
    In response to these comments, OFCCP amends proposed paragraph 60-
20.2(b)(7) (renumbered to paragraph 60-20.2(b)(10) in the final rule) 
by deleting the final clause: ``including through use of gender-
specific terms for jobs (such as `lineman').'' OFCCP will follow EEOC's 
policy guidance on Use of Sex-Referent Language in Employment 
Opportunity Advertising and Recruitment, which provides that use of 
sex-referent language in employment opportunity advertisements and 
other recruitment practices ``is suspect but is not a per se violation 
of Title VII'' and that ``[w]here sex-referent language is used in 
conjunction with prominent language that clearly indicates the 
employer's intent to include applicants or prospective applicants of 
both sexes, no violation of Title VII will be found.'' \102\ In 
addition, OFCCP incorporates the use of gender-neutral job terms, where 
such alternatives exist, as a best practice in an Appendix to the final 
rule.
---------------------------------------------------------------------------

    \102\ EEOC Notice No. 915-051, at 2 (April 16, 1990). While this 
document is not available on EEOC's Web site, a hard copy of it is 
available for public viewing in EEOC's library. A copy of this 
Notice is also available for public viewing in OFCCP's office.
    The joint employer group comment also mentions more recent EEOC 
guidance on this point: An informal discussion letter that the 
Commission's Office of Legal Counsel issued in 2008 about the 
Commission's policy regarding the use of gender-specific job titles 
like ``journeyman.'' The discussion letter stated that use of the 
term ``journeyman'' ``probably would not implicate federal EEO laws 
to the extent that it is a term of art designating a particular 
skill level,'' but that ``[t]he Commission has taken no position on 
whether `journeyman' or `journey level' is appropriate.'' The EEOC 
informs OFCCP that this informal discussion letter was not reviewed 
or voted on by the Commission and as such does not constitute an 
official opinion of the Commission.
---------------------------------------------------------------------------

    In the NPRM, paragraph 60-20.2(b)(8) listed several ways in which 
women may be denied equal employment opportunity in career advancement, 
specifically if contractors distinguish on the basis of sex in 
``apprenticeship or other formal or informal training programs; in 
other opportunities such as networking, mentoring, sponsorship, 
individual development plans, rotational assignments, and succession 
planning programs; or in performance appraisals that may provide the 
basis of subsequent opportunities.'' Five commenters suggest adding 
``on-the-job training'' to the list of opportunities mentioned in the 
proposed paragraph. OFCCP agrees that on-the-job training is an 
important type of opportunity that should not be omitted. Therefore, in 
the final rule, OFCCP adds ``on-the-job training'' to this example 
(renumbered as paragraph 60-20.2(b)(11)).
    As discussed above in connection with Sec.  60-20.1, five comments 
from employer associations and a law firm express concern that the 
examples in proposed paragraphs 60-20.2(b)(7) and (8) are inconsistent 
with contractors' affirmative action obligations in 41 CFR part 60-2, 
specifically 41 CFR 60-2.17(c), which requires contractors to correct 
identified impediments to equal employment opportunity by developing 
and executing action-oriented programs, attaining established goals and 
objectives, and using good faith efforts to remove identified barriers, 
expand

[[Page 39122]]

employment opportunities, and produce measurable results (e.g., 
targeting outreach or recruitment efforts to women who are 
underrepresented in the contractor's workforce). One of those comments 
also points out that the Uniform Guidelines on Employee Selection 
Procedures (UGESP), 41 CFR part 60-3, state that it may be necessary 
for contractors to use recruiting procedures designed to attract 
members of a particular sex. These concerns should be alleviated by 
Sec.  60-20.1, which provides that the regulations at 41 CFR part 60-20 
``are to be read in conjunction with the other regulations implementing 
Executive Order 11246.'' Nevertheless, as explained above, OFCCP 
includes new language in the final rule, in Sec.  60-20.1, stating that 
under no circumstances will a contractor's good faith efforts to comply 
with the affirmative action requirements of 41 CFR part 60-2 be 
considered a violation of 41 CFR part 60-20. Contractors should not 
interpret 41 CFR part 60-20 as prohibiting them from using targeted 
efforts to recruit and advance women in order to comply with their 
affirmative action obligations.
    Proposed paragraph 60-20.2(b)(9) stated that making any facilities 
or employment-related activities available only to members of one sex 
is an unlawful sex-based discriminatory practice, with the condition 
that if a contractor provides restrooms or changing facilities, the 
contractor must provide separate or single-user restrooms or changing 
facilities to assure privacy between the sexes. NPRM paragraph 60-
20.2(b)(10) stated that a Federal contractor is discriminating based on 
sex if it denies employees access to the bathroom designated for the 
gender with which they identify. Comments on these provisions raise 
several issues.
    First, nine comments on paragraph 60-20.2(b)(10) recommend revising 
the example to include other workplace facilities as well as restrooms, 
because the legal principle of equality and non-stigmatization 
underlying the example applies to all types of facilities. The proposed 
example in paragraph (b)(10) was not intended to limit transgender 
workers' access to other workplace facilities that are segregated by 
sex, as OFCCP agrees that the legal protection applies equally to these 
various types of facilities. Accordingly, OFCCP clarifies paragraph 60-
20.2(b)(9) (renumbered paragraph 60-20.2(b)(12)), as well as paragraph 
60-20.2(b)(10) (renumbered paragraph 60-20.2(b)(13)), to refer 
specifically to ``restrooms, changing rooms, showers, or similar 
facilities.''
    Nine comments urge OFCCP to revise proposed paragraph 60-20.2(b)(9) 
to prohibit Federal contractors from segregating single-user restrooms 
based on sex. As a comment from an organization representing LGBT 
individuals explained, segregating single-user restrooms can negatively 
affect transgender workers by drawing ``unwanted attention and scrutiny 
to their gender identity and expression, contributing to workplace 
harassment.'' In another comment, an employer association notes that 
gender-neutral restrooms give contractors more flexibility ``given the 
rapidly changing social environment.'' Although provision of sex-
neutral single-user facilities may well contribute to the prevention of 
discomfort and harassment for transgender employees, the example 
regarding sex-segregated single-user facilities must be read in 
conjunction with the final rule's example in 60-20.2(b)(13), which 
provides that denying transgender employees access to facilities 
designated for use by the gender with which they identify constitutes 
an unlawful sex-based discriminatory practice. Provision of sex-
segregated single-user facilities is not sex discrimination as long as 
transgender employees may use the facilities consistent with their 
gender identity. OFCCP therefore declines to require that single-user 
restrooms be sex-neutral. However, recognizing the role that sex-
neutral single-user facilities might play in preventing harassment of 
transgender employees, OFCCP adds to the Appendix a new paragraph that 
recommends that, as a best practice, contractors designate single-user 
restrooms, changing rooms, showers, and similar single-user facilities 
as sex-neutral.
    In light of the comments discussed above, the final rule example 
(renumbered paragraph 60-20.2(b)(12)) is clarified to include 
``restrooms, changing rooms, showers, or similar facilities.'' With 
minor wording changes for clarity and brevity, the final rule also 
maintains OFCCP's proposal that if a contractor provides restrooms, 
changing rooms, showers, or similar facilities, the contractor must 
provide same-sex or single-user facilities.
    OFCCP received 13 comments that support the requirement in proposed 
paragraph 60-20.2(b)(10) that Federal contractors provide employees 
with access to the bathrooms designated for the gender with which they 
identify. One comment underscores the effect of denying a transgender 
employee access to gender-appropriate restrooms: Such a denial 
``singles out and humiliates transgender workers, invites others to 
harass them, and places workers in the untenable position of either 
enduring this humiliation or avoiding restroom use at work altogether, 
risking serious negative health effects.\103\
---------------------------------------------------------------------------

    \103\ This comment, as well as others, cites Jody L. Herman, 
Gendered Restrooms and Minority Stress: The Public Regulation and 
its Impact on Transgender People's Lives, J. PUB. MGMT. & SOC. POL'Y 
19:65-80 (2013) (transgender individuals fearing denial of access in 
workplaces, among other public venues, avoid restroom use and 
commonly report physical symptoms or medical problems).
---------------------------------------------------------------------------

    Two comments oppose the NPRM paragraph (b)(10) requirement. These 
two opposition comments argue that the requirement is contrary to title 
VII -- that, indeed, courts have held that the title VII prohibition on 
sex discrimination does not preclude the reservation of restrooms and 
locker rooms based on biological sex--and thus is beyond OFCCP's 
authority. The EEOC, however, recently held that an employer must 
permit access to restrooms and other facilities consistent with the 
employee's gender identity.\104\ These decisions are consistent with 
the stated legal positions of the Departments of Justice and Education 
in the context of sex discrimination under title IX of the Education 
Amendments of 1972, 20 U.S.C. 1681(a) (title IX); \105\ with the final 
rule interpreting the prohibition of sex discrimination under Section 
1557 of the Patient Protection and Affordable Care Act (ACA) published 
by the Department of Health and Human Services; \106\ with guidance 
documents issued by the Office of Personnel Management (OPM) regarding 
the employment of transgender individuals in the Federal workplace; 
\107\ and with

[[Page 39123]]

the Department's Occupational Safety and Health Administration's best 
practices relating to restroom access for transgender workers.\108\ 
Most relevant, the proposed requirement is consistent with guidance 
that OFCCP issued in April 2015 relating to its Executive Order 13672 
regulations, which expressly prohibit discrimination on the basis of 
gender identity.\109\
---------------------------------------------------------------------------

    \104\ Lusardi v. Dep't of Army, EEOC Appeal Doc. 0120133395, 
2015 WL 1607756, at *8 (April 1, 2015); Additionally at least one 
Federal district court has recognized that such a claim is 
cognizable under title VII. See, e.g., Hart v. Lew, 973 F. Supp. 2d 
561, 581-82 (D. Md. 2013) (recognizing a transgender plaintiff's 
title VII sex discrimination claim based in part on her employer's 
repeated denial of access to the women's restroom).
    \105\ U.S. Department of Justice and U.S. Department of 
Education, Dear Colleague Letter on Transgender Students (May 13, 
2016), available at http://www2.ed.gov/about/offices/list/ocr/letters/colleague-201605-title-ix-transgender.pdf (last accessed May 
13, 2016); Brief of the United States as Amicus Curiae Supporting 
Plaintiff-Appellant, G.G. v. Gloucester Cnty. Sch. Bd., Case No. 15-
2056, 2015 WL 6585237 (4th Cir. October 28, 2015). The Fourth 
Circuit subsequently upheld the Department of Education's 
interpretation, G.G., 2016 WL 1567467, at *8 (4th Cir. April 19, 
2016), and denied the school board's petition for rehearing en banc, 
G.G., slip op. at 2 (4th Cir. May 31, 2016).
    \106\ See U.S. Dep't of Health & Hum. Servs., Nondiscrimination 
in Health Programs and Activities: Final Rule, 81 FR 31376, 31388-
31389, 31409 (May18, 2016) (HHS Nondiscrimination Final Rule).
    \107\ See OPM, Diversity and Inclusion Reference Materials: 
Guidance Regarding the Employment of Transgender Individuals in the 
Federal Workplace, available at http://www.opm.gov/policy-data-oversight/diversity-and-inclusion/reference-materials/gender-identity-guidance/ (last accessed March 26, 2016).
    \108\ See Occupational Safety and Health Administration, U.S. 
Department of Labor, Publications: Best Practices: A Guide to 
Restroom Access for Transgender Workers, available at https://www.osha.gov/Publications/OSHA3795.pdf (last accessed March 26, 
2016).
    \109\ See OFCCP, Frequently Asked Questions: EO 13672 Final Rule 
(``How is restroom access affected by the Final Rule?''), available 
at http://www.dol.gov/ofccp/LGBT/LGBT_FAQs.html#Q35 (last accessed 
March 25, 2016).
---------------------------------------------------------------------------

    Further, this requirement is the logical outgrowth of the rulings 
that discrimination on the basis of gender identity is discrimination 
on the basis of sex. As one supportive comment explains, ``denying 
employees access to sex-segregated facilities consistent with their 
gender identity amounts to treating them differently from non-
transgender employees based on a perceived inconsistency between their 
gender identity and sex assigned at birth--in other words, based on 
being transgender, and therefore based on sex.'' Although E.O. 11246 
does not expressly state that applicants and employees must be allowed 
to use the restroom that is designated for use by the gender with which 
they identify, OFCCP must ``adopt such rules and regulations and issue 
such orders as are deemed necessary and appropriate to achieve the 
purposes'' of the Executive Order.\110\
---------------------------------------------------------------------------

    \110\ E.O. 11246, sec. 201.
---------------------------------------------------------------------------

    One of the comments that opposes the requirement also argues that 
allowing workers to use facilities according to the gender with which 
they identify would have an adverse impact on other employees who have 
a legitimate expectation of privacy in workplace restrooms and locker 
rooms. To begin with, this comment assumes that non-transgender 
employees will react to the presence of transgender employees based on 
the transgender employees' birth-assigned gender, rather than on the 
gender with which they identify in their daily interactions with co-
workers. It also assumes that non-transgender employees' reactions will 
be based on fear, ignorance, or prejudice about transgender 
individuals. It is well established that private bias, prejudice, or 
fear ``is not a legitimate basis for retaining the status quo.'' \111\ 
Non-transgender co-workers' fears, ignorance, or prejudice about 
transgender individuals can no more be permitted to trump the right of 
transgender employees to equal workplace treatment than white co-
workers' prejudices against sharing restrooms or drinking fountains 
with black employees would have been permitted to trump black 
employees' rights after the Executive Order and title VII went into 
effect 50 years ago.
---------------------------------------------------------------------------

    \111\ Latta v. Otter, 771 F.3d 456, 470-71 (9th Cir. 2014); see 
also Palmore v. 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 Sec.  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

[[Page 39124]]

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 Sec.  60-20.5 to apply 
disparate-impact analysis to contractors' failure to accommodate 
pregnancy. This revision is discussed in connection with Sec.  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 v. 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 v. 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

[[Page 39125]]

``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 Sec.  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 Sec.  60-
20.3 as proposed. One comment, from a contractor association, supports 
the proposed changes to Sec.  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 Sec.  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 Sec.  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 Sec.  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 (Sec.  1604.2, provision on BFOQ defense).
    \115\ Id. at Sec.  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 Sec.  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 Sec.  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 Sec.  
60-20.4 only reiterates that contractors may not discriminate on the 
basis of sex in compensation. OFCCP disagrees that proposed Sec.  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 Sec.  
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

[[Page 39126]]

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 
Sec.  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 Sec.  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 Sec.  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 Sec.  
60-20.4, because pay secrecy policies are already addressed in OFCCP's 
regulations.\117\
---------------------------------------------------------------------------

    \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. v. 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 v. 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. v. 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. v. 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 Sec.  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 Sec.  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 
Sec.  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.

[[Page 39127]]

The commenter also objects to proposed Sec.  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\
---------------------------------------------------------------------------

    \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 involve similar duties or 
working conditions. OFCCP does not conduct comparable worth assessments 
when reviewing contractors' compensation systems. OFCCP enforces the 
Executive Orders prohibition against compensation discrimination in 
line with title VII principles.\122\ As noted above, this requires a 
case-by-case assessment of the relevant factors to determine similarly 
situated employees. Depending on the unique pay systems and policies of 
a given contractor, this may involve comparing employees in similar, 
but not necessarily identical, jobs, or employees who are similar in 
terms of level, function, or other classification relevant to the 
contractor's workforce. Further, a specific job or position may not be 
the only relevant consideration, particularly in a systemic case. For 
example, a bonus pool or commission formula may apply to a group of 
individuals who hold multiple positions, and in an assessment of pay 
practices at hire, a key point of comparison may be qualifications at 
entry. OFCCP adheres to title VII case law on compensation 
discrimination as it develops and does not endorse or advocate for any 
particular method for contractors to ensure nondiscrimination in 
compensation.
---------------------------------------------------------------------------

    \122\ Id.
---------------------------------------------------------------------------

    Another commenter suggests adding job title, seniority, and 
education to the list of factors that may be relevant to the 
determination of which employees are similarly situated. While one or 
more of these three factors may be relevant to the determination of 
which employees are similarly situated in a particular case, OFCCP 
declines to add them to paragraph 60-20.4(a) in the final rule. The 
list of potentially relevant factors itemized in the third sentence of 
proposed paragraph 60-20.4(a) is non-exhaustive, due to the highly 
case-specific nature of the similarly situated inquiry. OFCCP will 
continue to consider and account for the factors that a particular 
contractor uses to determine compensation, on a case-by-case basis and 
in line with title VII principles.
    Two organizations representing women in construction suggest that 
OFCCP add ``work hours'' to the list of factors that may be relevant to 
a similarly situated determination as a way of addressing the 
discrimination in the number of hours assigned that women in 
construction often face. OFCCP declines to add ``work hours'' to 
paragraph 60-20.4(a) because the practice of assigning fewer work hours 
on the basis of sex is independently prohibited by paragraph 60-
20.4(c). Paragraph 60-20.4(c) states that ``[c]ontractors may not 
provide or deny earnings opportunities because of sex, for example, by 
denying women equal opportunity to obtain regular and/or overtime 
hours.'' Additionally, identifying work hours as a possible factor for 
making the similarly situated determination may limit OFCCP's ability 
to compare women to their male counterparts who work more hours but 
have similar qualifications.
    A number of commenters recommend that OFCCP add examples of pay 
factors--such as market forces and prior salary--that may be 
discriminatory. A related comment on proposed paragraph 60-20.4(d) 
states that the definition of ``compensation practice'' in that 
paragraph is unclear and argues that it would be improper for OFCCP to 
interpret the phrase to include a contractor's determination to pay a 
particular applicant a higher wage based on market forces (e.g., 
matching a competitor's offer) and thus to conclude that the practice 
is discriminatory. As the comments themselves acknowledge, the case law 
about what factors are legitimate for the purposes of setting pay is 
unsettled. Thus, OFCCP declines to adopt a per se rule permitting or 
prohibiting the use of market forces or prior salaries in setting 
compensation. As with any other compensation practice, OFCCP will 
review the employer's practice on a case-by-case basis to determine 
whether there is discriminatory treatment or discriminatory impact 
based on sex. Each claim of pay discrimination turns on the specific 
facts of the case.
    Paragraph 60-20.4(b) prohibits contractors from granting or denying 
higher-paying wage rates, salaries, positions, job classifications, 
work assignments, shifts, development opportunities, or other 
opportunities on the basis of sex. It also prohibits contractors from 
granting or denying training, work assignments, or other opportunities 
that may lead to

[[Page 39128]]

advancement to higher-paying positions on the basis of sex.
    A women's rights group suggests that the preamble to the final rule 
should point out that steering on the basis of sex in assigning workers 
to part-time and full-time jobs could be sex discrimination in 
violation of this rule. OFCCP agrees that such a practice could violate 
this part. For example, it would likely constitute discrimination if a 
contractor steered women into part-time jobs with a lower wage rate 
than similar full-time jobs assigned to men, based on a sex stereotype 
that women prefer to work fewer hours than men. Even if the wage rates 
for similar part-time and full-time jobs are the same or very similar, 
steering women into part-time jobs could also be discriminatory--not 
only because women would be assigned fewer hours but also if benefits 
such as health insurance were granted only to full-time workers or if 
opportunities for promotion or training were disproportionately or 
solely available to full-time workers.
    Another commenter, a construction contractor, expresses concern 
that OFCCP may attribute differences in pay to discrimination rather 
than to legitimate differences in experience or skill. The commenter 
explains that the construction industry has historically been male 
dominated. As a result, men in this industry often have higher-paying 
positions due to their experience, and women tend to apply for and 
occupy lower-paying administrative positions. The commenter is 
concerned that OFCCP will not account for such employee characteristics 
and preferences that are beyond the control of the contractor. OFCCP 
considers legitimate, nondiscriminatory factors that may explain 
differences in employee compensation when conducting its analyses.\123\ 
Relevant factors may include a particular skill or attribute; 
education; work experience; the position, level, or function; tenure in 
a position; and performance ratings. OFCCP considers whether a factor 
accounts for differences in pay on a case-by-case basis, by determining 
whether the factor is actually used by the contractor to determine 
compensation and whether the factor has been applied consistently 
without regard to sex or another protected basis. Whether any 
particular factor that explains differences in pay is ``tainted'' by 
discrimination, or should be included or excluded as a legitimate 
explanation for sex-based disparities, will depend on case-specific 
evidence.
---------------------------------------------------------------------------

    \123\ OFCCP, Frequently Asked Questions: OFCCP Procedures for 
Reviewing Contractor Compensation Systems and Practices (``How will 
`factors' that the contractor asserts are relevant to compensation 
be considered and analyzed by OFCCP?''), available at http://www.dol.gov/ofccp/regs/compliance/faqs/CompGuidance_faq.htm#Q27 
(last accessed March 27, 2016).
---------------------------------------------------------------------------

    Two comments suggest that OFCCP add the term ``apprenticeships'' to 
paragraph 60-20.4(b) in order to make clear that sex-based distinctions 
in granting apprenticeships are prohibited. OFCCP agrees that 
apprenticeships provide valuable opportunities for workers to learn new 
skills and advance and that access to apprenticeships is crucial for 
women in certain industries like construction. Accordingly, OFCCP adds 
the term ``apprenticeships'' to the second sentence of paragraph 60-
20.4(b) in the final rule.
    Proposed paragraph 60-20.4(d) prohibits compensation practices that 
have an unjustified sex-based disparate impact, stating that 
contractors are prohibited from implementing compensation practices, 
including performance systems, that have an adverse impact on the basis 
of sex and are not shown to be job-related and consistent with business 
necessity.
    One commenter argues that disparate impact cannot be a viable mode 
of analysis in pay-discrimination cases because Section 703(h) of title 
VII, 42 U.S.C. 2000e-2(h), forecloses the possibility of a neutral 
policy's being the basis of a pay discrimination claim. However, 
Section 703(h), by its terms, provides a defense only where an employer 
applies different standards of compensation ``pursuant to . . . a 
system which measures earnings by quantity or quality of production or 
to employees who work in different locations,'' and where those 
differences are not the result of intentional discrimination. This 
provision of title VII is entirely consistent with OFCCP's case-by-case 
approach in assessing relevant factors that may explain differences in 
compensation.
    The same commenter further questions the characterization of Lewis 
v. City of Chicago, 560 U.S. 205, 212 (2010), in footnote 71 of the 
NPRM, which stated that ``[t]itle VII places no limit on the types of 
employment practices that may be challenged under a disparate impact 
analysis.'' To clarify, in footnote 71 of the NPRM, OFCCP referred to 
the Supreme Court's statement in Lewis that title VII does not define 
``employment practice'' for purposes of establishing a disparate-impact 
claim. However, to prevent confusion, OFCCP does not include footnote 
71 of the NPRM in the final rule. Paragraph 60-20.4(d) should be read 
consistently with established title VII principles.
    Another commenter requests clarification of whether paragraph 60-
20.4(d) would as a general rule require contractors to validate their 
performance review systems pursuant to UGESP. The commenter notes that 
not all performance review systems are tied to annual merit increases, 
bonuses, or other forms of compensation. The commenter also alludes to 
the significant financial burden that contractors would face if 
required to validate performance review systems and points out that 
this cost was not estimated as part of the burden calculation in the 
NPRM. As proposed, paragraph 60-20.4(d) did not necessarily require 
contractors to validate their performance review systems pursuant to 
UGESP. UGESP applies to tests and other selection procedures that 
employers use as bases for employment decisions. Thus, a performance 
review system that a contractor uses as a basis for promoting, 
demoting, referring, or retaining employees is subject to UGESP, which 
may require it to be validated if it has an adverse impact on the basis 
of sex, race, or national origin. In that respect, proposed paragraph 
60-20.4(d) did not require anything beyond what UGESP already requires. 
To prevent confusion, however, OFCCP revises final rule paragraph 60-
20.4(d) to remove the specific reference to performance review systems. 
In any event, to the extent that a particular performance review system 
is not a ``selection procedure'' and, thus, not subject to UGESP, a 
contractor that uses such a system to make compensation decisions must 
show that the system is job-related and consistent with business 
necessity if it has an adverse impact on the basis of sex.
    Proposed paragraph 20.4(e) provided that a contractor violates the 
rule any time it pays wages, benefits, or other compensation that is 
the result in whole or in part of the application of any discriminatory 
compensation decision or other practice described in that section. One 
commenter, arguing that the FPA extends the statute of limitations for 
compensation discrimination claims but not for other discrete 
employment actions such as hiring, initial job assignments, and 
promotion decisions, requests that OFCCP modify the language in 
paragraph 60-20.4(e) to exclude discrete employment actions like job 
assignment and promotion. OFCCP declines to do so, for the reasons 
below.
    OFCCP first notes that a substantial majority of its enforcement 
actions under E.O. 11246 arise out of

[[Page 39129]]

compliance evaluations, which are governed by 41 CFR 60-1.26. Both 
Federal and administrative courts have held that Sec.  60-1.26 contains 
no statute of limitations.\124\ Because OFCCP enforcement actions 
arising from compliance evaluations contain no statute of limitations, 
the commenter's discussion of the FPA and subsequent case law is not 
applicable to those compliance evaluations.
---------------------------------------------------------------------------

    \124\ See Lawrence Aviation v. Reich, 28 F. Supp. 2d 728, 737 
(E.D.N.Y. 1998), aff'd in relevant part, vacated in part, 182 F.3d 
900 (2d Cir. 1999); OFCCP v. Georgia-Pacific Corp., 90-OFC-25, 
Acting Sec'y Final Decision and Order at 10 (December 29, 1990) 
(180-day limitation contained in 41 CFR 60-1.21 refers to complaints 
by individual applicants or employees alleging discrimination and is 
not applicable to compliance evaluations).
---------------------------------------------------------------------------

    OFCCP enforcement actions arising from individual complaint 
investigations, on the other hand, are governed by 41 CFR 60-1.21, 
which does contain a 180-day statute of limitations. Accordingly, OFCCP 
enforces its complaint-based claims under Sec.  60-20.4(e) in 
accordance with the FPA. The FPA states that ``an unlawful employment 
practice'' occurs

when a discriminatory compensation decision or other practice is 
adopted, when an individual becomes subject to a discriminatory 
compensation decision or other practice, or when an individual is 
affected by application of a discriminatory compensation decision or 
other practice, including each time wages, benefits, or other 
compensation is paid, resulting in whole or in part from such a 
decision or other practice.\125\
---------------------------------------------------------------------------

    \125\ 42 U.S.C. 2000e-5(e)(3)(A).

---------------------------------------------------------------------------
The FPA's purpose

was to reinstate the law regarding the timeliness of pay 
compensation claims as it was prior to [Ledbetter v. Goodyear Tire 
and Rubber Co, Inc., 550 U.S. 618 (2007)], which Congress believed 
undermined statutory protections against compensation discrimination 
by unduly restricting the time period in which victims could 
challenge and recover for discriminatory compensation 
decisions.\126\
---------------------------------------------------------------------------

    \126\ Mikula v. Allegheny Cnty., 583 F.3d 181, 184 (3d Cir. 
2009).

---------------------------------------------------------------------------
As another court explained,

    Thus, pursuant to the FPA, each paycheck that stems from a 
discriminatory compensation decision or pay structure is a tainted, 
independent employment action that commences the administrative 
statute of limitations.\127\
---------------------------------------------------------------------------

    \127\ Noel v. Boeing Co., 622 F.3d 266, 271 (3d Cir. 2010).

    With regard to the commenter's specific suggestion, OFCCP declines 
to exclude discrete employment actions like job assignment and 
promotion from paragraph 60-20.4(e). While some courts have refused to 
revive failure-to-promote and other employment actions by application 
of the FPA, whether a particular claim can be revived depends on 
whether it is sufficiently tied to an allegation of discriminatory pay, 
which turns on a factual inquiry. For example, one Federal court held 
that a failure to promote was sufficiently tied to the plaintiff's 
claim of discriminatory compensation practices to permit application of 
the FPA to toll the statute of limitations.\128\ OFCCP will determine 
whether a particular claim of compensation discrimination satisfies the 
FPA's standard of ``discriminatory compensation decision or other 
practice'' on a case-by-case basis, following title VII law as it 
develops.
---------------------------------------------------------------------------

    \128\ Perry v. Clinton, 831 F. Supp. 2d 1, 13 (D.D.C. 2011); see 
also Daniels v. United Parcel Service, Inc., 797 F. Supp. 2d 1163, 
1186 (D. Kan. 2011) (employer's misclassification of employee's job 
title, resulting in denial of greater pay and benefits, constitutes 
a claim of a discriminatory compensation decision under the FPA); 
Coppett v. Tenn. Valley Auth., 2012 WL 3962902, at *9 (N.D. Ala. 
September 11, 2012) (forcing employee to take leave for retaliatory 
reasons can be considered part of a discriminatory compensation 
decision or other practice).
---------------------------------------------------------------------------

    OFCCP does make a revision to paragraph 60-20.4(e). It deletes the 
last four words of proposed paragraph 60-20.4(e), ``described in this 
section,'' so that the final rule reads: ``A contractor will be in 
violation of E.O. 11246 and this part any time it pays wages, benefits, 
or other compensation that is the result in whole or in part of the 
application of any discriminatory compensation decision or other 
practice.'' With this change, the paragraph uses the exact language in 
the FPA and thus clarifies that OFCCP will follow the FPA standard.

Section 60-20.5 Discrimination on the Basis of Pregnancy, Childbirth, 
or Related Medical Conditions

    The proposed rule revised, reorganized, or removed the provisions 
of Sec.  60-20.5 in the Guidelines, entitled ``Discriminatory wages.'' 
It moved paragraph 60-20.5(a) (dealing with discriminatory wage 
schedules) to Sec.  60-20.4 and moved paragraph 60-20.5(b) (dealing 
with discriminatory job classifications) to Sec.  60-20.2. It deleted 
paragraph 60-20.5(c) (dealing with coordination with the Wage and Hour 
Administrator). OFCCP received no comments on these changes, and the 
final rule incorporates them.
    The NPRM introduced a new Sec.  60-20.5, ``Discrimination on the 
basis of pregnancy, childbirth, or related medical conditions.'' 
Proposed paragraph 60-20.5(a) incorporated the principles set forth in 
the PDA that discrimination on the basis of sex includes ``because of 
or on the basis of pregnancy, childbirth, or related medical 
conditions,'' and that employers must treat employees and job 
applicants of childbearing capacity and those affected by pregnancy, 
childbirth, or related medical conditions the same for employment-
related purposes as other persons not so affected but similar in their 
ability or inability to work. Proposed paragraph 60-20.5(a) also 
incorporated the provision in the PDA that exempts employers from 
having to pay for health insurance benefits for abortion ``except where 
the life of the mother would be endangered if the fetus were carried to 
term, or except where medical complications have arisen from an 
abortion,'' and the further proviso that nothing in that exemption 
``preclude[s] a contractor from providing abortion benefits or 
otherwise affect[s] bargaining agreements in regard to abortion.'' The 
proposed provision also included a non-exhaustive list of related 
medical conditions. For the sake of clarity and ease of comprehension, 
the final rule divides paragraph 60-20.5(a) into two paragraphs, the 
first paraphrasing the general provisions of the PDA and the second 
containing the non-exhaustive list of related medical conditions.
    Three commenters address the provision in proposed paragraph 60-
20.5(a) that exempted employers from having to pay for health insurance 
benefits for abortion, except where the life of the mother would be 
endangered if the fetus were carried to term or where medical 
complications have arisen from an abortion. One commenter simply states 
that abortion should not be government-funded.
    Another commenter asserts that coverage of abortion insurance 
benefits is beyond the scope of E.O. 11246. Finally, the religious 
organization commenter urges OFCCP to remove the proposed provision 
because, it argues, the requirement that employer-sponsored health 
plans in some instances include coverage of abortion violates the 
Weldon amendment \129\ and RFRA.
---------------------------------------------------------------------------

    \129\ Consolidated Appropriations Act, 2016, Public Law 114-113, 
Div. H, title V, sec. 507(d) (December 18, 2015).
---------------------------------------------------------------------------

    OFCCP notes that nothing in the proposed rule required the federal 
government to fund abortion. However, OFCCP does not retain the 
provisions related to abortion in the final rule. OFCCP refers, and 
will continue to refer, to the EEOC for processing any individual 
complaints that raise the issue of whether contractors provide health 
insurance benefits for the

[[Page 39130]]

abortion exception specified in the PDA. Accordingly, OFCCP removes the 
language taken from the PDA regarding abortion from paragraph 60-
20.5(a) in the final rule. OFCCP therefore need not address the 
comments regarding the Weldon amendment and RFRA as they pertain to 
this provision.
    Several commenters recommend additions to the list of related 
medical conditions in proposed paragraph 60-20.5(a) (60-20.5(a)(1) in 
the final rule). One such recommendation, joined by three commenters, 
is to add ``propensity for pregnancy-related risks that require 
restrictions, such as avoiding exposure to toxic chemicals.'' These 
commenters acknowledge that the need for preventive restrictions may 
not be ``considered a symptom or disorder-related'' but argue that 
preventive restrictions are nonetheless related to pregnancy. OFCCP 
declines to include this phrase on the list of related medical 
conditions, for the reason the commenters acknowledge: The 
``propensity'' that may require restrictions is not a human medical 
condition, but rather a characteristic of the workplace condition, like 
toxic chemicals exposure, and thus not appropriate for a list of 
medical conditions.
    The commenters similarly urge OFCCP to add ``or other preventative 
measures'' to the phrase ``complications requiring bed rest'' already 
on the list. OFCCP declines to do so, for two reasons. First, doing so 
is unlikely to achieve the result that the commenters seek, which is to 
ensure that pregnant women who are advised by their doctors to avoid 
certain work conditions to prevent problems with their pregnancies are 
permitted light duty or other accommodations; the problem is that it is 
the work conditions, not any pregnancy complications, that require 
preventive measures. Second, to the extent that there are pregnancy 
complications that require other preventive measures, the list of 
related medical conditions is not exhaustive, and such complications 
may fairly be categorized as medical conditions related to pregnancy or 
childbirth.
    In addition, the final rule addresses the well-documented need for 
pregnant persons to receive light duty or other accommodations when 
they need them to prevent unhealthy pregnancy outcomes directly, 
through the prohibition of discrimination in the provision of workplace 
accommodations. The NPRM addressed discrimination in the provision of 
workplace accommodations in proposed paragraph 60-20.5(b)(5); the final 
rule includes a new provision, paragraph 60-20.5(c), covering such 
discrimination, which is discussed infra.
    Several commenters urge OFCCP to include complications related to 
conception, such as treatment for infertility, in the list of related 
medical conditions in proposed paragraph 60-20.5(a) (60-20.5(a)(2) in 
the final rule). OFCCP agrees that employment decisions based on 
complications related to conception, such as treatment for infertility, 
may constitute sex discrimination when those decisions are sex 
specific. The commenters cite a title VII appellate opinion in which 
the court held that an employee who was terminated for taking time off 
to undergo in vitro fertilization treatments could have a valid sex 
discrimination claim because surgical impregnation is intrinsically 
tied to a woman's childbearing capacity.\130\ In title VII appellate 
decisions addressing the exclusion of infertility from employer-
provided health insurance, however, courts have generally held that 
exclusions of all infertility coverage for all employees is gender 
neutral and thus not sex discrimination under title VII.\131\ 
Nevertheless, title VII may be implicated by exclusions of particular 
treatments that apply only to one gender.\132\ While OFCCP declines to 
add complications related to conception to the list of related medical 
conditions, it will follow these principles in implementing paragraph 
60-20.5(a)(2).
---------------------------------------------------------------------------

    \130\ Hall v. Nalco Co., 534 F.3d 644, 649 (7th Cir. 2008).
    \131\ See Saks v. Franklin Covey, Inc., 316 F.3d 337, 347 (2d 
Cir. 2003) (holding that the exclusion of surgical impregnation 
procedures was not discriminatory, even though they were performed 
only on women, because ``the need for the procedures may be traced 
to male, female, or couple infertility with equal frequency,'' and 
thus ``male and female employees afflicted by infertility are 
equally disadvantaged by the exclusion of surgical impregnation 
procedures''); Krauel v. Iowa Methodist Med. Ctr., 95 F.3d 674 (8th 
Cir. 1996) (holding that, ``because the policy of denying insurance 
benefits for treatment of fertility problems applies to both female 
and male workers and thus is gender-neutral,'' it was not 
intentionally discriminatory, id. at 680, and rejecting plaintiff's 
disparate impact claim because she failed to demonstrate that the 
exclusion disproportionately harmed women, id. at 681).
    \132\ EEOC Pregnancy Guidance, supra note 31, at I.A.3.c.
---------------------------------------------------------------------------

    Several commenters recommend that OFCCP add carpal tunnel and 
urinary tract infections to the list of related medical conditions. 
OFCCP declines to do so. The list in proposed paragraph 60-20.5(a) 
(paragraph 60-20.5(a)(2) in the final rule) is illustrative rather than 
exhaustive. When these conditions are related to pregnancy or 
childbirth, the rule will encompass them.
    Proposed paragraph 60-20.5(b) set forth some of the most common 
applications of the general principle of nondiscrimination on the basis 
of pregnancy, childbirth, or related medical conditions. The examples 
included refusing to hire applicants because of pregnancy or 
childbearing capacity (proposed paragraph (b)(1)); firing employees or 
requiring them to go on leave because they become pregnant or have a 
child (proposed paragraph (b)(2)); limiting a pregnant employee's job 
duties based on pregnancy or requiring a doctor's note in order for the 
employee to continue employment while pregnant (proposed paragraph 
(b)(3)); providing employees with health insurance that does not cover 
hospitalization and other medical costs for pregnancy, childbirth, or 
related medical conditions, including contraception coverage, to the 
same extent that such costs are covered for other medical conditions 
(proposed paragraph (b)(4)); and denying alternative job assignment, 
modified duties, or other accommodations on the basis of pregnancy, 
childbirth, or related medical conditions (proposed paragraph (b)(5)).
    Fifteen comments request addition of provisions specifically 
addressing breastfeeding, including a provision stating that the denial 
of an adequate time and place to express milk is sex discrimination; a 
requirement of 20-minute breaks for pumping; and examples of 
discrimination against women who return to work and face adverse action 
because they breastfeed or seek an accommodation to breastfeed. OFCCP 
declines to include additional provisions related to breastfeeding. 
Lactation--which is inclusive of breastfeeding--is listed as a 
``related medical condition'' in paragraph 60-20.5(a)(2) in the final 
rule. Moreover, the lists of examples of disparate treatment in 
paragraph 60-20.5(b) and of discriminatory denial of pregnancy-based 
accommodations in paragraph 60-20.5(c) in the final rule are merely 
illustrative; the fact that they do not include lactation examples does 
not mean that adverse treatment associated with lactation is not 
discriminatory. To the contrary, as lactation is a pregnancy-related 
medical condition, certain adverse actions against a lactating 
employee, including denial of an adequate time and place to express 
milk and some of the other breastfeeding examples that commenters 
propose, will be considered unlawful sex discrimination under this 
rule.
    In addition, OFCCP does not have the authority to require 20-minute 
breaks for pumping. However, section 7 of the

[[Page 39131]]

Fair Labor Standards Act (FLSA) requires covered employers to provide 
reasonable break time for an employee to express breast milk for 
nursing children each time such employee has need to express the milk, 
for up to one year after the child's birth.\133\ The FLSA also requires 
employers to provide employees a place, other than a bathroom, that is 
shielded from view and free from intrusion from coworkers and the 
public, that may be used to express breast milk.\134\ Most contractors 
are subject to these requirements.
---------------------------------------------------------------------------

    \133\ 29 U.S.C. 207(r)(1).
    \134\ Id. DOL's Wage and Hour Division enforces the FLSA. See 
Wage and Hour Division, U.S. Department of Labor, ``Break Time for 
Nursing Mothers,'' available at http://www.dol.gov/whd/nursingmothers/ (last accessed March 26, 2016).
---------------------------------------------------------------------------

    One commenter suggests that the final rule eliminate the phrase 
``when doctors' notes are not required for employees who are similarly 
situated'' in proposed paragraph 60-20.5(b)(3). The commenter believed 
that requiring pregnant women to provide doctors' notes simply to 
continue working their regular jobs without modification is, by itself, 
impermissible disparate treatment and a burden on pregnant employees. 
OFCCP agrees with this point, and it deletes the clause ``when doctors' 
notes are not required for employees who are similarly situated.'' In 
addition, OFCCP changes the word ``employment'' in the clause ``in 
order for a pregnant woman to continue employment'' to ``working'' 
because it is plainer, and changes the word ``woman'' to ``employee'' 
because some persons who have the physiology necessary to have a chance 
of becoming pregnant do not identify as women (as discussed supra). 
Thus, in the final rule, paragraph 60-20.5(b)(3) reads ``Limiting 
pregnant employees' job duties based solely on the fact that they are 
pregnant, or requiring a doctor's note in order for a pregnant employee 
to continue working.''
    OFCCP received three comments regarding the NPRM's inclusion of 
contraceptive coverage in proposed paragraph 60-20.5(b)(4), which 
required that employer-provided health insurance cover contraception to 
the same extent that medical costs are covered for other medical 
conditions. One comment commends OFCCP's recognition of contraceptive 
coverage as a medical cost related to pregnancy that employers must 
provide, to the extent other medical costs are covered for other 
conditions. A contractor umbrella organization expresses concern that 
the rule does not include an exception for contractors with religious 
and moral objections to contraception coverage and requests 
clarification of the provision's applicability, given RFRA and the 
Supreme Court ruling in Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 
__(2014). The third commenter, a religious organization, also argues 
that RFRA forbids application of this portion of paragraph 60-
20.5(b)(4) to contractors with religious objections to contraception. 
In addition, the religious organization commenter argues that title VII 
case law does not support the rule's requirement that contraceptives be 
covered in employer-provided health insurance, citing In re Union 
Pacific Railroad Employment Practices Litigation, 479 F.3d 936 (8th 
Cir. 2007).
    Although OFCCP's rule implements the Executive Order, not title 
VII, OFCCP notes that proposed paragraph 60-20.5(b)(4)'s provision 
regarding contraceptives is consistent with the EEOC's interpretation 
of title VII as amended by the PDA. The EEOC has held that an 
employer's refusal to offer insurance coverage for prescription 
contraceptives, which are available only for women, is a facially 
discriminatory policy that violates title VII if the employer offers 
coverage of other prescription drugs or devices or other types of 
services used to prevent the occurrence of other medical 
conditions.\135\ However, federal courts addressing this issue have 
reached different conclusions. As noted by the religious organization 
commenter, the only circuit court of appeals that has addressed the 
question disagreed with the EEOC's interpretation.\136\ Some district 
courts in other circuits, however, have adopted the EEOC's 
approach.\137\ Thus, while there is support for the language proposed 
in the NPRM, OFCCP acknowledges that case law has not yet settled this 
issue under title VII.
---------------------------------------------------------------------------

    \135\ EEOC Decision on Coverage of Contraception (December 14, 
2000), available at http://www.eeoc.gov/policy/docs/decision-contraception.html (last accessed March 27, 2016).
    \136\ In re Union Pac. R.R. Emp't Practices Litig., 479 F.3d 
936, 943 (8th Cir. 2007).
    \137\ Mauldin v. Wal-Mart Stores, Inc., No. 01-2755, 2002 WL 
2022334 (N.D. Ga. August 23, 2002) (certifying a class of female 
employees alleging that Wal-Mart's lack of coverage for prescription 
contraception was a violation of Title VII, as amended by the PDA); 
Erickson v. Bartell Drug Co., 141 F. Supp. 2d 1266, 1272 (W.D. Wash. 
2001) (holding that, ``[i]n light of the fact that prescription 
contraceptives are used only by women, Bartell's choice to exclude 
that particular benefit from its generally applicable benefit plan 
is discriminatory'').
---------------------------------------------------------------------------

    OFCCP further notes that, since these title VII cases were decided, 
the ACA and its implementing regulations have imposed a requirement 
that, with limited exceptions, health insurance must cover ``[a]ll Food 
and Drug Administration approved contraceptive methods, sterilization 
procedures, and patient education and counseling for all women with 
reproductive capacity'' at no cost to the insured.\138\ Accordingly, 
the ACA and its implementing regulations guarantee the provision of 
comprehensive coverage of contraception and related services for most 
employees. There are numerous and robust ways to enforce this 
guarantee, including a private right of action under the Employee 
Retirement Income Security Act of 1974 (ERISA).\139\
---------------------------------------------------------------------------

    \138\ U.S. Dep't of Health & Human Servs., Health Res. & Servs. 
Admin., Women's Preventive Service Guidelines, available at http://www.hrsa.gov/womensguidelines (last accessed May 22, 2016).
    \139\ 29 U.S.C. 1132(a)(1)(B) (a provision of ERISA authorizing 
plan participants and beneficiaries to bring civil actions against 
group health plans and health insurance issuers ``to recover 
benefits due to [them] under the terms of [the] plan, to enforce 
[their] rights under the terms of the plan, or to clarify [their] 
rights to future benefits under the terms of the plan''); see also 
29 U.S.C. 1132(a)(5) (a provision of ERISA authorizing the Secretary 
of Labor to take enforcement action against group health plans of 
employers that violate this and other requirements); 26 U.S.C. 4980D 
(a provision of the Internal Revenue Code imposing a tax on group 
health plans that fail to meet this and other requirements); 42 
U.S.C. 300gg-22(b) (a provision of the Public Health Service Act 
authorizing the Secretary of Health and Human Services, in the 
absence of state enforcement, to impose civil money penalties on 
health insurance issuers that fail to meet this and other 
requirements).
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    Certain types of employers, such as nonprofit religious hospitals, 
nonprofit religious institutions of higher education, and certain 
closely held for-profit corporations, that have religious objections to 
providing contraceptive coverage, are provided with an accommodation so 
that these employers do not have to contract, arrange, refer, or pay 
for the coverage, but their employees generally still receive separate 
payments for contraceptive services from third parties.\140\ This final 
rule does not alter that accommodation in any way.
---------------------------------------------------------------------------

    \140\ See 45 CFR 147.131.
---------------------------------------------------------------------------

    For these reasons, OFCCP removes the phrase ``including 
contraceptive coverage'' from paragraph 60-20.5(b)(4) in the final 
rule.
    One commenter points out that paragraph 60-20.5(b)(5), as well as 
several places in the NPRM's preamble narrative, refer to ``pregnant 
workers'' or ``workers who are pregnant,'' and recommends that, 
``because there has been considerable confusion regarding the 
applicability of Title VII to medical conditions beyond pregnancy 
itself,'' the language refer instead to ``workers who are pregnant or 
affected by related medical conditions.'' This change would, the 
commenter asserts, clarify that the scope of contractors' obligation 
encompasses addressing conditions

[[Page 39132]]

related to pregnancy as well as pregnancy itself. Because OFCCP revises 
paragraph 60-20.5(b)(5) substantially, referring in that section to 
``employees who are unable to perform some of their job duties because 
of pregnancy, childbirth, or related medical conditions,'' it is not 
necessary to make the suggested revision in that paragraph. OFCCP 
reviewed the narrative sections of the preamble and made changes to 
ensure that the PDA's coverage of pregnancy, childbirth, and related 
medical conditions is reflected accurately.
    The NPRM's proposed paragraph 60-20.5(b)(5) included, as another 
common example of discrimination based on pregnancy, childbirth, or 
related medical conditions, the failure to provide reasonable workplace 
accommodations to employees affected by such conditions when such 
accommodations are provided to other workers similar in their ability 
or inability to work. However, since this issue was pending before the 
U.S. Supreme Court in Young v. UPS when OFCCP published the NPRM, the 
NPRM stated that OFCCP would reflect the ruling in Young v. UPS in the 
final rule as necessary.
    The Supreme Court decided Young v. UPS on March 25, 2015. Peggy 
Young, a part-time truck driver for UPS, had alleged that UPS provided 
light-duty accommodations for truck drivers who were injured on the 
job, for those who had disabilities within the meaning of the ADA, and 
for those who lost their Department of Transportation truck driver 
certifications, but not for those who were affected by pregnancy, 
childbirth, or related medical conditions. The Court held that if Young 
could prove that UPS provided more favorable treatment to at least some 
employees whose situation could not reasonably be distinguished from 
hers, then these facts would establish a prima facie case of pregnancy 
discrimination. The Court remanded the case for further proceedings 
during which UPS would have been permitted to offer a legitimate, 
nondiscriminatory reason for differences in treatment and Young would 
have been permitted to attempt to rebut that reason by showing that it 
was pretextual.\141\ In describing the legitimate, nondiscriminatory 
reason, the Court explained that--

    \141\ This litigation has subsequently been settled. In a 
company statement provided to the media, UPS explained--
    UPS changed its policy because the company recognized that state 
law, regulatory guidance and the general work environment in the 
U.S. have evolved. UPS believes it is appropriate to update its 
workplace policies so that the company can attract and retain the 
best workforce. The new policy began last January. It strengthens 
UPS's commitments to treat all workers fairly and supports women in 
the workplace.
    The new UPS policy makes temporary light duty work available to 
all pregnant employees with medically certified lifting or other 
physical restrictions. The policy reflects pregnancy-specific laws 
recently enacted in a number of states where UPS conducts business, 
and is consistent with new guidance on pregnancy-related 
accommodations issued by the Equal Employment Opportunity Commission 
last year.
    NBC Washington, ``UPS Settles with Maryland Woman in Pregnancy 
Discrimination Case'' (October 1, 2015), available at http://www.nbcwashington.com/news/local/UPS-Settles-With-Maryland-Woman-in-Pregnancy-Discrimination-Case-330305251.html (last accessed March 
11, 2016).
---------------------------------------------------------------------------

consistent with the Act's basic objective, that reason normally 
cannot consist simply of a claim that it is more expensive or less 
convenient to add pregnant women to the category of those (``similar 
in their ability or inability to work'') whom the employer 
accommodates.\142\

    \142\ Young v. UPS, 135 S. Ct. at 1354.
---------------------------------------------------------------------------

    Once the employer offers a legitimate, nondiscriminatory reason 
that meets this test, it falls to the plaintiff to prove that the 
employer's proffered reason is pretextual. The Court explained the 
evidence required on this point as follows:

    We believe that the plaintiff may reach a jury on this issue by 
providing sufficient evidence that the employer's policies impose a 
significant burden on pregnant workers, and that the employer's 
``legitimate, nondiscriminatory'' reasons are not sufficiently 
strong to justify the burden, but rather--when considered along with 
the burden imposed--give rise to an inference of intentional 
discrimination.
    The plaintiff can create a genuine issue of material fact as to 
whether a significant burden exists by providing evidence that the 
employer accommodates a large percentage of nonpregnant workers 
while failing to accommodate a large percentage of pregnant workers. 
Here, for example, if the facts are as Young says they are, she can 
show that UPS accommodates most nonpregnant employees with lifting 
limitations while categorically failing to accommodate pregnant 
employees with lifting limitations. Young might also add that the 
fact that UPS has multiple policies that accommodate nonpregnant 
employees with lifting restrictions suggests that its reasons for 
failing to accommodate pregnant employees with lifting restrictions 
are not sufficiently strong--to the point that a jury could find 
that its reasons for failing to accommodate pregnant employees give 
rise to an inference of intentional discrimination.\143\

    \143\ Id. at 1354-55.
---------------------------------------------------------------------------

As the Chair of the EEOC has testified, ``[a]s a result of [the Young] 
decision, many pregnant women who were previously denied accommodations 
will now be entitled to receive them.'' \144\
---------------------------------------------------------------------------

    \144\ Yang Testimony, supra note 57, at 7. The EEOC had issued 
guidance in 2014 on the topic of pregnancy discrimination, part of 
which was disapproved by the Young v. UPS decision. The EEOC revised 
its guidance in June 2015. See EEOC Pregnancy Guidance, supra note 
31.
---------------------------------------------------------------------------

    The many comments that OFCCP received on paragraph 60-20.5(b)(5) 
include the comment that 70 national, regional, state, and local 
women's, civil rights, LGBT, and labor organizations joined, as well as 
comments that virtually every organization representing contractors 
submitted. Two comments recommend that OFCCP defer adoption of any part 
of the rule interpreting Young until the EEOC issues new guidance. The 
EEOC has now issued revised guidance in response to Young,\145\ and the 
final rule is consistent with that guidance.
---------------------------------------------------------------------------

    \145\ See EEOC Pregnancy Guidance, supra note 31.
---------------------------------------------------------------------------

    Several of the industry groups suggest that OFCCP should remove the 
provisions about pregnancy accommodations, given the recent Supreme 
Court ruling in Young v. UPS.\146\ On the other hand, the women's, 
civil rights, LGBT, and labor organizations recommend no change to 
paragraph 60-20.5(b)(5) in light of Young v. UPS.\147\ OFCCP declines 
to adopt either suggestion but, instead, revises the final rule to 
reflect the Supreme Court ruling, as described infra.
---------------------------------------------------------------------------

    \146\ The joint comment filed by one employer group, for 
example, states:
    [In Young v. UPS,] the Court found the [EEOC's] position 
untenable because it suggested that the PDA confers upon pregnant 
women ``a most-favored-nation status,'' under which they are 
automatically entitled to workplace accommodations to the same 
extent as anyone else who is similarly limited, ``irrespective of 
the nature of their jobs, the employer's need to keep them working, 
their ages, or any other criteria.'' The Court found that such an 
approach was unsupported by the text of the PDA and otherwise 
inconsistent with basic disparate treatment law. . . . [T]he EEOC's 
discredited position, repeated in the Proposed Rule and now rejected 
by the Supreme Court, is incompatible with Title VII and the weight 
of federal appeals court authority. . . . To the extent that Young 
rejects this interpretation of the PDA, OFCCP should delete that 
corresponding language from the NPRM in its entirety.
    \147\ The 70-group comment, for example, states:
    The ADAAA's expansive coverage means that employers will 
accommodate most non-pregnant employees similar in ability to work 
to pregnant workers with physical limitations; Young makes clear 
that employers who refuse to also accommodate pregnant workers in 
this situation likely violate the PDA. As a result, employers will 
typically be required to provide these accommodations to pregnant 
workers as well under the standard articulated by the Court in 
Young. The rule proposed in the NPRM appropriately reflects this 
result.
---------------------------------------------------------------------------

    A few commenters do suggest specific language to reflect or clarify 
the effect of the Young v. UPS decision. One commenter proposes that 
paragraph 60-20.5(b)(5) refer to ``other employees whose abilities or 
inabilities to perform

[[Page 39133]]

their job duties are similarly affected, including but not limited to 
employees with on-the-job injuries and employees with disabilities 
including temporary disabilities.'' As discussed infra, in the final 
rule OFCCP reorganizes proposed paragraph 60-20.5(b)(5) and refers 
specifically to employees with on-the-job injuries as an example in new 
paragraph 60-20.5(c)(2). Another commenter proposes that the final rule 
clarify that employers may not use accommodation policies that impose a 
``significant burden'' on pregnant workers. As discussed infra, 
consistent with Young v. UPS, the final rule includes the proposed 
language in new paragraph 60-20.5(c)(1)(ii).
    To reorganize proposed paragraph 60-20.5(b)(5), OFCCP removes 
paragraph (5) from paragraph 60-20.5(b) and substitutes a new 
paragraph, 60-20.5(c), ``Accommodations.'' Paragraph 60-20.5(c) is 
divided into two paragraphs: (1) Disparate treatment and (2) Disparate 
impact.
    Paragraph (1), on disparate treatment, provides that it is a 
violation of the Executive Order for a contractor to deny alternative 
job assignments, modified duties, or other accommodations to employees 
who are unable to perform some of their job duties because of 
pregnancy, childbirth, or related medical conditions in three 
circumstances, recited in three paragraphs of 60-20.5(c)(1).
    The first circumstance, in paragraph 60-20.5(c)(1)(i), is a 
corollary of Congress's reversal of the reasoning in Gilbert v. General 
Electric, 429 U.S. 125 (1976), by the PDA. In Gilbert, GE's temporary 
disability insurance policy provided coverage for all conditions except 
those related to pregnancy. The Court upheld that exclusion as being 
not based on sex but, rather, as a distinction between pregnant 
persons, who are all women, and nonpregnant persons, who include women 
and men. Congress overturned both that decision and its underlying 
reasoning that distinctions between pregnancy and nonpregnancy are not 
distinctions based on sex.\148\ As Young recognized, ``a plaintiff can 
prove disparate treatment . . . by direct evidence that a workplace 
policy, practice, or decision relies expressly on a protected 
characteristic.'' \149\ Thus, an accommodations policy that 
distinguishes between all pregnant workers on the one hand, and all 
nonpregnant workers on the other, runs afoul of the PDA. Paragraph 60-
20.5(c)(1)(i) states this principle.
---------------------------------------------------------------------------

    \148\ See Young v. UPS, 135 S. Ct. at 1353.
    \149\ Id. at 1345.
---------------------------------------------------------------------------

    The second circumstance, in paragraph 60-20.5(c)(1)(ii), most 
directly reflects the holding in Young: That it is a violation of title 
VII for an employer to deny alternative job assignments, modified 
duties, or other accommodations (including light duty) to employees who 
are unable to perform some of their job duties because of pregnancy, 
childbirth, or related medical conditions when (a) the employer 
provides such accommodations to other employees whose abilities or 
inabilities to perform their job duties are similarly affected, (b) the 
denial of accommodations ``impose[s] a significant burden'' on 
employees affected by pregnancy, childbirth, or related medical 
conditions, and (c) the contractor's asserted reasons for denying 
accommodations to such employees ``are not sufficiently strong to 
justify the burden.'' \150\
---------------------------------------------------------------------------

    \150\ Id. at 1354.
---------------------------------------------------------------------------

    The phrase ``or is required by its policy or by other relevant laws 
to provide'' is included to cover the situation where a contractor's 
policy or a relevant law (such as the ADA and Section 503) would 
require an alternative job assignment or job modification to be 
provided to an employee not affected by pregnancy, childbirth, or a 
related medical condition but who is similarly restricted in his or her 
ability to perform the job, even if no such employees have been 
accommodated under the policy or law. In such a situation, the 
existence of the policy or law (e.g., the ADA and Section 503) 
requiring reasonable accommodation or job modifications for employees 
with disabilities may affect the analysis required by Young of whether 
the contractor's failure to provide such accommodations to employees 
affected by pregnancy, childbirth, or related medical conditions who 
are similar in their ability or inability to work imposes a 
``substantial burden'' on those employees and whether the contractor's 
justification for that failure is pretextual.
    The third circumstance, in paragraph 60-20.5(c)(1)(iii)--``where 
intent to discriminate on the basis of pregnancy, childbirth, or 
related medical conditions is otherwise shown''--covers the situation 
in which OFCCP finds that a denial of an accommodation for pregnancy, 
childbirth, or a related medical condition is the result of intentional 
discrimination established by means other than the kind of evidence 
outlined in subparagraphs 60-20.5(c)(1)(i) and (ii). An example would 
be evidence of animus against an employee's working during pregnancy on 
the part of the supervisor who denied a requested accommodation. As 
Young recognized, `` `[l]iability in a disparate-treatment case depends 
on whether the protected trait actually motivated the employer's 
decision.' ''\151\
---------------------------------------------------------------------------

    \151\ Id. at 1345 (quoting Raytheon Co. v. Hernandez, 540 U.S. 
44, 52 (2003) (alteration in original)).
---------------------------------------------------------------------------

    One commenter suggests that OFCCP add references to specific 
alternative job assignments, modified duties, or other accommodations 
that may be required under the accommodations paragraph. In particular, 
the commenter mentions that reducing lifting requirements, offering 
light-duty assignments, and allowing employees to drink water and pump 
breast milk are some ways in which contactors can ensure that workers 
affected by pregnancy, childbirth, or related medical conditions are 
reasonably accommodated. Although OFCCP agrees that these are examples 
of possible reasonable accommodations for workers affected by 
pregnancy-related conditions, OFCCP declines to add these or other 
specific examples. The term ``or other accommodations'' encompasses the 
examples, as well as other accommodations not specified.
    Nine commenters urge OFCCP to include a reference to disparate-
impact analysis for pregnancy under section 60-20.5, along with a non-
exhaustive list of examples. At least one commenter specifically points 
out that ``a policy of only offering `light duty' to employees with on-
the-job injuries, which excludes pregnant employees, may have a 
disparate impact and thus would be impermissible unless shown to be 
job-related and consistent with business necessity.'' The second 
paragraph of paragraph 60-20.5 in the final rule, 60-20.5(c)(2), 
addresses disparate impact. It applies basic disparate-impact 
principles to policies or practices that deny alternative job 
assignments, modified duties, or other accommodations to employees who 
are unable to perform some of their job duties because of pregnancy, 
childbirth, or related medical conditions, stating that contractors 
that have such policies or practices must ensure that such policies or 
practices do not have an adverse impact on the basis of sex unless they 
are shown to be job-related and consistent with business necessity. The 
final rule provision also includes, as an example of a policy that 
might have an unjustified disparate impact based on pregnancy, a 
contractor's policy of offering light duty only to employees with on-
the-job injuries.

[[Page 39134]]

    Many commenters suggest that OFCCP has the authority to address the 
need to provide reasonable accommodation for pregnancy not as a 
nondiscrimination measure but as a form of affirmative action aimed at 
breaking down barriers to women's acceptance and advancement in the 
workplace under E.O. 11246. E.O. 11246 requires contractors to ``take 
affirmative action to ensure that applicants are employed, and that 
employees are treated during employment, without regard to their . . . 
sex.'' \152\ Under its affirmative action authority, OFCCP could go 
beyond the nondiscrimination requirements of title VII and, for 
example, simply require federal contractors to provide light duty, 
modified job duties or assignments, or other reasonable accommodations 
to employees who are unable to perform some of their job duties because 
of pregnancy, childbirth, or related medical conditions (as it requires 
them to develop, adopt, and update affirmative action programs). OFCCP 
declines to exercise its affirmative action authority in this way at 
this time. As discussed in the preamble to the NPRM, OFCCP believes 
that most employers already provide some form of accommodation when 
requested.\153\ Contractor compliance with the clarified 
nondiscrimination requirements set out in paragraphs 60-20.5(c)(1) and 
(2) in the final rule should ensure that many other employees will 
receive necessary accommodations. Moreover, as the EEOC has indicated, 
a number of pregnancy-related impairments previously excluded from ADA 
coverage are likely to be considered disabilities under the Americans 
with Disabilities Amendments Act of 2008 (ADAAA) \154\ and will 
therefore now require accommodations under the ADA.\155\ Should this 
prove not to be true as the case law develops, OFCCP will reconsider 
its decision not to require pregnancy-related accommodations under its 
affirmative action authority.
---------------------------------------------------------------------------

    \152\ Executive Order 11246, sec. 202(1).
    \153\ See Eugene Declercq, Carol Sakala, Maureen Corry, Sandra 
Appelbaum, and Ariel Herrlich, Childbirth Connection, Listening to 
Mothers III: New Mothers Speak Out, 36 (2013), available at http://www.childbirthconnection.org/article.asp?ck=10394 (last accessed 
March 27, 2016) (Listening to Mothers).
    \154\ 122 Stat. 3555, codified at 42 U.S.C. 12102(1)-(2).
    \155\ According to the EEOC:
    Prior to the enactment of the ADAAA, some courts held that 
medical conditions related to pregnancy generally were not 
impairments within the meaning of the ADA, and so could not be 
disabilities. Although pregnancy itself is not an impairment within 
the meaning of the ADA, and thus is never on its own a disability, 
some pregnant workers may have impairments related to their 
pregnancies that qualify as disabilities under the ADA, as amended. 
. . . . Moreover, under the amended ADA, it is likely that a number 
of pregnancy-related impairments that impose work-related 
restrictions will be substantially limiting [and therefore covered], 
even though they are only temporary.
    EEOC Pregnancy Guidance, supra note 31, at II.A (footnotes 
omitted).
---------------------------------------------------------------------------

    Nevertheless, OFCCP adds a section to the Appendix to the final 
rule that makes it a best practice for contractors to provide light 
duty, modified job duties or assignments, or other reasonable 
accommodations to employees who are unable to perform some of their job 
duties because of pregnancy, childbirth, or related medical conditions. 
It is a best practice for contractors to provide these reasonable 
accommodations as part of their broader accommodations policies.
    A number of commenters urge OFCCP to provide in the final rule that 
in the wake of the ADAAA, Section 503 will entitle many pregnant 
workers for contractors to reasonable accommodation for their 
temporary, pregnancy-related impairments.\156\ Other commenters 
objected to this idea, on the ground that interpretation of or guidance 
on Section 503 is beyond the scope of sex discrimination regulations. 
OFCCP agrees that Section 503 may require contractors to provide 
reasonable workplace accommodations to workers with pregnancy-related 
impairments, when those impairments fall within the meaning of 
``disability.'' In addition, as noted above, EEOC has clarified that 
some pregnancy-related impairments are likely to be considered 
disabilities under the amended ADA. OFCCP declines to interpret Section 
503 as it relates to pregnancy accommodations in this rule, as doing so 
would be outside the rule's scope. Nevertheless, contractors should be 
aware of their obligation to provide reasonable accommodation for 
pregnancy-related disabilities, unless they can demonstrate that the 
accommodation would impose an undue hardship on the operation of their 
businesses.
---------------------------------------------------------------------------

    \156\ In Young v. UPS, the Supreme Court ``express[ed] no view'' 
about application of the ADAAA to the case because it was filed 
before the ADA was amended. 135 S. Ct. at 1348.
---------------------------------------------------------------------------

    Proposed paragraph 60-20.5(c) addressed the provision of leave 
related to pregnancy, childbirth, or related medical conditions. In the 
final rule, it is renumbered paragraph 60-20.5(d). Proposed paragraph 
(c)(1) (final rule paragraph (d)(1)) set forth the general Executive 
Order and title VII principle that neither family nor medical leave may 
be denied or provided differently on the basis of sex. Proposed 
paragraph (c)(2)(i) (final rule paragraph (d)(2)(i)) required that 
employees affected by pregnancy, childbirth, or related medical 
conditions be granted medical leave, including paid sick leave, on the 
same basis that such leave is granted to other employees unable to work 
for other medical reasons. Proposed paragraph (c)(2)(ii) (final rule 
paragraph (d)(2)(ii)) required that family leave be provided to men on 
the same terms that it is provided to women.
    Proposed paragraph (c)(3) (now (d)(3)) applied disparate impact 
analysis to contractor leave policies that are inadequate such that 
they have a disparate impact on members of one sex. This is consistent 
with the EEOC's Guidelines on Discrimination Because of Sex, 29 CFR 
1604.10(c), and Section I.B.2 of its enforcement guidance on pregnancy 
discrimination. Therefore, failure to provide workers who are 
temporarily unable to work due to pregnancy, childbirth, or related 
medical conditions with any parental or medical leave at all, or with 
insufficient leave, may be unlawful sex discrimination if that failure 
is found to have an adverse impact on such workers, unless the 
contractor can demonstrate that the failure to provide leave or 
sufficient leave is job-related and consistent with business necessity.
    Six commenters address NPRM paragraph 60-20.5(c). One commenter 
proposes that the final rule require paid leave after childbirth. OFCCP 
does not have the authority to require paid leave under E.O. 11246. 
OFCCP does have the authority to require that, if contractors provide 
paid leave, they must do so on the same basis for women as for men (and 
vice versa), and for pregnancy as for other similar disabling 
conditions. See final rule paragraph 60-20.5(d)(2)(i) (requiring 
contractors to provide job-guaranteed medical leave, including paid 
sick leave, for employees' pregnancy, childbirth, or related medical 
conditions on the same terms that medical or sick leave is provided for 
other medical conditions that are similar in their effect on employees' 
ability to work); final rule paragraph 60-20.5(d)(2)(ii) (requiring 
contractors to provide job-guaranteed family leave, including any paid 
leave, to male employees on the same terms that they provide such 
family leave to female employees).
    One commenter expresses concern that proposed paragraph 
20.5(c)(2)(i) (final rule paragraph 20.5(d)(2)(i)) requires contractors 
to provide more expansive leave rights than are mandated by the FMLA or 
similar law because, the commenter asserts, the

[[Page 39135]]

paragraph requires female employees to be eligible for the same amount 
of leave as other employees unable to work for other medical reasons. 
Under paragraph 20.5(d)(2)(i), the contractor's provision of medical 
and sick leave for other medical conditions establishes the terms on 
which it must provide medical and sick leave for pregnancy, childbirth, 
and related medical conditions. Thus, if a contractor provides medical 
or sick leave beyond that required by the FMLA to employees who are 
unable to work for other medical reasons, then paragraph 20.5(d)(2)(i) 
requires the contractor to provide leave for pregnancy, childbirth, and 
related medical conditions on the same terms. The same commenter also 
asserts that proposed paragraph 60-20.5(c)(3) (final rule paragraph 60-
20.5(d)(3)) requires contractors to grant employee leave rights beyond 
those required by the FMLA and is inconsistent with current law. 
Paragraph 60-20.5(d)(3) does not categorically require employers to 
provide leave rights beyond those required under current federal law. 
OFCCP will review implementation of contractors' leave practices to 
make determinations about potential discriminatory conduct on a case-
by-case basis.
    A women's rights organization requests that proposed paragraph 60-
20.5(c)(3) include an explicit reference to the fact that contractors 
covered by the FMLA are statutorily required to provide eligible 
employees with up to 12 weeks of unpaid leave a year and must abide by 
applicable state FMLA laws that provide more expansive coverage. OFCCP 
declines to do this, as regulations concerning the FMLA are not within 
its authority. It is important for contractors to remember, however, 
that the FMLA requires covered employers to provide eligible employees 
with unpaid, job-protected leave for specified family and medical 
reasons and that a number of states also have laws that directly 
address the provision of leave.
    One comment, joined by three organizations, suggests that the final 
rule require that non-birth parents, including adoptive parents, foster 
parents, and workers standing in loco parentis, be entitled to family 
leave time equal to the family leave time provided to birth mothers. No 
sex discrimination principle requires equal treatment of birth mothers, 
on the one hand, and adoptive parents, foster parents, and workers 
standing in loco parentis, on the other. OFCCP therefore declines to 
add text to the final rule regarding non-birth parents' leave, as doing 
so would be outside the scope of the sex discrimination regulations.

Section 60-20.6 Other Fringe Benefits

    The NPRM proposed to remove the Guidelines' Sec.  60-20.6, entitled 
``Affirmative action,'' as the requirements related to affirmative 
action programs are set forth in 41 CFR parts 60-2 and 60-4. OFCCP 
received no comment on this change, and the final rule incorporates it. 
The proposed rule substituted a new Sec.  60-20.6, entitled ``Other 
fringe benefits,'' divided into three paragraphs. Proposed paragraph 
60-20.6(a) stated the general principle that contractors may not 
discriminate on the basis of sex in the provision of fringe benefits; 
paragraph (b) defined ``fringe benefits'' broadly to encompass a 
variety of such benefits that are now provided by contractors; and 
paragraph (c) replaced the inaccurate statement found in the 
Guidelines' paragraph 60-20.3(c) that a contractor will not be 
considered to have violated the Executive Order if its contributions 
for fringe benefits are the same for men and women or if the resulting 
benefits are equal.\157\ In the final rule, OFCCP retains the proposed 
paragraphs for Sec.  60-20.6 with modifications to paragraphs (a) and 
(b).
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    \157\ See City of Los Angeles v. Manhart, discussed and cited 
supra in the section Reasons for Promulgating this New Regulation; 
see also Ariz. Governing Comm. v. Norris, 463 U.S. 1073 (1983).
---------------------------------------------------------------------------

    OFCCP received four comments on proposed rule Sec.  60-20.6. One 
commenter urges OFCCP to state explicitly in paragraph 60-20.6(a) that 
contractors may not condition fringe benefits on the sex of an 
employee's spouse. OFCCP declines to explicitly include this in the 
regulatory text, as this expansion was not proposed in the NPRM. OFCCP 
will follow developing relevant case law in this area in its 
interpretation of these regulations. Further, OFCCP notes that a claim 
of discrimination due to a contractor's failure to provide the same 
fringe benefits to same-sex spouses that it provides to opposite-sex 
spouses would be actionable under its Executive Order 13672 
regulations.
    One commenter states that OFCCP's proposed definition of ``fringe 
benefits'' in paragraph 60-20.6(b) is ``much broader than current 
regulations/case law'' permit. The commenter does not cite specific 
regulations or cases. OFCCP believes its proposed definition of 
``fringe benefits'' is permissible; however, to ensure consistency with 
title VII principles, OFCCP adopts the definition of ``fringe 
benefits'' that appears in the EEOC's Guidelines on Discrimination 
Because of Sex. See 29 CFR 1604.9(a). Accordingly, OFCCP revises 
paragraph 60-20.6(b) to read: ``As used herein, the term `fringe 
benefits' includes, but is not limited to, medical, hospital, accident, 
life insurance, and retirement benefits; profit-sharing and bonus 
plans; leave; and other terms, conditions, and privileges of 
employment.'' Deleted from the final rule are the specific examples 
``dependent care assistance; educational assistance; employee 
discounts; stock options; lodging; meals; moving expense 
reimbursements; retirement planning services; and transportation 
benefits.'' OFCCP considers these items to be covered as terms, 
conditions, or privileges of employment.
    Another comment suggests that OFCCP add ``flexible work 
arrangements'' as an example of fringe benefits. OFCCP declines to do 
so. Such an addition would be inconsistent with the decision to use a 
list that is identical to the list in the EEOC regulations. Moreover, 
as explained earlier in the preamble, OFCCP does add ``treating men and 
women differently with regard to the availability of flexible work 
arrangements'' at paragraph 60-20.2(b)(3) of the final rule, as an 
additional listed example of disparate treatment.
    Two comments--one from an individual and one from a civil rights 
legal organization--urge OFCCP to revise the section to prohibit 
contractors from providing health insurance plans that deny insurance 
coverage for health care related to gender transition (trans-exclusive 
plans). One comment states that many health insurance policies are 
facially discriminatory against transgender individuals because they 
exclude, for example, ``any procedure or treatment, including hormone 
therapy, designed to change [their] physical characteristics from 
[their] biologically determined sex to those of the opposite sex.'' The 
comment suggests that OFCCP add a new paragraph in Sec.  60-20.6, as 
follows: ``It shall be an unlawful employment practice for a contractor 
to offer health insurance that does not cover care related to gender 
identity or any process or procedure designed to facilitate the 
adoption of a sex or gender other than the beneficiary's designated sex 
at birth.'' OFCCP declines to insert this additional language in the 
final rule because it would be superfluous. Section 60-20.6 forbids 
discrimination in fringe benefits on the basis of sex. Because the term 
``fringe benefits'' is defined to include medical benefits and the term 
``sex'' is defined to include gender identity, the logical reading of

[[Page 39136]]

the language proposed in the NPRM, which is adopted into the final rule 
without change, is that certain trans-exclusive health benefits 
offerings may constitute unlawful discrimination.\158\
---------------------------------------------------------------------------

    \158\ OFCCP notes that OPM issued a Federal Employee Health 
Benefits (FEHB) Program Carrier Letter on June 23, 2015, stating 
that, ``[e]ffective January 1, 2016, no carrier participating in the 
Federal Employees Health Benefits Program may have a general 
exclusion of services, drugs or supplies related to gender 
transition or `sex transformations.' '' FEHB Program Carrier Letter 
No. 2015-12, available at http://www.opm.gov/healthcare-insurance/healthcare/carriers/2015/2015-12.pdf (last accessed January 9, 2016) 
(OPM Carrier Letter 2015-12). The letter cited the ``evolving 
professional consensus that treatment may be medically necessary to 
address a diagnosis of gender dysphoria.''
---------------------------------------------------------------------------

    Contractors are generally responsible for ensuring that fringe-
benefit schemes, including health insurance plans, offered to their 
employees do not discriminate on any of the protected bases set forth 
in E.O. 11246.\159\ Contractors thus must ensure that all of the health 
insurance plans that are offered to their employees provide services to 
all employees in a manner that does not discriminate on the basis of 
sex, including gender identity or transgender status. As discussed 
below, denying or limiting access to benefits may violate E.O. 11246's 
prohibition on sex discrimination, consistent with OFCCP Directive 
2014-02,\160\ as well as its prohibition on gender identity 
discrimination.
---------------------------------------------------------------------------

    \159\ See, e.g., Ariz. Governing Comm. for Tax Deferred Annuity 
& Deferred Compensation Plans v. Norris, 463 U.S. 1073 (1983) 
(applying Title VII). In the alternative, contractors may arrange to 
provide services to employees independently. See Norris, 463 U.S. at 
1089-91 (Marshall, J., concurring op. joined by five justices).
    \160\ OFCCP Directive 2014-02, Gender Identity and Sex 
Discrimination, supra note 86.
---------------------------------------------------------------------------

    Discrimination in benefits on the basis of gender identity or 
transgender status may arise under a number of different scenarios. 
First, transgender individuals may be denied coverage for medically 
appropriate sex-specific health-care services because of their gender 
identity or because they are enrolled in their health plans as one 
gender, where the medical care is generally associated with another 
gender. Consistent with recent guidance jointly issued by the 
Departments of Labor, Health and Human Services, and the Treasury 
pursuant to the ACA,\161\ as well as the final rule recently published 
by the Department of Health and Human Services to implement the ACA's 
nondiscrimination provision,\162\ the nondiscrimination requirements of 
E.O. 11246 obligate contractors to ensure that coverage for health-care 
services be made available on the same terms for all individuals for 
whom the services are medically appropriate, regardless of sex assigned 
at birth, gender identity, or recorded gender. For example, where an 
individual could benefit medically from treatment for ovarian cancer, a 
contractor may not deny coverage based on the individual's 
identification as a transgender male.
---------------------------------------------------------------------------

    \161\ U.S. Dep'ts of Labor, Health & Hum. Servs. & the Treasury, 
FAQs about Affordable Care Act Implementation (Part XXVI), Q.5 (May 
11, 2015), available at http://www.dol.gov/ebsa/faqs/faq-aca26.html 
(last accessed March 27, 2016).
    \162\ 45 CFR 92.207(b)(3)-(5), HHS Nondiscrimination Final Rule, 
supra note 106, 81 FR at 31471-31472.
---------------------------------------------------------------------------

    Second, some insurance plans have explicit exclusions of coverage 
for all health services associated with gender dysphoria \163\ or 
gender transition.\164\ Such categorical exclusions are facially 
discriminatory because they single out services and treatments for 
individuals on the basis of their gender identity or transgender 
status, and would generally violate E.O. 11246's prohibitions on both 
sex and gender identity discrimination.
---------------------------------------------------------------------------

    \163\ Gender dysphoria ``refers to discomfort or distress that 
is caused by a discrepancy between a person's gender identity and 
that person's sex assigned at birth (and the associated gender role 
and/or primary and secondary sex characteristics).'' World 
Professional Association for Transgender Health, Standards of Care 
for the Health of Transsexual, Transgender, and Gender-Nonconforming 
People, Version 7, 13 International Journal of Transgenderism 165, 
168 (2011) (WPATH Standards of Care), available at www.wpath.org/uploaded_files/140/files/IJT SOC, V7.pdf (last accessed January 22, 
2016). Not every transgender person has gender dysphoria. Lambda 
Legal, Know Your Rights, FAQ on Access to Transition-Related Care 
(no date), available at http://www.lambdalegal.org/know-your-rights/transgender/transition-related-care-faq#q2 (last accessed February 
22, 2016).
    \164\ OFCCP intends to interpret the scope of health services 
related to gender transition broadly and recognizes that such 
services may change as standards of medical care continue to evolve. 
The range of transition-related services, which includes treatment 
for gender dysphoria, is not limited to surgical treatments and may 
include, but is not limited to, services such as hormone therapy and 
psychotherapy, which may occur over the lifetime of the individual.
---------------------------------------------------------------------------

    In evaluating whether the denial of coverage of a particular 
service where an individual is seeking the service as part of a gender 
transition is discriminatory, OFCCP will apply the same basic 
principles of law as it does with other terms and benefits of 
employment--inquiring whether there is a legitimate, nondiscriminatory 
reason for such denial or limitation that is not a pretext for 
discrimination, for example.\165\ Contractors must apply the same 
generally applicable standards in determining coverage for health-care 
services to all employees, regardless of their gender identity or 
transgender status. If a contractor generally provides coverage for a 
particular treatment or service, e.g., hormone replacement or mental 
health care, where it is medically necessary, the contractor cannot 
decline to provide coverage for that same treatment when it is deemed 
medically necessary \166\ for a transgender individual because the 
treatment is related to his or her gender identity or transgender 
status. Contractors may deny or limit coverage only if such denial or 
limitation is based on the nondiscriminatory application of neutral 
criteria, for example, where a service is not medically necessary, a 
qualified provider is unavailable, or inadequate medical documentation 
has been provided.
---------------------------------------------------------------------------

    \165\ Note that under the EEOC's title VII guidance, the fact 
that it may cost more to provide benefits to members of a protected 
group (e.g., to provide health care for women) is not itself a 
justification for discriminating against that group. EEOC Compliance 
Manual Chapter 3, Directive No. 915.003, Title VII/EPA Section 
(October 3, 2000), available at http://www.eeoc.gov/policy/docs/benefits.html (last accessed March 27, 2016).
    \166\ Numerous medical organizations, including the American 
Medical Association, have recognized that ``[a]n established body of 
medical research demonstrates the effectiveness and medical 
necessity of mental health care, hormone therapy and sex 
reassignment surgery as forms of therapeutic treatment for many 
people diagnosed with GID [gender identity dysphoria]'' and that 
``[h]ealth experts in GID, including WPATH [World Professional 
Association for Transgender Health], have rejected the myth that 
such treatments are `cosmetic' or `experimental' and have recognized 
that these treatments can provide safe and effective treatment for a 
serious health condition.'' American Medical Association House of 
Delegates, Resolution 122 (A-08), Removing Financial Barriers to 
Care for Transgender Patients 1 (2008), available at http://www.tgender.net/taw/ama_resolutions.pdf (last accessed May 13, 
2016).
---------------------------------------------------------------------------

    In construing the prohibitions on sex and gender identity 
discrimination as applying in this manner, OFCCP is taking a similar 
approach to that of several states and the District of Columbia, which 
have concluded that their statutory or regulatory provisions 
prohibiting discrimination on the basis of sex and/or gender identity 
prohibit policy exclusions on the basis of gender identity or 
transgender status.\167\ For

[[Page 39137]]

example, the Illinois Department of Insurance has interpreted the 
Illinois Human Rights Act to prohibit (1) policy exclusions of 
``surgical treatments for gender dysphoria that are provided to non-
transgender persons for other medical conditions''; (2) policy 
exclusions of non-surgical treatments for gender transition, such as 
hormone therapy, ``if that treatment is provided for other medical 
conditions''; (3) provisions that deny transgender persons coverage or 
benefits for sex-specific treatment because of their gender identity 
(e.g., mammograms, ob-gyn visits); and (4) any exclusionary clauses or 
language that have the ``effect of targeting transgender persons or 
persons with gender dysphoria'' (including ``sex change'' or ``sex 
transformation'' exclusions).\168\
---------------------------------------------------------------------------

    \167\ See Cal. Dep't of Managed Health Care, Letter No. 12-K, 
Gender Nondiscrimination Requirements (April 9, 2013), available at 
https://www.dmhc.ca.gov/Portals/0/LawsAndRegulations/DirectorsLettersAndOpinions/d112k.pdf (last accessed March 17, 
2016); Conn. Insurance Dep't Bulletin IC-34 (December 19, 2013), 
available at http://www.ct.gov/cid/lib/cid/Bulletin_IC-37_Gender_Identity_Nondiscrimination_Requirement.pdf (last accessed 
March 17, 2016) (interpreting Conn. Gen. Stat. Ann. Sec.  46a-60); 
D.C. Dep't of Insurance, Securities and Banking, Bulletin No. 13-IB-
01-30/13 (February 27, 2014), available at http://disb.dc.gov/sites/default/files/dc/sites/disb/publication/attachments/ProhibitionofDiscriminationBasedonGenderIdentityorExpression-FINAL.pdf (last accessed March 17, 2016) (interpreting D.C. Code 
Sec.  31-2231.11(c)); Mass. Office of Consumer Affs. & Bus. Reg., 
Div. of Insurance, Bulletin 2014-03 (June 20, 2014), available at 
http://www.mass.gov/ocabr//doi/legal-hearings/bulletin-201403.pdf 
(last accessed March 17, 2016); Or. Dep't of Consumer & Bus. Servs., 
Or. Ins. Div. Bulletin INS 2012-1, available at http://www.oregon.gov/DCBS/insurance/legal/bulletins/Documents/bulletin2012-01.pdf (last accessed March 17, 2016) (interpreting 
Oregon Equality Act); Vt. Dep't of Financial Regulation, Division of 
Insurance, Insurance Bulletin No. 174 (April 22, 2013), available at 
http://www.dfr.vermont.gov/sites/default/files/Bulletin_174.pdf 
(last accessed March 17, 2016) (interpreting 8 V.S.A. Sec.  4724); 
Letter from Mike Kreidler, Washington State Insurance Commissioner 
(June 25, 2014), available at http://www.insurance.wa.gov/about-oic/newsroom/news/2014/documents/gender-identity-discrimination-letter.pdf (last accessed March 17, 2106) (interpreting RCW 
49.60.040). Two additional states, New York and Colorado, have 
relied on other bases to require insurers to cover transition-
related health care.
    \168\ Ill. Dep't of Insurance, Company Bulletin 2014-10, 
Healthcare for Transgender Individuals (Jul. 28, 2014), available at 
http://insurance.illinois.gov/cb/2014/CB2014-10.pdf (interpreting 
775 ILCS 5/1-103 (O-1)) (emphases omitted) (last accessed May 3, 
2016).
---------------------------------------------------------------------------

Section 60-20.7 Employment Decisions Made on the Basis of Sex-Based 
Stereotypes

    In the NPRM, OFCCP proposed this new section to provide specific 
examples of the well-recognized principle that employment decisions 
made on the basis of sex-based stereotypes about how applicants and 
employees are expected to look, speak, or act are a form of sex 
discrimination. The proposed rule preamble cited the Supreme Court's 
holding in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), and 
several other decisions that consistently applied the principle laid 
out in that case.\169\ In the final rule, OFCCP adopts Sec.  60-20.7 as 
proposed, with a revision to paragraph (a)(3), the addition of two new 
examples of prohibited sex-based stereotyping at paragraphs (c) and 
(d)(1) and with some minor rewording for clarity and to allow for the 
use of gender-neutral pronouns. The first minor rewording change is to 
the third sentence at the beginning of Sec.  20.7, so that the Final 
Rule reads ``examples of discrimination based on sex-based stereotyping 
may include'' those listed. The addition of ``may'' clarifies that 
whether each of the examples is unlawful discrimination will 
necessarily depend on an examination of the facts in a given case.
---------------------------------------------------------------------------

    \169\ Price Waterhouse, 490 U.S. at 251 (holding that an 
employer's failure to promote a female senior manager to partner 
because of the sex-stereotyped perceptions that she was too 
aggressive and did not ``walk more femininely, talk more femininely, 
dress more femininely, wear make-up, have her hair styled, and wear 
jewelry'' was unlawful sex-based employment discrimination); see 
also, e.g., United States v. Virginia, 518 U.S. 515, 533 (1996) (in 
making classifications based on sex, state governments ``must not 
rely on overbroad generalizations about the different talents, 
capacities, or preferences of males and females''); Chadwick v. 
Wellpoint, Inc., 561 F.3d 38 (1st Cir. 2009) (making employment 
decision based on the belief that women with young children neglect 
their job responsibilities is unlawful sex discrimination); Prowel 
v. Wise Bus. Forms, Inc., 579 F.3d 285 (3d Cir. 2009) (harassment 
based on a man's effeminacy); Barnes v. City of Cincinnati, 401 F.3d 
729 (6th Cir. 2005); Smith v. City of Salem, supra note 78; Schroer 
v. Billington, 577 F. Supp. 2d 293 (D.D.C. 2008); Glenn v. Brumby, 
663 F.3d 1312 (11th Cir. 2011).
---------------------------------------------------------------------------

    OFCCP received two general comments about the examples in proposed 
Sec.  60-20.7: One from a civil rights legal organization, stating that 
the section omits prevalent examples of sex stereotyping that should be 
addressed, and one from a human resources consulting firm, suggesting 
the removal of the entire section except the first sentence because 
``[i]t is impossible to catalogue all the possible gender-based 
stereotypes that employers and OFCCP compliance officers might 
potentially encounter.'' Although the examples are not exhaustive, 
OFCCP retains the examples provided in Sec.  60-20.7 of the final rule, 
as they accurately reflect real-life situations of prohibited sex-
stereotyping drawn from title VII case law and provide guidance to 
contractors and workers. In addition, as explained below, in response 
to comments it received, OFCCP has inserted two further examples, both 
of which are also based on title VII case law.
    Proposed paragraph 60-20.7(a)(1) addressed a type of sex-based 
employment discrimination central to the Supreme Court's holding in 
Price Waterhouse, namely, failing to promote a woman, or otherwise 
subjecting her to adverse employment treatment, based on sex 
stereotypes about dress and appearance, including wearing jewelry, 
make-up, or high heels. One comment on this paragraph specifically 
requests addition of an example in the final rule to show that 
requiring a person to conform to gender-specific uniform or appearance 
codes constitutes sex discrimination. The comment offers the example of 
uniform or appearance codes applied to gender non-conforming employees 
to illustrate that different uniform options could be made available to 
employees but that assigning them by sex is not permissible under title 
VII principles. Another commenter, however, states that courts have 
held ``that Title VII's prohibition of `sex discrimination' does not . 
. . preclude reasonable workplace rules requiring different dress and 
grooming.'' Without expressing an opinion on the reach of title VII in 
this context, OFCCP declines to add this example to the final rule, 
noting that the list of examples provided in the final rule is not 
exhaustive. OFCCP will follow title VII principles in enforcing E.O. 
11246 with regard to uniform, dress, and appearance requirements.
    Proposed paragraph 60-20.7(a)(2) addressed harassment of a man 
because he is considered effeminate or insufficiently masculine. No 
comments specifically address proposed paragraph 60-20.7(a)(2), and the 
final rule adopts the paragraph as proposed, with minor adjustments to 
language for clarity.
    Proposed paragraph 60-20.7(a)(3) set out, as an example of 
potentially actionable sex stereotyping, ``adverse treatment of an 
employee because he or she does not conform to sex-role expectations by 
being in a relationship with a person of the same sex.'' Three comments 
oppose this proposed example, which they view as prohibiting 
discrimination on the basis of sexual orientation. The religious 
organization commenter argues that the inclusion of this example is 
inconsistent with title VII law and with Congressional efforts to ban 
sexual orientation discrimination in employment. In addition, the 
religious organization argues that it would be ``incorrect as a matter 
of law'' if the example ``intend[s] to say that Title VII protects 
sexual conduct between persons of the same sex,'' because ``Title VII 
says nothing about same-sex relationships or conduct.'' The joint 
employer organization comment argues that the Federal judicial system 
has not fully embraced the inclusion of sexual orientation 
discrimination in title VII and that its inclusion as a form of sex 
discrimination here is confusing given Executive Order 13672's 
amendment of E.O. 11246 adding sexual orientation as a protected 
category. A third commenter

[[Page 39138]]

echoes the joint employer organization comment.
    As noted above in connection with paragraph 60-20.2(a), a large 
number of commenters, including the 70 signers to the civil rights 
organization comment, support expanding that paragraph to encompass not 
only gender identity discrimination but also sexual orientation 
discrimination. Thus, these commenters support inclusion of paragraph 
60-20.7(a)(3) to protect employees who are in same-sex relationships 
from sex-stereotyping discrimination on that ground.
    Contrary to the suggestions of the commenters that oppose its 
inclusion, proposed paragraph 60-20.7(a)(3) did not address sexual 
orientation discrimination per se; rather, it addressed a form of sex 
stereotyping. Many sex-stereotyping cases are derived in large part 
from Price Waterhouse, where the Supreme Court held that employers 
cannot ``evaluate employees by assuming or insisting that they match 
the stereotype associated with their'' sex.\170\ Over the past two 
decades, an increasing number of Federal court cases, building on the 
Price Waterhouse rationale, have found protection under title VII for 
those asserting discrimination claims related to their sexual 
orientation.\171\ Many Federal-sector EEOC decisions have found the 
same.\172\ Although some Federal circuit courts have rejected the 
contention that discrimination based on a person's failure to meet the 
sex stereotype of being heterosexual constitutes sex discrimination 
under title VII, even those courts recognize the validity of the sex-
stereotyping theory in the context of stereotypes involving workplace 
behavior and appearance, reflecting the types of sex stereotyping found 
to be actionable in Price Waterhouse.\173\ It is in that context that 
the example in paragraph 60-20.7(a)(3) applies, as made clear by the 
language of paragraph 60-20.7(a), which introduces the subsequent list 
as examples of ``[a]dverse treatment of an employee or applicant for 
employment because of that individual's failure to comply with gender 
norms and expectations for dress, appearance, and/or behavior'' 
(emphasis added). In light of this legal framework, and for consistency 
with the position taken by the Department of Health and Human Services 
in its rule implementing Section 1557 of the ACA, paragraph 60-
20.7(a)(3) is amended to cover treatment of employees or applicants 
adversely based on their sexual orientation where the evidence 
establishes that the discrimination is based on gender 
stereotypes.\174\ OFCCP declines to take a position on the intent that 
can be derived from Congress's inaction on the Employment Non-
Discrimination Act (ENDA).\175\ Further, OFCCP disagrees with the 
assertion that inclusion of 60-20.7(a)(3) will render Executive Order 
13672 and its implementing regulations unnecessary. The example in 60-
20.7(a)(3) is but one example of potentially actionable

[[Page 39139]]

discrimination on the basis of sex stereotyping; Executive Order 13672 
provides explicit protection against all manner of discrimination on 
the basis of sexual orientation.
---------------------------------------------------------------------------

    \170\ 490 U.S. 228, 251 (1989).
    \171\ See, e.g., Prowel, 579 F.3d at 291-92 (harassment of a 
plaintiff because of his ``effeminate traits'' and behaviors could 
constitute sufficient evidence that he ``was harassed because he did 
not conform to [the employer's] vision of how a man should look, 
speak, and act--rather than harassment based solely on his sexual 
orientation''); Nichols v. Azteca Rest. Enter., Inc., 256 F.3d 864, 
874-75 (9th Cir. 2001) (coworkers' and supervisors' harassment of a 
gay male because he did not conform to gender norms created a 
hostile work environment in violation of Title VII); Hall v. BNSF 
Ry. Co., No. C13-2160 RSM, 2014 WL 4719007, at *3 (W.D. Wash. 
September 22, 2014) (plaintiff's allegation that ``he (as a male who 
married a male) was treated differently in comparison to his female 
coworkers who also married males'' stated a sex discrimination claim 
under title VII); Terveer v. Billington, 34 F. Supp. 3d 100 (D.D.C. 
2014) (hostile work environment claim stated when plaintiff's 
``orientation as homosexual'' removed him from the employer's 
preconceived definition of male); Heller v. Columbia Edgewater 
Country Club, 195 F. Supp. 2d 1212, 1224 (D. Or. 2002) (``[A] jury 
could find that Cagle repeatedly harassed (and ultimately 
discharged) Heller because Heller did not conform to Cagle's 
stereotype of how a woman ought to behave. Heller is attracted to 
and dates other women, whereas Cagle believes that a woman should be 
attracted to and date only men.''); Centola v. Potter, 183 F. Supp. 
2d 403 (D. Mass. 2002) (``Sexual orientation harassment is often, if 
not always, motivated by a desire to enforce heterosexually defined 
gender norms. In fact, stereotypes about homosexuality are directly 
related to our stereotype about the proper roles of men and 
women.''). Cf. Videckis v. Pepperdine Univ., No. CV 15-00298 DDP 
(JCx), 2015 WL 1735191, at *8 (C.D. Cal. April 16, 2015) (harassment 
and adverse treatment of students because of their sexual 
orientation may state a claim of sex discrimination under title IX, 
because it is a form of sex stereotyping; indeed, ``discrimination 
based on a same-sex relationship could fall under the umbrella of 
sexual discrimination even if such discrimination were not based 
explicitly on gender stereotypes'').
    \172\ Baldwin v. Dep't of Transp., supra note 98, slip op. at 9-
11 (July 16, 2015); Castello v. U.S. Postal Serv., EEOC Request No. 
0520110649 (December 20, 2011) (sex-stereotyping evidence entailed 
offensive comment by manager about female subordinate's 
relationships with women); Veretto v. U.S. Postal Serv., EEOC Appeal 
No. 0120110873 (July 1, 2011) (complainant stated plausible sex-
stereotyping claim alleging harassment because he married a man); 
Culp v. Dep't of Homeland Sec., EEOC Appeal 0720130012, 2013 WL 
2146756 (May 7, 2013) (title VII covers discrimination based on 
associating with lesbian colleague); Couch v. Dep't of Energy, EEOC 
Appeal No. 0120131136, 2013 WL 4499198, at *8 (August 13, 2013) 
(complainant's claim of harassment based on his ``perceived sexual 
orientation''); Complainant v. Dep't of Homeland Sec., EEOC Appeal 
No. 0120110576, 2014 WL 4407422 (Aug. 20, 2014) (``While Title VII's 
prohibition of discrimination does not explicitly include sexual 
orientation as a basis, Title VII prohibits sex discrimination, 
including sex-stereotyping discrimination and gender 
discrimination'' and ``sex discrimination claims may intersect with 
claims of sexual orientation discrimination.'').
    \173\ See, e.g., Gilbert v. Country Music Ass'n, 432 F. App'x 
516, 520 (6th Cir. 2011) (acknowledging the validity of a sex-
stereotyping claim ``based on gender non-conforming `behavior 
observed at work or affecting . . . job performance,' such as . . . 
`appearance or mannerisms on the job,' '' but rejecting the 
plaintiff's sex discrimination claim because his ``allegations 
involve discrimination based on sexual orientation, nothing more. He 
does not make a single allegation that anyone discriminated against 
him based on his `appearance or mannerisms' or for his `gender non-
conformity.' '') (quoting Vickers v. Fairfield Med. Ctr., 453 F.3d 
757, 763 (6th Cir. 2006); Pagan v. Gonzalez, 430 F. App'x 170, 171-
72 (3d Cir. 2011) (recognizing that ``discrimination based on a 
failure to conform to gender stereotypes is cognizable'' but 
affirming dismissal of the plaintiff's sex discrimination claim 
based on ``the absence of any evidence to show that the 
discrimination was based on Pagan's acting in a masculine manner''); 
Dawson v. Bumble & Bumble, 398 F.3d 211, 221, 222-23 (2d Cir. 2005) 
(observing that ``one can fail to conform to gender stereotypes in 
two ways: (1) Through behavior or (2) through appearance, but 
dismissing the plaintiff's sex discrimination claim because she 
``has produced no substantial evidence from which we may plausibly 
infer that her alleged failure to conform her appearance to feminine 
stereotypes resulted in her suffering any adverse employment 
action'').
    \174\ See, e.g., Deneffe v. SkyWest, Inc., No. 14-cv-00348-MEH, 
2015 WL 2265373 (D. Colo. May 11, 2015) (allegations that an 
employer gave a homosexual pilot a negative reference, among other 
reasons, because the pilot designated his same-sex partner for 
flight privileges and traveled with his domestic partner--i.e., did 
not conform to stereotypes about appropriate behavior for men -- 
stated a cause of action of sex discrimination under title VII); 
Terveer, 34 F. Supp. at 116 (hostile work environment claim stated 
when plaintiff's ``orientation as homosexual'' removed him from the 
employer's preconceived definition of male); Koren v. Ohio Bell Tel. 
Co., 894 F. Supp. 2d 1032, 1038 (N.D. Ohio 2012) (taking same-sex 
spouse's last name was a nonconforming behavior that could support a 
sex discrimination claim under a sex-stereotyping theory); Centola, 
183 F. Supp. 2d at 410 (``Sexual orientation harassment is often, if 
not always, motivated by a desire to enforce heterosexually defined 
gender norms. In fact, stereotypes about homosexuality are directly 
related to our stereotype about the proper roles of men and 
women.'').
    \175\ The most recent version of ENDA was introduced in the 
113th Congress (2013-2014) as S. 815 and H.R. 1755, and passed the 
full Senate by a vote of 64-32. The House did not take action on the 
bill in the 113th Congress. U.S. Library of Congress.gov, available 
at https://www.congress.gov/bill/113th-congress/senate-bill/815/all-info?resultIndex=10 (Senate bill) (last accessed May 25, 2016); 
http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?&congress=113&session=1&vote=00232 (Senate 
vote); https://www.congress.gov/bill/113th-congress/house-bill/1755/all-info (House bill) (last accessed March 17, 2016).
    In the 114th Congress (2015-2016), identical bills titled the 
``Equality Act'' were introduced in the Senate (S. 1858) and House 
(H.R. 3185) on July 23, 2015. The bills would, inter alia, amend 
title VII to add sexual orientation and gender identity to the list 
of classes protected from employment discrimination. U.S. Library of 
Congress, Congress.gov, available at https://www.congress.gov/bill/114th-congress/senate-bill/1858, https://www.congress.gov/bill/114th-congress/house-bill/3185 (last accessed March 27, 2016).
---------------------------------------------------------------------------

    Several commenters that support the inclusion of paragraph 60-
20.7(a)(3) also suggest changes to it. Three comments suggest changing 
the proposed paragraph to state explicitly that the prohibition on sex-
based stereotyping includes individuals attracted to persons of the 
same sex. OFCCP declines to alter the paragraph in this way. As 
written, this paragraph provides only one of many potential examples 
that could illustrate how the prohibition on sex-based stereotyping may 
apply to applicants and employees who are attracted to persons of the 
same sex. OFCCP's decision not to make the suggested change should not, 
however, be interpreted by Federal contractors to mean that they can 
treat employees or applicants who are attracted to persons of the same 
sex adversely as long as they are not in a same-sex relationship. Such 
adverse treatment may also be actionable as sex stereotyping depending 
on the facts alleged, and in any event is prohibited expressly by E.O. 
11246, as amended by E.O. 13672.
    Finally, several commenters request that OFCCP include protections 
for persons who are ``perceived as'' being in a same-sex relationship 
in proposed paragraph 60-20.7(a)(3). OFCCP does not incorporate this 
into the text of the final rule for the same reasons, set forth above, 
that it declines to alter the example to refer to individuals 
``attracted to'' persons of the same sex. OFCCP notes that under title 
VII, many courts have found that individuals who are perceived to be of 
a protected class are protected, regardless of whether they are in fact 
members of that class.\176\ This interpretation of title VII is 
consistent with EEOC guidance regarding the protected categories of 
national origin, race, and religion.\177\ This is also consistent with 
paragraph 20.7(b), which as proposed and adopted herein prohibits 
``[a]dverse treatment of employees or applicants because of their 
actual or perceived gender identity or transgender status'' (emphasis 
added).
---------------------------------------------------------------------------

    \176\ Kallabat v. Mich. Bell Tel. Co., No. 12-CV-15470, 2015 BL 
194351 (E.D. Mich. June 18, 2015); Arsham v. Mayor & City Council of 
Baltimore, No. JKB-14-2158, 2015 WL 590490, at *8 (D. Md. February 
11, 2015); Boutros v. Avis Rent A Car Sys., No. 10 C 8196, 2013 WL 
3834405, at *7 (N.D. Ill. July 24, 2013); Henao v. Wyndham Vacations 
Resorts, Inc., 927 F. Supp. 2d 978, 986-87 (D. Haw. 2013). Cf. Jones 
v. UPS Ground Freight, 683 F.3d 1283, 1299-300 (11th Cir. 2012) 
(``[A] harasser's use of epithets associated with a different ethnic 
or racial minority than the plaintiff will not necessarily shield an 
employer from liability for a hostile work environment.''); EEOC v. 
WC&M Enterprises, Inc., 496 F.3d 393, 401-02 (5th Cir. 2007) 
(quoting with approval the EEOC's national origin discrimination 
guidelines and holding that ``a party is able to establish a 
discrimination claim based on its own national origin even though 
the discriminatory acts do not identify the victim's actual country 
of origin.''). However, not all courts recognize ``perceived as'' 
claims under Title VII. El v. Max Daetwyler Corp., 2011 WL 1769805, 
at *5 (W.D.N.C. May 9, 2011) aff'd, 451 F. App'x 257 (4th Cir. 2011) 
(collecting cases); see also Burrage v. FedEx Freight, Inc., 2012 WL 
6732005, at *3 (N.D. Ohio December 28, 2012); Adler v. Evanston Nw. 
Healthcare Corp., 2008 WL 5272455, at *4 (N.D. Ill. December 16, 
2008); Lewis v. N. Gen. Hosp., 502 F. Supp. 2d 390, 401 (S.D.N.Y. 
2007); Butler v. Potter, 345 F. Supp. 2d 844, 850 (E.D. Tenn. 2004).
    \177\ See 29 CFR 1606.1 (national origin); EEOC Compl. Man. 
Sec.  15-II (2006) (race); EEOC, Employment Discrimination Based on 
Religion, Ethnicity, or Country of Origin, available at http://www.eeoc.gov/laws/types/fs-relig_ethnic.cfm (last accessed March 27, 
2016).
---------------------------------------------------------------------------

    Proposed paragraph 60-20.7(b) provided that the adverse treatment 
of an employee or applicant because of his or her actual or perceived 
gender identity or transgender status is an example of prohibited sex-
based stereotyping. OFCCP received 13 comments about the use of 
``gender identity'' in this particular paragraph. All but three 
generally support the example of sex stereotyping; eight suggest adding 
``sexual orientation'' to the example; three oppose use of the example; 
two suggest the use of gender-neutral pronouns; and one highlights 
discriminatory experiences that transgender employees and applicants 
commonly face. As explained earlier in the analysis of paragraph 60-
20.2(a), the case law in the area of sexual orientation discrimination 
is still developing, and E.O. 11246, as amended by Executive Order 
13672, already explicitly prohibits sexual orientation discrimination. 
However, OFCCP retains use of the terms ``gender identity'' and 
``transgender status'' in the final rule. As was also explained in the 
earlier discussion about paragraph 60-20.2(a), the inclusion of gender 
identity and transgender status discrimination as sex discrimination is 
consistent with OFCCP's interpretation of the Executive Order even 
prior to this final rule, as reflected in its Directive 2014-02.
    Three organizations representing LGBT people (in two separate 
comments) suggest that OFCCP should consider adding an example or 
otherwise clarifying that just as contractors may not terminate 
employees for transitioning on the job, they also may not discriminate 
against employees for failing to live, dress, and work as their birth-
assigned sex, and must accept the gender identity asserted by employees 
and applicants without demanding medical or other evidence that they do 
not request from other employees under similar circumstances. OFCCP 
agrees with these examples; they are covered by paragraph 60-20.7(b), 
which states that adverse treatment of employees or applicants because 
of their actual or perceived gender identity or transgender status is 
an example of adverse treatment because of their ``failure to comply 
with gender norms and expectations for dress, appearance, and/or 
behavior,'' as well as by paragraph 60-20.2(a), which states that such 
treatment is a form of sex discrimination.\178\ Because they are 
already covered, OFCCP declines to add them again as specific examples 
in the final rule. As with all of the examples in the final rule, 
paragraph 60-20.7(b) is non-exhaustive; failure to include a particular 
discriminatory fact scenario does not preclude protection under E.O. 
11246.
---------------------------------------------------------------------------

    \178\ These examples are consistent with Executive Order 13672's 
direct prohibition of gender identity discrimination. See OFCCP, 
Frequently Asked Questions: E.O. 13672 Final Rule (``May an employer 
ask a transgender applicant or employee for documentation to prove 
his or her gender identity?'' and ``What kinds of documents may an 
employer require a transitioning applicant or employee to provide 
about the employee's transition?''), available at http://www.dol.gov/ofccp/LGBT/LGBT_FAQs.html#Q32 (last accessed March 27, 
2016).
---------------------------------------------------------------------------

    A civil rights legal organization recommends that OFCCP include a 
new example of discrimination based on sex-based stereotyping in the 
final rule, to prohibit adverse treatment of a woman ``because she does 
not conform to a sex stereotype about women being in a particular job, 
sector, or industry.'' As discussed above in the Reasons for 
Promulgating this New Regulation section of the preamble, OFCCP has 
found such steering discrimination based on outdated stereotypes in its 
compliance reviews.\179\ OFCCP includes this new example of 
discrimination based on sex stereotyping in the final rule, at 
paragraph 60-20.7(c), because it believes that this sort of sex 
stereotyping was not fairly represented in proposed paragraphs 60-
20.7(a), (b), or (c). In light of this new example at paragraph 60-
20.7(c), the final rule renumbers the caretaker stereotype provision in 
the final rule as paragraph 60-20.7(d).
---------------------------------------------------------------------------

    \179\ See supra text accompanying notes 36-39.
---------------------------------------------------------------------------

    Eleven comments on proposed paragraph 60-20.7(c) request that the 
final rule include a statement that discussing current and future plans 
about having a family during a job interview process may be considered 
evidence of caregiver discrimination. OFCCP agrees that contractors' 
bringing up current and future plans about family caregiving during the 
interview

[[Page 39140]]

process may be evidence of sex-stereotyping women as caregivers but 
declines to include this suggested example because, unlike the other 
examples in the rule, it addresses evidence for proving sex 
discrimination based on sex stereotypes regarding appropriate roles in 
caregiving (as opposed to describing the fact situation that OFCCP 
would consider an example of such discrimination if proved).
    Twelve comments propose adoption of additional examples of 
caregiver stereotypes, such as employment decisions based on 
assumptions that women with caregiver responsibilities cannot succeed 
in fast-paced environments; that women prefer to spend time with family 
rather than work; that women are less committed to their jobs than 
full-time employees; that women, as primary caretakers, are less in 
need of career advancement and salary increases; and that mothers are 
unwilling to travel or relocate their families for career advancement. 
Although these proposed examples are not included in the final rule, 
adverse actions based on caregiver stereotypes that women cannot 
succeed in fast-paced environments, are unwilling to travel or 
relocate, or are less committed to their jobs, among other examples, 
may also constitute discriminatory sex stereotyping. The list of 
examples included in the final rule is illustrative rather than 
exhaustive.
    Another comment suggests that the final rule include an example of 
caregiver stereotypes against male employees receiving adverse 
treatment for caring for their elder parents. The comment explains that 
adding an example of discrimination against men as caregivers would 
highlight the sex-based stereotype that ``men, much more so than women, 
are expected to be fully devoted to their jobs and available to work 
long and unpredictable hours, unhindered by family responsibilities.'' 
As there is no other example involving men and elder care in the rule, 
OFCCP includes the suggested example as new paragraph (d)(4) in the 
final rule, to clarify that discrimination based on sex stereotypes can 
harm men as well as women.
    One comment proposes the addition of best practices for employers 
to prevent caregiver stereotypes. OFCCP agrees that providing more time 
off and flexible workplace policies for men and women, encouraging men 
and women equally to engage in caregiving-related activities, and 
fostering a climate in which women are no longer assumed to be more 
likely to provide family care than men are best practices to prevent 
caregiver stereotypes that interfere with employees' and applicants' 
opportunities based on their sex. Accordingly, OFCCP adds these 
examples to the Appendix collecting best practices for contractors to 
consider undertaking.
    As discussed supra in the Overview of the Comments section of the 
preamble, OFCCP adapts the final rule throughout Sec.  60-20.7 by 
substituting ``their'' for ``his or her'' and ``they'' for ``he or 
she'' and adjusting verbs accordingly.

Section 60-20.8 Harassment and Hostile Work Environments

    Although the Guidelines did not include a section on harassment, 
the courts, EEOC, and OFCCP \180\ have recognized for many years that 
harassment on the basis of sex may give rise to a violation of title 
VII and the Executive Order. In the proposed rule, OFCCP thus included 
proposed Sec.  60-20.8, which set forth contractor obligations for 
offering protections to employees from harassment, including hostile 
work environments. It incorporated provisions of the EEOC's guidelines 
relating to sexual harassment, broadly defined harassment because of 
sex under the Executive Order, and suggested best practices for 
contractors. OFCCP received 34 comments on this section, primarily from 
individuals, civil rights groups, and law firms representing 
contractors. All 34 comments support the new section and indicate that 
OFCCP regulations covering sexual harassment and hostile work 
environments are long overdue. Thirteen comments offer suggestions on 
how to strengthen the section in the final rule. The final rule adopts 
Sec.  60-20.8 as it was proposed, with one modification to paragraph 
60-20.8(b).
---------------------------------------------------------------------------

    \180\ OFCCP's construction regulations require construction 
contractors to ``[e]nsure and maintain a working environment free of 
harassment, intimidation, and coercion at all sites.'' 41 CFR 60-
4.3(a) (paragraphs 7(a) and (n) of the required Equal Opportunity 
Clause for construction contracts). In addition, in chapter 3, Sec.  
2H01(d), the FCCM recognizes that ``[a]lthough not specifically 
mentioned in the Guidelines, sexual harassment (as well as 
harassment on the basis of race, national origin or religion) is a 
violation of the nondiscrimination provisions of the Executive 
Order'' and directs OFCCP compliance officers to ``be alert for any 
indications of such harassment.'' It goes on to state that ``OFCCP 
follows Title VII principles when determining whether sexual 
harassment has occurred.''
---------------------------------------------------------------------------

    As proposed, paragraph 60-20.8(a) generally establishes that 
harassment on the basis of sex is a violation of E.O. 11246 and 
describes actions and conduct that constitute sexual harassment. As 
proposed and as adopted in the final rule, this paragraph incorporates 
the provision of EEOC's Guidelines relating to sexual harassment 
virtually verbatim.\181\ Inclusion of the EEOC language is intended to 
align the prohibitions of sexually harassing conduct under the 
Executive Order with the prohibitions under title VII.
---------------------------------------------------------------------------

    \181\ See 29 CFR 1604.11(a), supra note 64.
---------------------------------------------------------------------------

    Twelve of the comments on paragraph 60-20.8(a) request that OFCCP 
clarify in the final rule that a contractor may be vicariously liable 
for harassment perpetrated by lower-level supervisors that have the 
authority to make tangible employment decisions such as hiring, firing, 
or demoting an employee in light of Vance v. Ball State 
University.\182\ These comments also recommend that OFCCP provide 
detailed guidelines explaining what constitutes a tangible employment 
action, providing information about the effective delegation doctrine, 
and clarifying when an employer is liable for harassment by coworkers 
and nonemployees. OFCCP declines to expand the section in this way. To 
do so would require incorporation of principles of tort and agency law 
into the final rule, which OFCCP believes is not necessary. OFCCP 
recognizes and follows the principles of employer liability for 
harassment established by the Supreme Court's title VII decisions in 
this area.
---------------------------------------------------------------------------

    \182\ 133 S. Ct. 2434 (2013).
---------------------------------------------------------------------------

    Proposed paragraph 60-20.8(b) defines ``harassment because of sex'' 
under the Executive Order broadly to include ``sexual harassment 
(including sexual harassment based on gender identity), harassment 
based on pregnancy, childbirth, or related medical conditions; and 
harassment that is not sexual in nature but is because of sex 
(including harassment based on gender identity).'' Twelve of the 
comments on this paragraph urge OFCCP to elaborate on what constitutes 
harassment based on gender identity by stating that such harassment 
includes the intentional and repeated use of a former name or pronoun 
inconsistent with the employee's current gender identity.\183\ The EEOC 
has held that ``[i]ntentional misuse of the employee's new name and 
pronoun . . . may constitute sex based discrimination and/or 
harassment.'' \184\ OFCCP agrees with the EEOC that unlawful harassment 
may include the intentional and repeated use of a former name or 
pronoun

[[Page 39141]]

inconsistent with an employee's gender identity. OFCCP declines to add 
this language to the final rule, however, because it believes that the 
principle is fairly subsumed by inclusion of the phrase ``sexual 
harassment based on gender identity'' in the parenthetical after the 
term ``sexual harassment'' in paragraph 60-20.8(b): ``Harassment 
because of sex includes sexual harassment (including sexual harassment 
based on gender identity).'' Moreover, because the determination of 
whether the use of pronouns inconsistent with an employee's gender 
identity constitutes a hostile work environment will be highly fact-
specific, a categorical prohibition in regulatory text is 
inappropriate. OFCCP will continue to follow title VII law as it 
evolves in this context.
---------------------------------------------------------------------------

    \183\ Multiple comments cite a 2008-2009 national survey in 
which 45 percent of transgender workers reported that they had been 
referred to by the wrong gender pronoun, repeatedly and on purpose. 
Injustice at Every Turn, supra note 16.
    \184\ Jameson v. Donahoe, EEOC Appeal No. 0120130992, 2013 WL 
2368729 (EEOC May 21, 2013).
---------------------------------------------------------------------------

    Five of the comments on paragraph 60-20.8(b) recommend that OFCCP 
add the term ``sexual orientation'' along with gender identity. OFCCP 
declines to incorporate the term ``sexual orientation'' in this 
paragraph, for the same reasons, explained earlier in the preamble, 
that it declines to incorporate that term in paragraph 60-20.2(a). 
OFCCP will continue to monitor the developing law on sexual orientation 
discrimination as sex discrimination under title VII and will interpret 
the Executive Order's prohibition of sex discrimination in conformity 
with title VII principles. In any event, contractor employees and 
applicants are protected from sexual orientation discrimination 
independently of the sex discrimination prohibition by Executive Order 
13672's addition of the term ``sexual orientation'' in the list of 
prohibited bases of discrimination in E.O. 11246.
    OFCCP does make one alteration to the text of paragraph (b) in the 
final rule, striking the second parenthetical phrase, ``(including 
harassment based on gender identity),'' and replacing it with ``or sex-
based stereotypes,'' so that the third clause of paragraph (b) in the 
final rule reads that harassment based on sex includes ``harassment 
that is not sexual in nature but that is because of sex or sex-based 
stereotypes.'' OFCCP removes the parenthetical phrase because it is 
redundant. OFCCP adds ``or sex-based stereotypes'' as a result of its 
decision to list sex-based stereotypes explicitly in paragraph 60-
20.2(a).
    Another comment asks OFCCP to clarify that discrimination against 
workers who are victims of gender-based harassment or violence, 
including domestic violence and stalking, amounts to disparate 
treatment. OFCCP agrees that sex-based harassment may include violence 
and stalking if the harassment is ``sufficiently patterned or 
pervasive'' and directed at employees because of their sex.\185\ 
Because the proposed text of paragraph 60-20.8(b) states that 
``[h]arassment because of sex includes . . . harassment that is not 
sexual in nature but that is because of sex,'' OFCCP believes it is not 
necessary to mention violence and stalking as specific examples of such 
but sex-based conduct.
---------------------------------------------------------------------------

    \185\ See EEOC, Notice No. N-915-050, ``Policy Guidance on 
Current Issues of Sexual Harassment'' (1990), available at http://www.eeoc.gov/policy/docs/currentissues.html (last accessed March 27, 
2016); McKinney v. Dole, 765 F.2d 1129, 1138 (D.C. Cir. 1985).
---------------------------------------------------------------------------

    Paragraph 60-20.8(c) in the proposed rule suggested best practices 
for procedures that contractors may develop and implement ``to ensure 
an environment in which all employees feel safe, welcome, and treated 
fairly . . . [and] are not harassed because of sex.'' One comment 
applauds the inclusion of ``best practice'' recommendations in 
paragraph (c). OFCCP received no other comments on paragraph (c) and 
adopts it in the final rule. The final rule includes an Appendix of 
best practices, including those in paragraph (c).

Comments Not Associated With Particular Language in the Rule

    Four commenters express general concern that affirmative action 
requirements lead to hiring based on sex and not qualifications. 
Nothing in the final rule requires contractors to hire any individual 
who is unqualified, and OFCCP's existing regulations are clear that no 
such requirement exists and that giving a preference to any individual 
on account of any of the bases protected by the Executive Order, absent 
a predicate finding of discrimination that must be remedied, is 
unlawful.\186\ Further clarifying this point, the final rule contains 
an express prohibition of employment decisions based on sex in 
paragraph 60-20.3(a).
---------------------------------------------------------------------------

    \186\ See, e.g., 41 CFR 60-1.4(a), (b) (``The contractor will 
take affirmative action to ensure that applicants are employed, and 
that employees are treated during employment, without regard to 
their race, color, religion, sex, sexual orientation, gender 
identity, or national origin.''); 41 CFR 60-2.16(e)(1) (``Quotas are 
expressly forbidden.''); 41 CFR 60-2.16(e)(2) (``Placement goals do 
not provide the contractor with a justification to extend a 
preference to any individual, select an individual, or adversely 
affect an individual's employment status, on the basis of that 
person's . . . sex. . . .''); 41 CFR 60-2.16(e)(4) (``Affirmative 
action programs prescribed by the regulations in this part do not 
require a contractor to hire a person who lacks qualifications to 
perform the job successfully, or hire a less qualified person in 
preference to a more qualified one.''); 41 CFR 60-4.3(10) (``[t]he 
contractor shall not use the goals . . . or affirmative action 
standards to discriminate against any person because of . . . sex. . 
. .'').
---------------------------------------------------------------------------

    A number of commenters make recommendations about how OFCCP should 
implement the rule. Many suggest that OFCCP should provide technical 
assistance and training for contractors, employees, and OFCCP 
investigators. As it does for any new rule or other significant policy 
development, OFCCP will provide appropriate technical assistance and 
training for contractors, employees, and OFCCP investigators for this 
new rule.
    Several commenters suggest that OFCCP focus compliance reviews on 
contractors ``in industries with the widest gaps between the average 
wages of men and women, or in industries with the highest rate of EEOC 
charge filings.'' OFCCP regularly reviews its selection procedures to 
make them more efficient and effective.
    One commenter suggests that OFCCP provide ``robust subsidies to 
small businesses which may find it difficult to abide by these new 
regulations.'' OFCCP has neither the authority nor the budget to 
provide subsidies to businesses. OFCCP does, however, hold many 
compliance assistance events for contractors, including compliance 
assistance events targeted to small employers, free of charge, and 
provides one-on-one technical assistance when resources permit. It is 
anticipated that these compliance assistance events will also help 
ensure stakeholders understand the requirements of the final rule.
    A few commenters recommend action that is within the purview of 
other government entities, such as passing the Equal Rights Amendment 
or removing the Executive Order's religious exemption.\187\ OFCCP does 
not have the authority to undertake these actions.
---------------------------------------------------------------------------

    \187\ E.O. 11246, as amended, sec. 204(c).
---------------------------------------------------------------------------

    One commenter proposes that OFCCP require contractors to use panels 
of interviewers of mixed genders for hiring and to omit gender as a 
question on job applications in order to eliminate bias by the hiring 
team. OFCCP declines to adopt these suggestions. The first is too 
prescriptive and burdensome: mixed-gender interview panels would not be 
practical in the case of every hire. The second is impossible: 
eliminating gender from job applications would not eliminate its 
consideration from hiring, as in the great majority of cases, hiring 
officials would identify applicants' genders from their appearance or 
names. Moreover, OFCCP regulations require contractors to maintain 
records on the sex of their employees,\188\ and the equal employment 
opportunity forms that employers must file annually with the

[[Page 39142]]

EEOC require reporting of this as well.\189\
---------------------------------------------------------------------------

    \188\ 41 CFR 60-3.4A and B.
    \189\ See, e.g., EEOC, Equal Employment Opportunity Standard 
Form 100, Rev. January 2006, Employer Information Report EEO-1 
Instruction Booklet, available at http://www.eeoc.gov/employers/eeo1survey/2007instructions.cfm (last accessed July 16, 2015) 
(``Employees must be counted by sex . . . for each of the ten 
occupational categories and subcategories.'').
---------------------------------------------------------------------------

    Finally, one commenter urges OFCCP to clarify that ``make-whole'' 
relief for victims of discrimination must account for increased tax 
liability due to lump-sum payments of back pay and interest. OFCCP 
declines to adopt this suggestion for two reasons. First, the issue of 
the components of make-whole relief is tangential to the rule. Second, 
the suggestion is applicable to relief not just for sex discrimination 
but for all types of discrimination within OFCCP's purview, and thus 
not appropriate for part 60-20. With respect to determining the 
elements of make-whole relief, as with other aspects of E.O. 11246 
enforcement, OFCCP follows title VII principles, including court and 
EEOC decisions on the impact of lump-sum recovery payments on class 
members' tax liability, and thus on whether they have in fact been made 
whole.

Regulatory Procedures

Executive Order 12866 (Regulatory Planning and Review) and Executive 
Order 13563 (Improving Regulation and Regulatory Review)

    OFCCP issues this final rule in conformity with Executive Orders 
12866 and 13563, which direct agencies to assess all costs and benefits 
of available regulatory alternatives and, if regulation is necessary, 
to select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health, and safety effects, 
distributive impacts, and equity). E.O. 13563 recognizes that some 
benefits are difficult to quantify and provides that, where appropriate 
and permitted by law, agencies may consider and discuss qualitative 
values that are difficult or impossible to quantify including equity, 
human dignity, fairness, and distributive impacts.
    Under E.O. 12866, OMB must determine whether a regulatory action is 
significant and therefore subject to its requirements and review by 
OMB.\190\ Section 3(f) of E.O. 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule that: (1) Has 
an annual effect of $100 million or more, or adversely affects in a 
material way a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local, or tribal 
governments or communities (also referred to as economically 
significant); (2) creates serious inconsistency or otherwise interferes 
with an action taken or planned by another agency; (3) materially 
alters the budgetary impacts of entitlement grants, user fees, or loan 
programs, or the rights and obligations of recipients thereof; or (4) 
raises novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in E.O. 12866.
---------------------------------------------------------------------------

    \190\ 58 FR 51735.
---------------------------------------------------------------------------

    This final rule has been designated a ``significant regulatory 
action'' although not economically significant, under sec. 3(f) of E.O. 
12866. Accordingly, OMB has reviewed this rule. The final rule is not 
economically significant, as it will not have an annual effect on the 
economy of $100 million or more.

The Need for the Regulation

    OFCCP's longstanding policy is to follow title VII principles when 
conducting analyses of potential sex discrimination under E.O. 11246. 
See Notice of Final Rescission, 78 FR 13508 (February 28, 2013). 
However, the Sex Discrimination Guidelines, substantively unchanged 
since their initial promulgation in 1970 and re-issuance in 1978, were 
no longer an accurate depiction of current title VII principles. 
Congress has amended title VII significantly four times since 1978, the 
Supreme Court has issued a number of decisions clarifying that 
practices such as sexual harassment can be unlawful discrimination, and 
the lower courts and EEOC have applied title VII law in new contexts. 
Indeed, because OFCCP follows title VII principles in interpreting a 
contractor's nondiscrimination mandate, OFCCP no longer enforced the 
Guidelines to the extent that they departed from existing law. 
Moreover, since the Guidelines were promulgated in 1970, there have 
been dramatic changes in women's participation in the workforce and in 
workplace practices. In light of these changes, this final rule 
substantially revises the Guidelines so that the part 60-20 regulations 
accurately set forth a contractor's obligation not to discriminate 
based on sex in accordance with current title VII principles. (A more 
detailed discussion of the need for the regulation is contained in 
Reasons for Promulgating this New Regulation, in the Overview section 
of the preamble, supra.)

Discussion of Impacts

    In this section, OFCCP presents a summary of the costs associated 
with the new regulatory requirements in part 60-20. The estimated labor 
cost to contractors is based on the U.S. Department of Labor, Bureau of 
Labor Statistics (BLS) data in the publication ``Employer Costs for 
Employee Compensation'' issued in December 2014, which lists total 
compensation for Management, Professionals, and Related Occupations as 
$55.47 per hour.\191\
---------------------------------------------------------------------------

    \191\ Press Release, Bureau of Labor Statistics, U.S. Department 
of Labor, Employer Costs for Employee Compensation--December 2015, 
at 4, available at http://www.bls.gov/news.release/ecec.t01.htm 
(last accessed March 27, 2016).
---------------------------------------------------------------------------

    There are approximately 500,000 contractor companies or firms, 
employing approximately 65 million employees, registered in the GSA's 
SAM database.\192\ Therefore, OFCCP estimates that 500,000 contractor 
companies or firms may be affected by the final rule. The SAM number 
results in an overestimation for several reasons: the system captures 
firms that do not meet the $10,000 jurisdictional dollar threshold for 
this rule; it captures inactive contracts, although OFCCP's 
jurisdiction covers only active contracts; it captures contracts for 
work performed outside the United States by individuals hired outside 
the United States, over which OFCCP does not have jurisdiction; and it 
captures thousands of recipients of Federal grants and Federal 
financial assistance, which are not contractors.\193\
---------------------------------------------------------------------------

    \192\ See supra note 13.
    \193\ In addition to these reasons to believe that the SAM data 
yield an overestimate of the number of entities affected by this 
rule, there is at least one reason to believe the data yield an 
underestimate: SAM does not necessarily include all subcontractors. 
However, this data limitation is offset somewhat because of the 
overlap among contractors and subcontractors; a firm may be a 
subcontractor on some activities but have a contract on others and 
thus in fact be included in the SAM data.
---------------------------------------------------------------------------

Cost of Regulatory Familiarization

    Agencies are required to include in the burden analysis the 
estimated time it takes for contractors to review and understand the 
instructions for compliance. See 5 CFR 1320.3(b)(1)(i). In order to 
minimize this burden, OFCCP will publish compliance assistance 
materials including, but not limited to, fact sheets and ``Frequently 
Asked Questions.'' OFCCP will also host webinars for the contractor 
community that will describe the new requirements and conduct listening 
sessions to identify any specific challenges contractors believe they 
face, or may face, when complying with the requirements.
    OFCCP received five comments that address the estimate of time 
needed for a contractor to become familiar with the new regulatory 
requirements in the final

[[Page 39143]]

rule. All indicate that the estimate was low. One of the five provides 
no additional information or alternative calculation. The remaining 
four provide alternative estimates of the time it would take for 
contractors to accomplish regulatory familiarization, ranging from 4 to 
15 hours. However, none of these commenters provide data or 
documentation regarding the time contractors spend on regulatory 
familiarization. For example, one commenter concludes that the time 
necessary for regulatory familiarization ``would be far closer to 4 or 
more hours'' on the basis of anonymous responses to a solicitation of 
the opinions of individuals who had previously worked as OFCCP 
attorneys and contracting legal consultants. These individual opinions 
are difficult to evaluate absent additional information about the facts 
underlying the evaluations. Another of the four commenters provides an 
estimate of the cost of regulatory familiarization of approximately 
$643 (for a midsize company with a staff of three human resources 
personnel, four operational directors, two vice presidents, and a 
president) to $1,000 (for a large firm), but does not explain how the 
commenter arrived at that estimate. In addition, one commenter 
criticizes OFCCP's estimate because it does not use the hourly wage 
rate for the BLS category of ``Lawyers'' for all the hours of 
regulatory familiarization, even though not all contractors employ 
lawyers for this purpose.
    OFCCP acknowledges that the precise amount of time each company 
will take to become familiar with the new requirements is difficult to 
estimate. However, the elements that OFCCP uses in its calculation take 
into account the fact that many contractors are smaller and may not 
have the same human resources capabilities as larger contractors. 
Further, not every contractor company or firm has the same type of 
staff; for example, many do not have attorneys on staff. The SAM 
database shows that the majority of contractors in OFCCP's universe are 
small; for example, approximately 74 percent of contractor companies or 
firms in the database have 50 or fewer employees, and approximately 58 
percent have 10 or fewer employees.
    As stated, the Discrimination on the Basis of Sex final rule 
updates the Guidelines to existing title VII requirements and current 
legal standards. As such, the final rule clarifies requirements and 
removes outdated provisions, potentially reducing the burden of 
contractors trying to understand their obligations and the 
responsibility of complying with those outdated and in some instances 
conflicting provisions. Yet, OFCCP recognizes that there may be 
additional time needed for regulatory familiarization with some 
concepts contained in the final rule. In particular, OFCCP added 30 
minutes to account for the time it takes specifically to digest the 
regulatory text, with its numerous examples. Thus, taking into 
consideration the comments received, the broad spectrum of contractors 
in OFCCP's universe, and the fact that the final rule brings the 
requirements into alignment with existing standards, OFCCP increases 
its estimation for regulatory familiarization by 50 percent, from 60 to 
90 minutes.
    In determining the labor cost, OFCCP uses data found in Table 2, 
Civilian workers, by occupational and industry group, of BLS's 
``Employer Costs for Employee Compensation'' publication. This 
publication is a product of the National Compensation Survey and 
measures employer costs for wages, salaries, and employee benefits for 
nonfarm private and state and local government workers. The 
occupational grouping of ``Management, professional and related'' 
includes the Standard Occupational Classifications (SOC) for the major 
groups from SOC 11 through SOC 29 and includes SOC 23 Legal 
Occupations.\194\ OFCCP believes that this broad category better 
reflects the staffing at its universe of contractors, including smaller 
contractors. OFCCP retains the use of wage data for the broad category 
of ``Management, professional and related.''
---------------------------------------------------------------------------

    \194\ SOC Major Groups: 11--Management Occupations, 13--Business 
and Financial Operations Occupations, 15--Computer and Mathematical 
Occupations, 17 0 Architecture and Engineering Occupations, 19--
Life, Physical, and Social Science Occupations, 21--Community and 
Social Science Occupations, 23--Legal Occupations, 25--Education, 
Training, and Library Occupations, 27--Arts, Design, Entertainment, 
Sports, and Media Occupations, and 29--Healthcare Practitioners and 
Technical Occupations.
---------------------------------------------------------------------------

    Thus, in determining the cost for contractors to become familiar 
with the requirements of the final rule, OFCCP estimates that it will 
take 90 minutes or 1.5 hours for management or a professional at each 
contractor establishment either to read the compliance assistance 
materials that OFCCP provides in connection with the final rule or to 
prepare for and participate in an OFCCP webinar to learn more about the 
new requirements. Consequently, the estimated burden for rule 
familiarization is 750,000 hours (500,000 contractor companies x 1.5 
hour = 750,000 hours) and the estimated cost is $41,602,500 (750,000 
hours x $55.47/hour = $41,602,500) or $83 per contractor company.

Cost of Provisions

    As stated previously, the final rule replaces OFCCP's Sex 
Discrimination Guidelines with regulations that set forth requirements 
that Federal contractors and subcontractors and federally assisted 
construction contractors and subcontractors must meet in fulfilling 
their obligations under E.O. 11246 to ensure nondiscrimination in 
employment based on sex. In order to reduce the burden and increase 
understanding, the final rule includes examples of prohibited 
employment practices with each of the provisions.
    OFCCP received 28 comments related to the burdens and costs of 
compliance with the proposed rule. Comments on specific sections are 
discussed below. Generally, 16 of the comments support the proposed 
rule, commenting that the costs are minimal and the return on 
investment high and that the rule would reduce confusion and have a 
positive effect on the community. Four of the 12 comments that oppose 
the rule comment generally that the rule imposes significant burden 
with little benefit but provide no additional specific information. Two 
of the 12 opposing comments assert that the rule imposes additional 
burden on contractors for data collection, unspecified recordkeeping 
requirements, development of affirmative action programs, and employee 
training. Because the final rule does not require any of these 
activities, no burden is assessed for them. Below is detailed 
information that addresses the specific cost and burdens of the final 
rule by section.
    The final rule changes the title of the regulation to provide 
clarity that the provisions in part 60-20 are regulations implementing 
E.O. 11246. The title change does not incur burden.

Sections 60-20.1--60-20.4

    The final rule makes minor edits to Sec.  60-20.1, including 
deleting a sentence explaining the reason for promulgating this part of 
the regulation and modifying the sentence notifying the public that 
part 60-20 is to be read in connection with existing regulations. These 
minor edits update the regulations and provide clarity. Because the 
edits do not cause additional action on the part of contractors, no 
additional burden is associated with this section.
    Section 60-20.2, General prohibitions, of the final rule removes 
the Guidelines section titled ``Recruitment and advertisement'' and 
replaces it with a provision that articulates the general

[[Page 39144]]

prohibition against sex discrimination in employment. The general 
prohibition against sex discrimination in employment is not a new 
provision and as such does not require any additional action on the 
part of contractors.
    Commenters express concern that this section of the rule would 
cause additional burden if it requires contractors to dissolve existing 
affinity groups for women, adopt ``gender neutral'' job titles, revise 
job descriptions, or construct single-user facilities. One comment 
recommends that OFCCP quantify the cost for Federal contractors to 
construct single-user, gender-neutral bathrooms.
    In adopting its final rule, OFCCP emphasizes that it does not 
consider contractors' good faith efforts to comply with their 
affirmative action requirements a violation of the final rule, thus 
clarifying that there is no need to dissolve affinity groups. The final 
rule also clarifies that it does not require contractors to avoid the 
use of gender-specific job titles, although OFCCP considers doing so a 
best practice. Nor does the final rule require construction of gender-
neutral bathrooms. The final rule offers gender-neutral, single-user 
restrooms as a best practice for contractors to consider, but only 
requires that contractors allow employees to access sex-segregated 
workplace facilities that are consistent with their gender identity. 
Contractors will be able to do this without change to their existing 
facilities. OFCCP declines to quantify the cost as recommended by the 
commenter. As there is no need for contractors to incur any of the 
burdens that the commenters suggest, OFCCP assesses no burden for this 
provision.
    The final rule replaces the Guidelines Sec.  60-20.3 (Job policies 
and practices) with a new Sec.  60-20.3, ``Sex as a bona fide 
occupational qualification.'' In this section, the final rule 
consolidates, in one provision, the references to the BFOQ defense 
available to employers, and updates it with the language set forth in 
title VII. This reorganization makes it easier for Federal contractors 
to locate and understand the BFOQ defense. This section reorganizes 
existing information and does not incur additional burden. Thus, OFCCP 
assesses no burden for this provision.
    Section 60-20.4 replaces the Guidelines provision addressing 
seniority systems with a new section addressing discrimination in 
compensation practices.\195\ The final rule provides clear guidance to 
covered contractors on their obligation to provide equal opportunity 
with respect to compensation. It provides guidance on determining 
similarly situated employees and conforms to existing title VII 
principles in investigating compensation discrimination. Two commenters 
assert that this provision would result in additional burden for 
contractors related to their analyses of compensation and their 
compensation practices. OFCCP disagrees, as the final rule does not 
change existing requirements with regard to compensation 
discrimination, nor does it change the requirement that contractors 
with affirmative action programs must conduct in-depth analyses of 
compensation practices. The final rule merely elaborates on the legal 
principles applicable to compensation discrimination under the 
Executive Order, in accordance with title VII law. As such, this 
section reduces confusion that may have resulted in the analysis of 
compensation discrimination.
---------------------------------------------------------------------------

    \195\ In the Guidelines, Sec.  60-20.5 addressed discriminatory 
wages. The final rule Sec.  60-20.4 incorporates that existing 
requirement and updates it to be consistent with current title VII 
law.
---------------------------------------------------------------------------

    It is true that existing regulations require some contractors to 
analyze their personnel activity data, including compensation, 
annually, to determine whether and where impediments to equal 
employment opportunity exist.\196\ The final rule does not create any 
new requirements or otherwise change the existing regulatory 
requirement. Therefore, this provision creates no new burden or new 
benefit (beyond confusion reduction).
---------------------------------------------------------------------------

    \196\ 41 CFR 60-2.17(b)(3).
---------------------------------------------------------------------------

Section 60-20.5: Discrimination Based on Pregnancy, Childbirth, or 
Related Medical Conditions

    The final rule addresses discrimination based on pregnancy, 
childbirth, or related medical conditions in Sec.  60-20.5. Paragraph 
60-20.5(a) generally prohibits discrimination based on pregnancy, 
childbirth, or related medical conditions, including childbearing 
capacity. This provision clarifies current law that E.O. 11246 
prohibits discrimination based on any of these factors and as such does 
not generate new burden or new benefits (with the exception of reduced 
confusion).
    Final rule paragraph 60-20.5(b) provides a non-exhaustive list of 
examples of unlawful pregnancy discrimination, including: Refusing to 
hire pregnant applicants; firing an employee or requiring an employee 
to go on leave because the employee becomes pregnant; limiting a 
pregnant employee's job duties based on pregnancy or requiring a 
doctor's note in order for a pregnant employee to continue working; and 
providing employees with health insurance that does not cover 
hospitalization and other medical costs related to pregnancy, 
childbirth, or related medical conditions when such costs are covered 
for other medical conditions. The clarification that the examples in 
paragraph 60-20.5(b) provide reduces contractors' confusion by 
harmonizing OFCCP's outdated regulations with current title VII 
jurisprudence.
    Final rule paragraph 60-20.5(c) addresses accommodations for 
pregnant employees. As described in the Section-by-Section Analysis 
above, in proposed paragraph 60-20.5(b)(5), the NPRM proposed a fifth 
common example of discrimination based on pregnancy, childbirth, or 
related medical conditions: failure to provide reasonable workplace 
accommodations to employees affected by such conditions when such 
accommodations are provided to other workers similar in their ability 
or inability to work. Because the issue of pregnancy accommodations was 
pending before the U.S. Supreme Court (in Young v. UPS, supra) when 
OFCCP published the NPRM, OFCCP stated that it would revise the rule to 
reflect the ruling in Young as necessary. The Supreme Court decided 
Young v. UPS on March 25, 2015. In light of this decision, OFCCP 
modifies the final rule. As described supra in the Section-by-Section 
Analysis, OFCCP removes paragraph (5) from paragraph 60-20.5(b) and 
substitutes a new paragraph, paragraph 60-20.5(c), titled 
``Accommodations,'' that treats the topic that was covered in proposed 
paragraph 60-20.5(b)(5). This new paragraph 60-20.5(c) is divided into 
two paragraphs: (1) Disparate treatment and (2) Disparate impact.
    Paragraph (1), on disparate treatment, provides that it is a 
violation of E.O. 11246 for a contractor to deny alternative job 
assignments, modified duties, or other accommodations to employees who 
are unable to perform some of their job duties because of pregnancy, 
childbirth, or related medical conditions in three circumstances:
    (i) Where the contractor denies such assignments, modifications, or 
other accommodations only to employees affected by pregnancy, 
childbirth, or related medical conditions;
    (ii) Where the contractor provides, or is required by its policy or 
by other relevant laws to provide, such assignments, modifications, or 
other accommodations to other employees

[[Page 39145]]

whose abilities or inabilities to perform their job duties are 
similarly affected, the denial of accommodations imposes a significant 
burden on employees affected by pregnancy, childbirth, or related 
medical conditions, and the contractor's asserted reasons for denying 
accommodations to such employees do not justify that burden; or
    (iii) Where intent to discriminate on the basis of pregnancy, 
childbirth, or related medical conditions is otherwise shown.
    OFCCP believes there is no additional burden for contractors to 
comply with new paragraph 60-20.5(c)(1). That is because this new 
paragraph reflects current title VII law as interpreted by the Supreme 
Court in Young. Contractors subject to title VII or to the state 
antidiscrimination laws that follow title VII precedent are thus 
already required to comply with this interpretation. In addition, 16 
states have laws that require accommodations for pregnant workers,\197\ 
so covered contractors in those states are already required to provide 
such accommodations and thus comply with this paragraph. However, 
because the requirement to provide accommodations in certain 
circumstances may be new for contractors that had not previously 
provided accommodations or light duty, OFCCP provides an estimate of 
the cost burden associated with final paragraph 60-20.5(c)(1).\198\
---------------------------------------------------------------------------

    \197\ As of December, 2015, these states included Alaska (Alaska 
Stat. Sec.  39.20.510); California (Cal. Gov't Code Sec.  12945); 
Connecticut (Conn. Gen. Stat. Sec.  46a-60(a)(7)); Delaware (Del. 
Code Ann. title 19 Sec.  711); Hawaii (Haw. Code R. Sec.  12-46-
107); Illinois (775 Ill. Comp. Stat. 5/2-102(I)); Louisiana (La. 
Rev. Stat. Ann. Sec.  23:342); Maryland (Md. Code Ann. State Gov't 
Sec.  20-609); Minnesota (Minn. Stat. Sec.  181.9414); Nebraska 
(Neb. Rev. Stat. Sec. Sec.  48-1107.01, 1121); New Jersey (N.J. 
Stat. Ann. Sec.  10:5-12(s)); New York (N.Y. Exec. Law Sec. Sec.  
292, 296); North Dakota (N.D. Cent. Code Sec.  14-02.4-03(2)); Rhode 
Island (R.I. Gen. Laws Sec.  28-5-7.4(a)); Texas (Tex. Lab. Code 
Ann. Sec. Sec.  21.051, 21.106); and West Virginia (W. Va. Code. R. 
Sec.  5-11-9(B)). New York City, the District of Columbia, 
Philadelphia, Providence, and Pittsburgh have such laws as well; 
their laws apply to employers of fewer than 15 employees. See 
National Partnership for Women & Families, Reasonable Accommodations 
for Pregnant Workers: State and Local Laws, December 2015, available 
at http://www.nationalpartnership.org/research-library/workplace-fairness/pregnancy-discrimination/reasonable-accommodations-for-pregnant-workers-state-laws.pdf (last accessed March 25, 2016).
    \198\ Because the Supreme Court had not yet clarified title VII 
law when the NPRM was published, and therefore some contractors had 
not previously provided accommodations or light duty, OFCCP 
similarly provided an estimate in the NPRM of the burden associated 
with proposed paragraph 60-20.5(b)(5) for such contractors.
---------------------------------------------------------------------------

    OFCCP uses the estimate that it developed in the NPRM for proposed 
paragraph 60-20.5(b)(5) as a basis for its estimate of the cost of 
final paragraph 60-20.5(c)(1) for contractors that had not previously 
provided accommodations or light duty. That proposed paragraph required 
contractors to provide alternative job assignments, modified duties, or 
other accommodations to employees who are unable to perform some of 
their job duties because of pregnancy, childbirth, or related medical 
conditions whenever such accommodations are provided to other workers 
similar in their ability or inability to work. OFCCP estimated that the 
total cost of that accommodations requirement would be $9,671,000.\199\ 
To arrive at that figure, OFCCP estimated that approximately 2,046,850 
women in the Federal contractor workforce would be pregnant in a year, 
of whom 21 percent (429,839 women) work in job categories likely to 
require accommodations that might involve more than a de minimis cost. 
Because the incidence of medical conditions during pregnancy that 
require accommodations ranges from 0.5 percent (placenta previa) to 50 
percent (back issues), OFCCP estimated that of the women in positions 
that require physical exertion or standing, half (or 214,920 women) may 
require some type of an accommodation or light duty. The Listening to 
Mothers study found that 63 percent, or 135,400, of pregnant women who 
needed and requested a change in duties, such as less lifting or more 
sitting, made such a request of their employers, and 91 percent, or 
123,214, of those women worked for employers that attempted to address 
their needs.\200\ In addition, OFCCP assumed that of the 37 percent 
(79,250 women) who did not make a request for accommodation, 91 percent 
(72,364) would have had their needs addressed had they made such a 
request. Thus, OFCCP determined that the proposed rule would require 
covered contractors to accommodate the 9 percent of women whose needs 
were not addressed or would not have been addressed had they requested 
accommodation. According to the Job Accommodation Network,\201\ the 
average cost of an accommodation is $500. Therefore, OFCCP estimated 
that the cost of proposed paragraph 60-20.5(b)(5) would be $9,671,000 
((135,400 - 123,214) + (79,520 - 72,364)) x $500).
---------------------------------------------------------------------------

    \199\ OFCCP's methodology was described in greater detail in the 
preamble to the NPRM. 80 FR at 5262-63.
    \200\ Listening to Mothers, supra note 153.
    \201\ Job Accommodation Network, Workplace Accommodations: Low 
Cost, High Impact-- Annually Updated Research Findings Address the 
Costs and Benefits of Job Accommodations 4 (2014), available at 
http://askjan.org/media/downloads/LowCostHighImpact.doc (last 
accessed March 9, 2016).
---------------------------------------------------------------------------

    However, proposed paragraph 60-20.5(b)(5) was broader--i.e., it 
covered more circumstances--than revised paragraph 60-20.5(c)(1). The 
next paragraphs analyze each of the three paragraphs of paragraph 60-
20.5(c)(1) in turn to explain how proposed paragraph 60-20.5(b)(5) was 
broader.
    The fact circumstances contemplated in paragraph 60-20.5(c)(1)(i) 
are those in which contractors do not provide accommodations to workers 
affected by pregnancy, childbirth, and related medical conditions, but 
do provide such accommodations to all other workers who are similar in 
their ability or inability to work. In other words, under this 
scenario, contractors deny accommodations to workers affected by 
pregnancy, childbirth, and related medical conditions, and only to 
those workers. Because proposed paragraph 60-20.5(b)(5) covered every 
circumstance in which contractors deny accommodations to workers 
affected by pregnancy, childbirth, and related medical conditions, the 
subparagraph 60-20.5(c)(1)(i) circumstances are a wholly contained 
subset of the circumstances that proposed paragraph 60-20.5(b)(5) 
covered.
    The circumstances contemplated in paragraph 60-20.5(c)(1)(ii) are 
similarly a subset of the proposed paragraph 60-20.5(b)(5) 
circumstances. That is because, pursuant to Young, the new paragraph 
requires contractors to provide alternative job assignments, modified 
duties, or other accommodations to employees who are unable to perform 
some of their job duties because of pregnancy, childbirth, or related 
medical conditions only when the denial of accommodations imposes a 
significant burden on employees affected by pregnancy, childbirth, or 
related medical conditions and the contractor's asserted reasons for 
denying accommodations to such employees do not justify that burden. It 
is difficult to ascertain precisely how much narrower this set of 
circumstances is than proposed paragraph 60-20.5(b)(5), because OFCCP 
does not have sufficient information to estimate how frequently 
``denial of accommodations [will] impose[ ] a significant burden on 
employees affected by pregnancy, childbirth, or related medical 
conditions and the contractor's asserted reasons for denying 
accommodations to such employees [will] not justify that burden.'' But 
by definition, contractors are required to accommodate workers affected 
by pregnancy, childbirth, and related medical conditions less 
frequently under paragraph 60-

[[Page 39146]]

20.5(c)(1)(ii) than they would have been under proposed paragraph 60-
20.5(b)(5).
    The circumstance contemplated in paragraph 60-20.5(c)(1)(iii) were 
not explicitly mentioned in proposed paragraph 60-20.5(b)(5). But 
because they make express a basic tenet of title VII law--that 
intentional discrimination may be manifest in a variety of ways--they 
were implicit in the proposed rule. Proposed paragraph 60-20.5(b)(5) 
therefore subsumed the circumstance in paragraph 60-20.5(c)(1)(iii).
    Thus, combining the circumstances that paragraphs (i), (ii), and 
(iii) of paragraph 60-20.5(c)(1) together cover, the circumstances that 
paragraph 60-20.5(c)(1) covers are narrower than those that proposed 
paragraph 60-20.5(b)(5) covered. Because of the difficulty in 
estimating how much narrower, however, for purposes of this rulemaking, 
OFCCP assumes that the maximum cost for contractor compliance with new 
subparagraph 60-20.5(c)(1) is equal to the $9,671,000 cost that OFCCP 
estimated for contractor compliance with proposed paragraph 60-
20.5(b)(5). This estimate represents the maximum cost because by 
definition, the cost for paragraph 60-20.5(c)(1) is less than that for 
proposed paragraph 60-20.5(b)(5).
    Many comments support OFCCP's proposal in paragraph 60-20.5(b)(5) 
that generally required contractors to provide accommodations to 
pregnant employees. In support, these commenters report that 
accommodating pregnant employees is good for business and that the 
costs of accommodating pregnant employees are minimal.
    On the other hand, several commenters suggest that OFCCP's 
estimated cost of accommodations was low or should be a range. One 
comment cites an alternate study indicating that pregnant women are 
prescribed some form of bed rest each year, for which additional burden 
should be assessed. This study functions as an online informational 
brochure for pregnant women which defines bed rest and its use. OFCCP's 
estimate of burden assesses the conditions that may require 
accommodations during pregnancy. While bed rest may be a way to address 
some of the conditions that OFCCP factored into its assessment, bed 
rest in itself is not a condition of pregnancy. Therefore, OFCCP 
declines to modify its assessment to include bed rest.
    The same comment recommends that OFCCP assess burden for workers in 
all job categories, rather than just the categories of craft workers, 
operatives, laborers, and service workers. When developing its 
assessment of burden, OFCCP considered the types of accommodations 
needed and the types of jobs in the various job categories. The report 
Listening to Mothers \202\ identified four pregnancy-related 
accommodations that may be required, depending on the jobs involved: 
More frequent breaks, changes in schedule, changes in duties such as 
less lifting and more sitting, and other adjustments. Considering the 
types of jobs in each of the job categories and the primary functions 
of those jobs, OFCCP determines that the jobs in the craft worker, 
operatives, laborers, and service worker categories are the most 
physically demanding and likely to limit workers' ability to take 
breaks when needed, reduce lifting, and sit. Thus, OFCCP retains its 
analysis using the job categories of craft workers, operatives, 
laborers, and service workers.
---------------------------------------------------------------------------

    \202\ Listening to Mothers, supra note 153. OFCCP discussed its 
consideration of this study in the NPRM. 80 FR at 5262.
---------------------------------------------------------------------------

    Finally, the comment questions whether the Job Accommodation 
Network's estimate for disability accommodations is ``likely sufficient 
to accommodate a pregnant employee'' because it covers all types of 
accommodations. The commenter is correct that the Job Accommodation 
Network estimate of $500 accounts for all types of accommodations. 
OFCCP acknowledged in the NPRM that this may be an overestimation and 
as multiple other commenters stated, the cost of accommodating a 
pregnant worker is minimal and results in benefits to employers, 
including reduced workforce turnover, increased employee satisfaction, 
and productivity.
    One of the industry group commenters acknowledges that ``the 
estimate of annual accommodation costs of $9,671,000 appears to be a 
reasonable foundation,'' but contends that this estimate is incomplete, 
and urges OFCCP to undertake further empirical research to assess the 
accommodation costs more fully. On the other hand, multiple other 
commenters describe the burden of accommodating pregnancy as either 
``minimal,'' or ``not burdensome.'' One contractor organization, which 
surveyed its membership, comments that the ``majority of the 
respondents felt that OFCCP's regulations will not impose additional 
duty on federal contractors to provide accommodations to pregnant 
employees, noting that 90 percent of respondents said that there won't 
be any impact to the organization.'' In addition, OFCCP's rule merely 
harmonizes its regulations with the existing requirements of title VII, 
as defined by the Supreme Court. As stated below, only those Federal 
contractors with 14 or fewer employees that are in states that do not 
have laws that prohibit discrimination on this basis will be required 
to make changes to their policies to come into compliance. Thus, OFCCP 
believes that its estimate is sufficient and may be an overestimation 
of burden.
    The second paragraph of paragraph 60-20.5 in the final rule, 60-
20.5(c)(2), applies disparate-impact principles to policies or 
practices that deny alternative job assignments, modified duties, or 
other accommodations to employees who are unable to perform some of 
their job duties because of pregnancy, childbirth, or related medical 
conditions. It states that contractors that have such policies or 
practices must ensure that such policies or practices do not have an 
adverse impact on the basis of sex unless they are shown to be job-
related and consistent with business necessity. The provision also 
includes, as an example of a policy that might have an unjustified 
disparate impact based on pregnancy, a contractor's policy of offering 
light duty only to employees with on-the-job injuries. Like the 
circumstance in paragraph 60-20.5(c)(1)(iii), this circumstance was not 
made express in proposed paragraph 60-20.5(b)(5). But as an expression 
of a basic principle of title VII law, it makes explicit what was 
implicit in the proposed rule. Thus, it does not add to contractors' 
existing obligations under title VII and OFCCP assesses no burden for 
it.
    Proposed paragraph 60-20.5(c)(3) stated that it is a best practice 
for contractors to provide light duty, modified job duties, or 
assignments to pregnant employees and applicants. In the final rule, 
this paragraph appears in the Appendix. Since this paragraph does not 
require contractors to provide accommodations, nor to take any action, 
there is no burden associated with it.
    Final rule paragraph 60-20.5(d) (proposed paragraph 60-20.5(c)) 
prohibits discriminatory leave policies based on sex, including 
pregnancy, childbirth, or other related medical conditions. This 
paragraph is the same in the final rule as it was in the proposed rule 
(except for the renumbering). Because it is consistent with title VII, 
OFCCP assesses no burden for it.
    In sum, Sec.  20.5 provides clarification and harmonizes OFCCP's 
requirements to existing title VII requirements; as such, no new burden 
or new benefits is created with the final rule. If any burden is 
created, it is less than $9,671,000, or $19 per contractor.

[[Page 39147]]

Section 60-20.6: Other Fringe Benefits

    The final rule replaces the current Sec.  60-20.6 (Affirmative 
action) with a new section titled ``Other fringe benefits.'' Section 
60-20.6 clarifies the existing requirement of nondiscrimination in 
fringe benefits, specifically with regard to application of that 
principle to contributions to and distributions from pension and 
retirement funds and to providing health-care benefits. One commenter, 
the contractor industry liaison group that surveyed its members, found 
that the majority did not anticipate any impact, as fringe benefits are 
already offered without regard to sex. On the other hand, one industry 
commenter states that this section of the proposed regulation ``is 
completely new or so thoroughly revised as to represent essentially new 
compliance requirements,'' and urges OFCCP to provide estimates of this 
section's compliance costs, such as ``the costs of establishing and 
maintaining requisite procedures, operating, records, and internal 
compliance assessment systems.'' \203\ Prohibiting discrimination in 
benefits, including in health-care benefits, is not a new requirement 
under E.O. 11246. Further, the final rule does not require the 
establishment of procedures, records or internal compliance assessment 
systems. Thus, OFCCP declines to estimate the costs that the commenter 
suggests.
---------------------------------------------------------------------------

    \203\ The commenter does acknowledge that there is a ``baseline 
proportion of covered employers who are already in full 
compliance.''
---------------------------------------------------------------------------

    With regard to pension-related costs, both the proposed and final 
rule reflect the current state of title VII law with regard to pension 
funds, imposing no additional burden on contractors covered both by 
E.O. 11246 and by title VII (which, generally, covers employers of 15 
or more employees) or by state or local laws that similarly prohibit 
sex discrimination (many of which have lower coverage thresholds). 
Indeed, this has been the law since the Supreme Court's Manhart 
decision in 1978.\204\ As to the remaining contractors, those that have 
fewer than 15 employees as defined by title VII, are not covered by 
state or local laws, and have at least $10,000 in Federal contracts or 
subcontracts, as noted in the discussion of this requirement elsewhere 
in the preamble, OFCCP's publicly available Federal Contract Compliance 
Manual (FCCM) put them on notice that OFCCP follows current law with 
regard to providing equal benefits and making equal contributions to 
pension funds for men and women. Thus, as an existing requirement, this 
does not generate any new benefits (beyond reduced confusion) or 
additional burden.
---------------------------------------------------------------------------

    \204\ See supra note 157.
---------------------------------------------------------------------------

    With regard to fringe benefits for same-sex spouses, as explained 
supra,\205\ the text of the final rule does not include a provision to 
the effect that conditioning fringe benefits on the sex of an 
employee's spouse is sex discrimination. The preamble does state that 
the agency will follow relevant developing case law in this area in its 
interpretation of these regulations.\206\ But even if the agency does 
interpret these regulations to require contractors to offer to same-sex 
spouses the same fringe benefits that they offer to opposite-sex 
spouses, the import of the Supreme Court's ruling in Obergefell v. 
Hodges, 576 U.S. __(2015), recognizing the legality of same-sex 
marriage, is that benefits for which spouses are eligible must be 
provided regardless of the sex of the spouse. In addition, the 
independent prohibition of discrimination based on sexual orientation 
contained in E.O. 11246 and its regulations requires contractors to 
offer same-sex spouses the same fringe benefits that they offer 
opposite-sex spouses.\207\ Thus, OFCCP does not believe that its 
interpretation of the final rule will affect contractors' behavior with 
respect to providing fringe benefits to same-sex spouses. For these 
reasons, OFCCP does not assess any additional cost under this rule for 
contractors' providing such benefits.
---------------------------------------------------------------------------

    \205\ See the discussion of ``Section 60-20.6 Other Fringe 
Benefits'' in the Section-by-Section Analysis.
    \206\ Id.
    \207\ Id.
---------------------------------------------------------------------------

    As discussed in the Section-by-Section Analysis, Sec.  60-20.6 also 
prohibits discrimination in medical benefits on the basis of gender 
identity or transgender status. The term ``fringe benefits'' is defined 
to include medical benefits and the term ``sex'' is defined to include 
gender identity. Thus, the effect of the regulatory language (``It 
shall be an unlawful employment practice for a contractor to 
discriminate on the basis of sex with regard to fringe benefits'') is 
that contractors may not discriminate on the basis of gender identity 
with regard to medical benefits. The preamble to this final rule states 
that ``[t]he logical reading of the language proposed in the NPRM, 
which is adopted into the final rule without change, is that certain 
trans-exclusive health benefits offerings may constitute unlawful 
discrimination,'' \208\ and goes on to describe the circumstances under 
which OFCCP may determine that health-benefits offerings constitute 
discrimination.\209\
---------------------------------------------------------------------------

    \208\ Supra text accompanying note 158.
    \209\ Supra text accompanying notes 161-166.
---------------------------------------------------------------------------

    Further, discrimination on the basis of gender identity in the 
provision of fringe benefits already falls within the scope of E.O. 
11246 and its existing regulations. Since issuance of its Directive on 
Gender Identity and Sex Discrimination in August 2014, it has been 
OFCCP's position that prohibited sex discrimination includes 
discrimination on the bases of gender identity and transgender status. 
Moreover, the independent prohibition of discrimination based on gender 
identity contained in E.O. 11246 and its regulations bans 
discrimination in rates of pay and other forms of compensation, which 
include all manner of employee benefits.
    OFCCP recognizes that there has been some uncertainty among 
contractors and other stakeholders who may not have understood this 
nondiscrimination obligation under existing authorities, given that the 
agency has received comments and questions from stakeholders. 
Understanding that some contractors may recognize a need to update 
their plans in light of the guidance provided in this final rule, OFCCP 
has decided to provide an evaluation of the cost for contractors to 
remove unlawful benefits exclusions or otherwise come into compliance 
with the prohibition on gender identity discrimination in the provision 
of employment-based health-care benefits.
    This prohibition affects only those contractors that currently 
offer health-benefit plans \210\ that exclude transition-related 
benefits in a discriminatory manner or otherwise discriminate on the 
basis of gender identity. While OFCCP does not know how many 
contractors offer health-benefit plans that discriminate on the basis 
of gender identity, many employers already offer nondiscriminatory 
plans, and that number is increasing.\211\
---------------------------------------------------------------------------

    \210\ Approximately 57 percent of employers offer health-care 
benefits to employees. Kaiser Family Foundation and Health Research 
Educational Trust, 2015 Employer Health Benefits Survey, Summary of 
Findings (September 22, 2015), available at http://kff.org/report-section/ehbs-2015-summary-of-findings/ (Kaiser Health Benefits 
Survey 2015) (last accessed January 27, 2016). While no research on 
the provision of employment-based health-care benefits is specific 
to contractors, OFCCP is not aware of any reason to believe that the 
population of contractors is significantly different from the 
broader employer population with respect to whether they offer 
employment-based health-care benefits.
    \211\ The Human Rights Campaign Foundation's 2016 Corporate 
Equality Index (CEI) reports that the number of businesses that 
offer transgender-inclusive health coverage has increased from zero 
in 2002 to 40 percent of Fortune 500 companies and 60 percent of the 
CEI universe of businesses in 2016. Human Rights Campaign 
Foundation, Corporate Equality Index 2016 (2015) 4, 16, available at 
http://hrc-assets.s3-Web site-us-east-1.amazonaws.com//files/assets/resources/CEI-2016-FullReport.pdf (last accessed January 23, 2016).

---------------------------------------------------------------------------

[[Page 39148]]

    To assess the cost for contractors coming into compliance, OFCCP 
reviewed a 2012-2013 survey of 34 public and private employers,\212\ a 
2012 assessment by the California Insurance Department of the cost of a 
proposed regulation prohibiting transition-exclusive health insurance 
in California and the data on which it relied,\213\ and projections of 
the cost of providing transition-related health-care benefits to the 
members of the military published in the New England Journal of 
Medicine,\214\ which are described in the text below. Based on this 
review, OFCCP determines that the cost of adding nondiscriminatory 
health-care benefits is most likely to be de minimis.
---------------------------------------------------------------------------

    \212\ Cost and Benefits of Providing Transition-Related Health 
Care Coverage in Employee Health Benefits Plans, Williams Institute, 
September 2013 (Williams Institute Study), available at http://williamsinstitute.law.ucla.edu/wp-content/uploads/Herman-Cost-Benefit-of-Trans-Health-Benefits-Sept-2013.pdf (last accessed 
January 24, 2016).
    \213\ Economic Impact Assessment, Gender Nondiscrimination in 
Health Insurance, State of California Department of Insurance, April 
13, 2012 (Cal. Ins. Dept. Assessment), available at http://transgenderlawcenter.org/wp-content/uploads/2013/04/Economic-Impact-Assessment-Gender-Nondiscrimination-In-Health-Insurance.pdf (last 
accessed January 24, 2016). The U.S. Department of Health and Human 
Services relied in part on the California Insurance Department 
Assessment to ``estimate that providing transgender individuals 
nondiscriminatory insurance coverage and treatment will . . . have 
de minimis impact on the overall cost of care and on health 
insurance premiums.'' HHS Nondiscrimination Final Rule, supra note 
106, at 31457.
    \214\ A. Belkin, ``Caring for Our Transgender Troops--The 
Negligible Cost of Transition-Related Care,'' 373 New Eng. J. 
Medicine 1089 (September 15, 2015) (DOD Study).
---------------------------------------------------------------------------

    This result is due in large part to the rarity of gender dysphoria 
\215\ and gender transition. Inexpensive hormone therapy is the most 
commonly sought treatment,\216\ and it is often already covered by 
insurance plans as the treatment for diagnoses other than gender 
dysphoria. Further, only a small percentage of individuals with a need 
for health services related to gender transition undergo the most 
expensive treatment, genital surgery, because they do not choose it or 
meet the physical, diagnostic, and other qualifications for it.\217\ 
Moreover, ``surgical treatment . . . is usually a once-in-a-lifetime 
event, and many costs are spread over a lifetime, and do not occur in 
just a single year.'' \218\ Studies of utilization of transgender-
nondiscriminatory health-care benefits provided by both private and 
public employers confirm this data, placing the utilization rate at 
between 0 and 0.325 per thousand employees per year.\219\
---------------------------------------------------------------------------

    \215\ Data from 25 specialty hospital- and university-based 
clinics around the world serving as gateways for surgical and 
hormonal sex reassignment reported the prevalence of adults with 
gender identity disorder at between 0.0065 percent and 0.0173 
percent of the population. K. Zucker and A. Lawrence, Epidemiology 
of Gender Identity Disorder: Recommendations for the Standards of 
Care of the World Professional Association for Transgender Health, 
11 International Journal of Transgenderism 8, 13, 16 (2009), 
available at http://dx.doi.org/10.1080/15532730902799946 (last 
accessed February 24, 2016). See also Cal. Ins. Dept. Assessment at 
3 (reporting on study based on medical diagnoses of gender identity 
disorder finding prevalence range as low as 0.0014-0.0047 percent). 
After these studies were published, the diagnostic term ``gender 
dysphoria'' replaced ``gender identity disorder.'' American 
Psychiatric Association, Gender Dysphoria (2013), available at 
http://www.dsm5.org/documents/gender%20dysphoria%20fact%20sheet.pdf 
(last accessed March 3, 2016).
    \216\ D. Spade, ``Medicaid Policy & Gender-Confirming Healthcare 
for Trans People: An Interview with Advocates,'' 8 Seattle Journal 
for Social Justice 497, 498 (2010) (Medicaid Policy & Gender-
Confirming Healthcare), available at http://digitalcommons.law.seattleu.edu/sjsj/vol8/iss2/4 (last accessed 
January 22, 2016).
    \217\ Medicaid Policy & Gender-Confirming Healthcare at 498. The 
WPATH Standards of Care prescribe a period of at least 12 continuous 
months of hormone therapy, of the ``experience of living in an 
identity-congruent gender role,'' or both, before performance of 
genital surgeries. WPATH Standards of Care at 202.
    \218\ Cal. Ins. Dept. Assessment, supra note 213, at 8.
    \219\ Williams Institute Study at 2 (for the figure 0); Cal. 
Ins. Dept. Assessment at 6, 14 (citing Wilson, A., Transgender-
Inclusive Health Benefits: Costs, Data for Cost Calculation (Jamison 
Green and Associates 2012) (Wilson Cost Study) for the figure 
0.325). According to the Williams Institute Study, the figure of 
0.325 per thousand that the California Insurance Department cites is 
not a correct report of the findings of the Wilson Cost Study; the 
correct figure is 0.22 per thousand. Williams Institute Study at 6 
and 22, note 18.
---------------------------------------------------------------------------

    After assessing the experiences of five public employers when they 
eliminated gender-identity discrimination in the provision of health 
insurance to their employees, the California Insurance Department 
characterized the impact on costs of a proposed regulation prohibiting 
such discrimination in health insurance in California as ``immaterial'' 
and assigned a value of $0 to such costs in its economic impact 
assessment.\220\ The Insurance Department relied particularly on the 
experiences of the City and County of San Francisco (San Francisco) and 
the University of California, neither of which charged any additional 
premium for health insurance covering transition-related medical 
costs.\221\
---------------------------------------------------------------------------

    \220\ Cal. Ins. Dept. Assessment, supra note 213, at 5. The five 
employers were the University of California, the City and County of 
San Francisco, and the Cities of Berkeley, Portland, and Seattle.
    \221\ Human Rights Campaign, San Francisco Transgender Benefit: 
Total Claims Experience and Plan Evolution, By Year (2001-2006) (HRC 
SF Report), available at http://www.hrc.org/resources/san-francisco-transgender-benefit-total-claims-experience-and-plan-evolutio (last 
accessed March 27, 2016); Calif. Ins. Dept. Assessment at 6 (San 
Francisco); Cal. Ins. Dept. Assessment at 7 (University of 
California). San Francisco did charge an additional amount when it 
first removed exclusions for transgender-related health care in 
2001, but removed the surcharges altogether in 2006, presumably 
because they were unnecessary as costs were de minimis.
---------------------------------------------------------------------------

    Likewise, a 2013 Williams Institute study of employers that 
provided nondiscriminatory health-care coverage found that providing 
transition-related benefits has ``zero to very low costs.'' \222\ Of 
the respondents that provided ``information about the cost of adding 
transition-related coverage to existing health-care plans,'' 85 percent 
reported no costs.\223\ And of the employers that provided information 
about actual costs that they incurred as a result of employees' 
utilizing the transition-related health-care coverage, 67 percent 
reported no actual costs.\224\ Of those that incurred some costs based 
on benefit utilization, only one, a self-insured employer with 
approximately 10,000 employees, provided enough specific information to 
allow an estimate of the proportion of overall health-insurance costs 
attributable to the transgender-inclusive benefit; that proportion was 
0.004 percent.\225\
---------------------------------------------------------------------------

    \222\ Williams Institute Study, supra note 212, at 2. Although 
it is a very small and nonrandom sample--with responses from only 34 
employers--this is the only publicly available study that includes 
data on the costs to private employers of providing 
nondiscriminatory health-care insurance. The employers that 
responded to the Williams Institute survey ranged in size from fewer 
than 1,000 employees to 50,000 or more employees; their health-
benefits plans included self-insured, fully insured, and managed 
care/HMO plans. Id. at 7, 8.
    \223\ Id. at 2.
    \224\ Id. at 11.
    \225\ Id.
---------------------------------------------------------------------------

    The DOD study published in the New England Journal of Medicine 
provided an estimate of the increase in cost for providing transition-
related health-care benefits to the members of the military. This study 
projected an annual increase of $5.6 million, or 0.012 percent of 
health-care costs--``little more than a rounding error in the 
military's $47.8 billion annual health care budget.'' \226\
---------------------------------------------------------------------------

    \226\ DOD Study at 1090.
---------------------------------------------------------------------------

    OFCCP also considered whether there might be an increase in demand 
for transition-related health-care services that would affect benefits 
utilization and therefore cost. Of the available public information 
about actual utilization and cost adjustments over time, there is a 
small amount of evidence of an increase in utilization--in one plan 
that the University of California offered and one offered by one 
respondent to the Williams Institute

[[Page 39149]]

Study--but in neither case does the record show that there was an 
associated increase in cost. Thus, OFCCP does not believe that an 
increase in demand that is significant enough to affect the cost of 
nondiscriminatory health-care benefits is likely. The California 
Insurance Department considered this issue as well, and despite 
expecting ``a possible spike in demand for such [benefits] in the first 
few years . . . due to the possible existence of some current unmet 
demand,'' it similarly concluded that any increased utilization that 
might occur over time was likely to be so low that any resulting costs 
remained actuarially immaterial.\227\
---------------------------------------------------------------------------

    \227\ Cal. Ins. Dept. Assessment at 9.
---------------------------------------------------------------------------

Sections 60-20.7-60-20.8

    Section 60-20.7, titled ``Employment decisions made on the basis of 
sex-based stereotypes,'' explains the prohibition against making 
employment decisions based on sex stereotypes, which the Supreme Court 
recognized in 1989 as a form of sex discrimination under title VII. 
This section clarifies that such discrimination includes disparate 
treatment based on nonconformity to gender norms and expectations. To 
the three paragraphs in the proposed rule, covering sex stereotypes 
about dress, appearance, and behavior (paragraph 60-20.7(a)), gender 
identity (paragraph 60-20.7(b)), and caregiving responsibilities 
(proposed rule paragraph 60-20.7(c), renumbered in the final rule to 
paragraph 60-20.7(d)), the final rule adds a fourth, covering sex 
stereotypes about the jobs, sectors, or industries appropriate for 
women to work in (final rule paragraph 60-20.7(c)). As such, the final 
rule reflects the current state of title VII law with regard to sex-
based stereotyping, imposing no additional burden on contractors 
covered both by E.O. 11246 and by title VII or state or local laws that 
similarly prohibit sex discrimination and have lower coverage 
thresholds. As to the remaining contractors, those that have fewer than 
15 employees as defined by title VII, are not covered by state or local 
laws, and have at least $10,000 in Federal contracts or subcontracts, 
as noted in the discussion of this requirement elsewhere in the 
preamble, OFCCP's publicly available FCCM has put them on notice that 
OFCCP follows current law with regard to sex-based stereotyping. The 
FCCM provides that:

    [Compliance Officers (COs] must examine whether contractor 
policies make prohibited distinctions in conditions of employment 
based on sex, including the basis of pregnancy, childbirth or 
related medical conditions, or on the basis of sex-based 
stereotypes, including those related to actual or perceived 
caregiver responsibilities. Contractors must not make employment 
decisions based on stereotypes about how males and females are 
``supposed'' to look or act. Such employment decisions are a form of 
sex discrimination prohibited by Executive Order 11246, as amended.

FCCM, ch. 2, section 2H00(a).\228\ Thus, for these contractors as well, 
the final rule imposes no additional burden and generates no new 
benefits for their employees.\229\

    \228\ Another section of the FCCM also covers sex-based 
stereotyping:
    Sex-Based Stereotyping and Caregiver Discrimination. 
Differential treatment for an employment-related purpose based on 
sex-based stereotypes, including those related to actual or 
perceived caregiving responsibilities, is a violation of Title VII 
of the Civil Rights Act of 1964. For example, it is prohibited to 
deny advancement opportunities to similarly situated mothers that 
are provided to fathers or women without children, based on 
stereotypes about mothers in the workplace; it is also prohibited to 
deny to fathers access to family-friendly policies like workplace 
flexibility that employers provide to mothers, based on stereotypes 
about fathers' roles in care giving.
    FCCM, ch. 2, section 2H01(e).
    \229\ One commenter asserts that this section, as well, is so 
``new or . . . thoroughly revised'' that cost estimates for it are 
required. OFCCP disagrees with this assertion. The Supreme Court 
recognized sex stereotyping as a form of sex discrimination in 1989.
---------------------------------------------------------------------------

    Section 60-20.8 of the final rule, titled ``Harassment and hostile 
work environments,'' explains the circumstances under which sex-based 
harassment and hostile work environments violate the Executive Order, 
reflecting principles established in EEOC Guidelines adopted in 1980 
and Supreme Court title VII decisions beginning in 1986. This section 
clarifies that such discrimination includes ``sexual harassment 
(including harassment based on gender identity or expression), 
harassment based on pregnancy, childbirth, or related medical 
conditions,'' and sex-based harassment that is not sexual in nature but 
that is because of sex or sex-based stereotypes. In addition, the 
Appendix includes a section describing best practices that contractors 
may follow to reduce and eliminate harassment and hostile work 
environments.
    One commenter asserts that there would be burdens for complying 
with this requirement, explaining that there would be costs for 
establishing and maintaining procedures, records, and internal 
compliance assessments. The equal opportunity clause has always 
prohibited discrimination, including harassment and hostile work 
environments. The update proposed in the NPRM and finalized with this 
rule does not create any additional burdens. In fact, the section 
reflects the current state of title VII law with regard to sex-based 
harassment and hostile work environments, imposing no additional burden 
on contractors covered both by E.O. 11246 and by title VII or state or 
local laws that similarly prohibit sex discrimination and have lower 
coverage thresholds. As to the remaining contractors, those that have 
fewer than 15 employees as defined by title VII, are not covered by 
state or local laws, and have at least $10,000 in Federal contracts or 
subcontracts, as noted in the discussion of this requirement elsewhere 
in the preamble, OFCCP's publicly available FCCM has put them on notice 
that OFCCP follows current law with regard to sex-based harassment and 
hostile work environments. The FCCM provides that:

    Although not specifically mentioned in the Guidelines, sexual 
harassment, as well as harassment based on race, color, national 
origin or religion is a violation of the nondiscrimination 
provisions of EO 11246. During the onsite review, COs must be alert 
for any indications of such harassment. OFCCP follows Title VII 
principles when determining whether sexual harassment has occurred.

FCCM, Chapter 2, Section 2H01(d). Thus, for these contractors as well, 
the final rule imposes no additional burden and generates no new 
benefits for their employees.

Summary: Cost of Provisions

    The total cost to contractors of the regulation in the first year 
is, thus, estimated at a maximum of $51,273,500, or $103 per contractor 
company. Below, in Table 1, is a summary of the hours and costs.

[[Page 39150]]



                                            Table 1--New Requirements
----------------------------------------------------------------------------------------------------------------
                             Section                                   Hours        Total cost    Per contractor
----------------------------------------------------------------------------------------------------------------
Estimated One-Time Burden:
    Regulatory Familiarization..................................         750,000     $41,602,500             $83
                                                                 -----------------------------------------------
        Total One-Time Burden...................................         750,000      41,602,500              83
Estimated Annual Recurring Cost:
    41 CFR 60-20.5: Light duty or accommodation (maximum).......               0       9,671,000              19
                                                                 -----------------------------------------------
        Total Annual Recurring Cost (maximum)...................               0       9,671,000              19
                                                                 -----------------------------------------------
            Total Cost (maximum)................................         750,000      51,273,500       \230\ 103
----------------------------------------------------------------------------------------------------------------

Summary of Transfer and Benefits
---------------------------------------------------------------------------

    \230\ The estimated per-contractor one-time burden and the 
annual recurring cost do not sum to $103 due to rounding.
---------------------------------------------------------------------------

    E.O. 13563 recognizes that some rules have benefits that are 
difficult to quantify or monetize, but are, nevertheless, important, 
and states that agencies may consider such benefits. In fact, in its 
comment, one industry organization criticizes OFCCP for not attempting 
to monetize the benefits of the proposed rule, and urges OFCCP ``to 
assign a monetary value (e.g., increased earnings, improved 
productivity, recovered denied wages) to the regulatory benefit.'' The 
final rule creates equity and fairness benefits, which are explicitly 
recognized in E.O. 13563. Prohibiting discrimination in employment 
based on sex can contribute to ensuring that qualified and productive 
employees, both female and male, receive fair compensation, employment 
opportunities, and terms and conditions of employment. That effect may 
generate a transfer of value to employees from employers (if additional 
wages are paid out of profits) or from taxpayers (if contractor fees 
increase to pay higher wages to employees). OFCCP designed the final 
rule to achieve these benefits by:
     Supporting more effective enforcement of the prohibitions 
against sex-based discrimination in employment;
     Providing clearer guidance and harmonizing existing 
regulations, improving contractors' and their employees' understanding 
of the requirements;
     Increasing employees' and applicants' understanding of 
their rights in the workforce.
    Social science research suggests antidiscrimination law can have 
broad social benefits, not only to those workers who are explicitly 
able to mobilize their rights and obtain redress, but also to the 
workforce and the economy as a whole. In general, discrimination is 
incompatible with an efficient labor market. Discrimination interferes 
with the ability of workers to find jobs that match their skills and 
abilities and to obtain wages consistent with a well-functioning 
marketplace.\231\ Discrimination may reflect market failure, where 
collusion or other anti-egalitarian practices allow majority group 
members to shift the costs of discrimination to minority group 
members.\232\
---------------------------------------------------------------------------

    \231\ Shelley J. Lundberg & Richard Starz, ``Private 
Discrimination and Social Intervention in Competitive Labor 
Markets,'' 73 American Economic Review 340 (1983), available at 
http://www.jstor.org/stable/pdf/1808117.pdf?acceptTC=true (last 
accessed June 3, 2015); Dennis J. Aigner & Glen G. Cain, 
``Statistical Theories of Discrimination in Labor Markets,'' 30 
Industrial and Labor Relations Review 175 (1977), available at 
http://econ2.econ.iastate.edu/classes/econ321/rosburg/Aigner%20and%20Cain%20-%20Statistical%20Theories%20of%20Discrimination%20in%20Labor%20Markets.pdf (last accessed June 3, 2015).
    \232\ Kenneth J. Arrow, ``What Has Economics to Say about Racial 
Discrimination?'' 12 Journal of Economic Perspectives 91 (1998), 
available at http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.12.2.91 
(last accessed June 3, 2015).
---------------------------------------------------------------------------

    For this reason, effective nondiscrimination enforcement can 
promote economic efficiency and growth. For example, a number of 
scholars have documented the benefits of the civil rights movement and 
the adoption of title VII on the economic prospects of workers and the 
larger economy.\233\ One recent study estimated that improved workforce 
participation by women and minorities, including through adoption of 
civil rights laws and changing social norms, accounts for 15-20 percent 
of aggregate wage growth between 1960 and 2008.\234\ Positive impacts 
of this rule, which only applies to Federal contractors and only 
affects discrimination based on sex, would necessarily be smaller than 
the impacts of major society-wide phenomena such as the civil rights 
movement as a whole.
---------------------------------------------------------------------------

    \233\ J. Hoult Verkerke, ``Free to Search,'' 105 Harvard Law 
Review 2080 (1992); James J. Heckman and Brook S. Payner, 
``Determining the Impact of Federal Anti-Discrimination Policy on 
the Economic Status of Blacks: A Study of South Carolina,'' 79 
American Economic Review 138 (1989).
    \234\ Hsieh, C., Hurst, E. Jones, C.I., Klenow, P.J. ``The 
Allocation of Talent and U.S. Economic Growth,'' NBER Working Paper 
(2013), available at http://klenow.com/HHJK.pdf (last accessed June 
3, 2015).
---------------------------------------------------------------------------

    More specifically, concrete benefits arise from the provisions of 
the final rule disallowing discrimination based on gender identity and 
sex stereotyping involving sexual orientation. Research specifically on 
corporate policies prohibiting employment discrimination on these bases 
has found that employers--including federal contractors--adopt such 
policies because they benefit the employers in multiple ways. Of the 41 
top 50 federal contractors that had adopted such nondiscrimination 
policies or extended health-insurance benefits to their employees' 
same-sex domestic partners as of 2011, fully 88 percent made public 
statements to the effect that ``policies promoting employee diversity 
in general are good for their bottom line'' or otherwise ``linked 
diversity to corporate success.''\235\ The most commonly cited specific 
benefits of workplace policies that benefit LGBT employees were in the 
areas of improving recruitment and retention of talented employees (and 
thus improving company competitiveness); promoting innovation through a 
workforce reflecting diverse perspectives; providing better service to 
a diverse customer base; and boosting employee morale and thus 
productivity.\236\
---------------------------------------------------------------------------

    \235\ B. Sears and C. Mallory, Williams Institute, ``Economic 
Motives for Adopting LGBT-Related Workplace Policies'' (Williams 
Institute October 2011) 2, 7, available at http://williamsinstitute.law.ucla.edu/research/workplace/economic-motives-for-adopting-lgbt-related-workplace-policies/ (last accessed 
February 13, 2016). The federal contractors were the 50 prime 
contractors with the greatest contract award amounts in FY 2009. Id. 
at 3.
    \236\ Id. at 5-6.
---------------------------------------------------------------------------

    Particularly with regard to nondiscriminatory health-care benefits 
for transgender individuals, the California Insurance Department 
reviewed relevant research and concluded that eliminating

[[Page 39151]]

discrimination will result in lower costs for insurance companies and 
employers for other treatments that employees whose claims are denied 
on the basis of their transgender status commonly need.\237\ The 
conditions for which these treatments are needed, and for which the 
California Insurance Department predicted reduced need if gender 
nondiscriminatory health-care coverage were available, include 
complications arising from suicide attempts, mental illness, substance 
abuse, and HIV.\238\ As one transgender man explained,
---------------------------------------------------------------------------

    \237\ Cal. Ins. Dept. Assessment at 9.
    \238\ Id. at 9-12.

    People who need [treatments for gender transition] but don't 
have access to them can end up costing their companies a lot in 
terms of being treated for depression and stress-related illnesses. 
[After undergoing reassignment surgery,] my costs related to 
migraine treatment and . . . prescription drugs . . . dropped 
dramatically. My healthcare costs went from being well-above average 
for my plan to well-below average in the first full year after my 
transition.\239\
---------------------------------------------------------------------------

    \239\ A. McIlvaine, ``A New Benefits Trend,'' Human Resources 
Executive Online (October 8, 2012), available at http://www.hreonline.com/HRE/view/story.jhtml?id=533351347 (last accessed 
March 18, 2016) (quoting Andre Wilson).

    The Insurance Department ``determined that the benefits of 
eliminating discrimination far exceed the insignificant costs 
associated with implementation of the proposed regulation [requiring 
nondiscriminatory health-care coverage].'' \240\
---------------------------------------------------------------------------

    \240\ Cal. Ins. Dept. Assessment at 9.
---------------------------------------------------------------------------

Regulatory Flexibility Act and Executive Order 13272 (Consideration of 
Small Entities)

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., 
as amended, requires agencies to prepare regulatory flexibility 
analyses and make them available for public comment when proposing 
regulations that will have a significant economic impact on a 
substantial number of small entities. See 5 U.S.C. 603. If the rule is 
not expected to have a significant economic impact on a substantial 
number of small entities, the RFA allows an agency to certify such in 
lieu of preparing an analysis. See 5 U.S.C. 605. As explained in the 
Regulatory Flexibility Act and Executive Order 13272 section of the 
NPRM, OFCCP did not expect the proposed rule to have a significant 
economic impact on a substantial number of small entities. 80 FR at 
5266 (January 30, 2015). However, in the interest of transparency and 
to provide an opportunity for public comment, OFCCP prepared an initial 
regulatory flexibility analysis (IRFA) rather than certify that the 
proposed rule was not expected to have a significant economic impact on 
a substantial number of small entities. In the proposed rule OFCCP 
specifically requested comments on the initial RFA, including the 
number of small entities affected by the proposed rule, the compliance 
cost estimates, and whether alternatives exist that will reduce burden 
on small entities while still remaining consistent with the objective. 
While OFCCP received 27 comments that addressed the costs and burdens 
of the proposed rules, none commented on the initial regulatory 
flexibility analysis. Thus, as explained below, OFCCP adopts the 
proposed rule's initial RFA economic analysis for purposes of the final 
rule and adjusts it to reflect the increased cost of the final rule.
    In the NPRM, OFCCP estimated the impact on small entities that are 
covered contractors of complying with the proposed rule's requirements. 
In this final rule, OFCCP certifies that this rule will not have a 
significant economic impact on a substantial number of small entities. 
In making this certification, OFCCP determines that all small entities 
subject to E.O. 11246 would be required to comply with all of the 
provisions of the final rule and that the compliance cost would be 
approximately $103 per contractor. The compliance requirements are more 
fully described above in other portions of this preamble. The following 
discussion analyzes the cost of complying with the final rule.
    In estimating the annual economic impact of this rule on the 
economy, OFCCP determined the compliance cost of the rule and whether 
the costs would be significant for a substantial number of small 
contractor firms (i.e., small business firms that enter into contracts 
with the Federal Government). If the estimated compliance costs for 
affected small contractor firms are less than three percent of small 
contractor firms' revenues, OFCCP considered it appropriate to conclude 
that this rule will not have a significant economic impact on the small 
contractor firms covered by the final rule. While OFCCP chose three 
percent as the significance criterion, using this benchmark as an 
indicator of significant impact may overstate the impact, because the 
costs associated with prohibiting sex discrimination against employees 
and job applicants are expected to be mitigated to some degree by the 
benefits of the rule. As discussed above in the Summary of Transfers 
and Benefits section of the preamble, the benefits may include fair 
compensation, employment opportunities, and terms and conditions of 
employment, as well as a more efficient labor market and ultimately, 
improved economic prospects for workers and for the larger economy.
    The data sources used in the analysis of small business impact are 
the Small Business Administration's (SBA) Table of Small Business Size 
Standards,\241\ the Current Population Survey (CPS), and the U.S. 
Census Bureau's Statistics of U.S. Businesses (SUSB).\242\ Because 
contractors are not limited to specific industries, OFCCP assesses the 
impact of the rule across the 19 industrial classifications.\243\ 
Because data limitations do not allow OFCCP to determine which of the 
small firms within these industries are contractors, OFCCP assumes that 
these small firms are not significantly different from the small 
contractors that will be directly affected by the rule.
---------------------------------------------------------------------------

    \241\ U.S. Small Business Administration, Office of Advocacy, 
``Firm Size Data, Statistics of U.S. Businesses, Business Dynamics 
Statistics, Business Employment Dynamics, and Nonemployer 
Statistics,'' available at http://www.sba.gov/advocacy/849/12162#susb (last accessed June 2, 2015).
    \242\ U.S. Census Bureau, Statistics of U.S. Businesses, 
``Latest SUSB Annual Data,'' available at http://www.census.gov/econ/susb/ (last accessed June 2, 2015).
    \243\ Agriculture, Forestry, Fishing, and Hunting Industry 
(North American Industry Classification System (NAICS) 11, Mining 
NAICS 21, Utilities NAICS 22, Construction NAICS 23, Manufacturing, 
NAICS 31-33, Wholesale Trade NAICS 42, Retail Trade NAICS 44-45, 
Transportation and Warehousing NAICS 48-49, Information NAICS 51, 
Finance and Insurance NAICS 52, Real Estate and Rental and Leasing 
NAICS 53, Professional, Scientific, and Technical Services NAICS 54, 
Management of Companies and Enterprises NAICS 55, Administrative and 
Support and Waste Management and Remediation Services NAICS 56, 
Educational Services NAICS 61, Healthcare and Social Assistance 
NAICS 62, Arts, Entertainment, and Recreation NAICS 71, 
Accommodation and Food Services NAICS 72, Other Services NAICS 81.
---------------------------------------------------------------------------

    OFCCP takes the following steps to estimate the cost of the rule 
per small contractor firm as measured by a percentage of the total 
annual receipts. First, OFCCP uses Census SUSB data that disaggregates 
industry information by firm size in order to perform a robust analysis 
of the impact on small contractor firms. OFCCP applies the SBA small 
business size standards to the SUSB data to determine the number of 
small firms in the affected industries. Then OFCCP uses receipts data 
from the SUSB to calculate the cost per firm as a percent of total 
receipts by dividing the estimated annual cost per firm by the average 
annual receipts per firm. This methodology is applied to each of the 
industries. The results are presented by industry in the summary tables 
below (Tables 2-20).

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[GRAPHIC] [TIFF OMITTED] TR15JN16.013

    In sum, the increased cost of compliance resulting from the rule is 
de minimis relative to revenue at small contractor firms no matter 
their size. All of the industries have an annual cost per firm as a 
percent of receipts of three percent or less. For instance, the 
manufacturing industry cost is estimated to range from 0.00 percent for 
firms with 10 employees or more to 0.02 percent for firms with zero to 
four employees. Management of companies and enterprises is the industry 
with the highest relative costs, with a range of 0.00 percent for firms 
that have average annual receipts of $20 million-$24.99 million to 0.34 
percent for firms that have average annual receipts of under $100,000. 
Therefore, OFCCP determines that in no instance is the effect of the 
rule greater than three percent of total receipts.
    OFCCP then determines the number of small contractor firms actually 
affected by the rule. This information is not readily available. The 
best source for the number of small contractor firms that are affected 
by this rule is GSA's SAM database, which allows direct estimates of 
the number of small contractor firms.\244\ Based on the most current 
SAM data available, if OFCCP defines ``small'' as fewer than 500 
employees, then there are 328,552 small contractor firms. If OFCCP 
defines ``small'' as firms with less than $35.5 million in revenues, 
then there are 315,902 small contractor firms. Thus, OFCCP establishes 
a range of 315,902-328,552 as the total universe of small contractor 
firms that the final rule may affect.
---------------------------------------------------------------------------

    \244\ See supra note 13. Federal contractor status cannot be 
discerned from the SBA firm size data. SBA firm size data can only 
be used to estimate the number of small firms, not the number of 
small contractor firms. As described in the text supra, OFCCP uses 
the SBA data to estimate the impact of the final rule on a 
``typical'' or ``average'' small firm in each of the 19 industries. 
OFCCP then assumes that a typical small firm is similar to a small 
contractor firm. It is based on this analysis that OFCCP believes 
that this rule will not have a significant economic effect on a 
substantial number of small businesses.
---------------------------------------------------------------------------

    However, this range represents a significant overestimate of the 
number of small contractor firms that the final rule will in fact 
affect. First, as described above in the preamble section on 
``Discussion of Impacts,'' the SAM database itself probably represents 
an overestimate, because it includes thousands of recipients of Federal 
monies that are Federal grantees, not contractors, and thus not subject 
to E.O. 11246. Second, it includes contractors that have inactive 
contracts and contracts of $10,000 or less; the final rule affects only 
those contractors that have active contracts with an annual value in 
excess of $10,000.\245\
---------------------------------------------------------------------------

    \245\ See supra text accompanying note 193.
---------------------------------------------------------------------------

    Most important, most if not all of the contractor firms in the 
universe will not be impacted by the final rule because they already 
are subject to prohibitions on making employment decisions based on 
sex. The final rule updates the existing regulations to address 
discrimination based on pregnancy, harassment, and decisions based on 
sex-based stereotypes, among other things. These revisions and updates 
bring OFCCP's regulations at part 60-20 in line with the current 
standards of title VII, with applicable state anti-discrimination laws, 
and with OFCCP's own FCCM and Directives. Thus, small contractor firms 
should already be in compliance with the requirements of the final 
rule.

[[Page 39166]]

    OFCCP has closely reviewed the initial RFA economic analysis it 
used in the proposed rule and carefully considered all the comments 
received. Based on this review and consideration and the available data 
sources, OFCCP concludes that the method used to conduct the initial 
RFA economic analysis in the proposed rule reasonably estimates the 
annual effect of the rule. OFCCP accordingly adopts the proposed rule's 
initial RFA economic analysis for purposes of the final rule, adjusted 
to reflect the increased cost of the final rule.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires 
that OFCCP consider the impact of paperwork and other information 
collection burdens imposed on the public. According to the 1995 
amendments to the Paperwork Reduction Act (5 CFR 1320.8(b)(2)(vi)), an 
agency may not collect or sponsor the collection of information or 
impose an information collection requirement unless the information 
collection instrument displays a currently valid OMB control number.
    OFCCP has determined that there is no new requirement for 
information collection associated with this final rule. This final rule 
clarifies and updates current part 60-20 and removes outdated 
provisions so that the requirements conform to current sex 
discrimination law. The information collection requirements contained 
in the existing E.O. 11246 regulations are currently approved under OMB 
Control No. 1250-0001 (Construction Recordkeeping and Reporting 
Requirements) and OMB Control No. 1250-0003 (Recordkeeping and 
Reporting Requirements--Supply and Service). Consequently, this final 
rule does not require review by the Office of Management and Budget 
under the authority of the Paperwork Reduction Act of 1995, 44 U.S.C. 
3501 et seq.

Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule as defined by section 804 of the 
Small Business Regulatory Enforcement Fairness Act of 1996. This rule 
will not result in an annual effect on the economy of $100 million or 
more; a major increase in costs or prices; or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of the United States-based companies to 
compete with foreign-based companies in domestic and export markets.

Unfunded Mandates Reform Act of 1995

    For purposes of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 
1532, this rule does not include any Federal mandate that may result in 
excess of $100 million in expenditures by state, local, and tribal 
governments in the aggregate or by the private sector.

Executive Order 13132 (Federalism)

    OFCCP has reviewed this final rule in accordance with E.O. 13132 
regarding federalism, and has determined that it does not have 
``federalism implications.'' This rule will not ``have substantial 
direct effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''

Executive Order 13175 (Consultation and Coordination With Indian Tribal 
Governments)

    This rule does not have tribal implications under E.O. 13175 that 
would require a tribal summary impact statement. The rule would not 
have substantial direct effects on one or more Indian tribes, on the 
relationship between the Federal government and Indian tribes, or on 
the distribution of power and responsibilities between the Federal 
government and Indian tribes.

Effects on Families

    The undersigned hereby certifies that the final rule would not 
adversely affect the well-being of families, as discussed under section 
654 of the Treasury and General Government Appropriations Act, 1999. To 
the contrary, by better ensuring that working mothers do not suffer sex 
discrimination in compensation, benefits, or other terms and conditions 
of employment, and that working fathers do not suffer discrimination on 
the basis of sex-based stereotypes about caregiver responsibilities, 
this rule would have a positive effect on the economic well-being of 
families, especially of families headed by single mothers.

Executive Order 13045 (Protection of Children)

    This final rule would have no environmental health risk or safety 
risk that may disproportionately affect children.

Environmental Impact Assessment

    A review of this final rule in accordance with the requirements of 
the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et 
seq.; the regulations of the Council on Environmental Quality, 40 CFR 
1500 et seq.; and DOL NEPA procedures, 41 CFR part 11, indicates this 
rule does not have a significant impact on the quality of the human 
environment. There is, thus, no corresponding environmental assessment 
or an environmental impact statement.

Executive Order 13211 (Energy Supply)

    This rule is not subject to E.O. 13211. It will not have a 
significant adverse effect on the supply, distribution, or use of 
energy.

Executive Order 12630 (Constitutionally Protected Property Rights)

    This rule is not subject to E.O. 12630 because it does not involve 
implementation of a policy that has takings implications or that could 
impose limitations on private property use.

Executive Order 12988 (Civil Justice Reform Analysis)

    This rule was drafted and reviewed in accordance with E.O. 12988 
and will not unduly burden the Federal court system. The rule was: (1) 
Reviewed to eliminate drafting errors and ambiguities; (2) written to 
minimize litigation; and (3) written to provide a clear legal standard 
for affected conduct and to promote burden reduction.

List of Subjects in 41 CFR Part 60-20

    Civil rights, Discrimination in employment, Employment, Equal 
employment opportunity, Government procurement, Labor, Sex, Women.

Patricia A. Shiu
Director, Office of Federal Contract Compliance Programs.

    For the reasons set forth in the preamble, OFCCP revises 41 CFR 
part 60-20 to read as follows:

PART 60-20--DISCRIMINATION ON THE BASIS OF SEX

Sec.
60-20.1 Purpose.
60-20.2 General prohibitions.
60-20.3 Sex as a bona fide occupational qualification.
60-20.4 Discriminatory compensation.
60-20.5 Discrimination on the basis of pregnancy, childbirth, or 
related medical conditions.
60-20.6 Other fringe benefits.
60-20.7 Employment decisions made on the basis of sex-based 
stereotypes.
60-20.8 Harassment and hostile work environments.
Appendix to Part 60-20--Best Practices


    Authority: Sec. 201, E.O. 11246, 30 FR 12319, 3 CFR, 1964-1965 
Comp., p. 339 as amended by E.O. 11375, 32 FR 14303, 3 CFR

[[Page 39167]]

1966-1970 Comp., p. 684; E.O. 12086, 43 FR 46501, 3 CFR 1978 Comp., 
p. 230; E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258; and E.O. 
13672, 79 FR 42971.


Sec.  60-20.1  Purpose.

    The purpose of this part is to set forth specific requirements that 
covered Federal Government contractors and subcontractors, including 
those performing work under federally assisted construction contracts 
(``contractors''),\1\ must meet in fulfilling their obligations under 
Executive Order 11246, as amended, to ensure nondiscrimination on the 
basis of sex in employment. These regulations are to be read in 
conjunction with the other regulations implementing Executive Order 
11246, as amended, set forth in parts 60-1, 60-2, 60-3, 60-4, and 60-30 
of this chapter. 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.
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    \1\ This part also applies to entities that are ``applicants'' 
for Federal assistance involving a construction contract as defined 
in part 60-1 of this chapter.
---------------------------------------------------------------------------


Sec.  60-20.2  General prohibitions.

    (a) In general. It is unlawful for a contractor to discriminate 
against any employee or applicant for employment because of sex. The 
term sex includes, but is not limited to, pregnancy, childbirth, or 
related medical conditions; gender identity; transgender status; and 
sex stereotyping.
    (b) Disparate treatment. Unless sex is a bona fide occupational 
qualification reasonably necessary to the normal operation of a 
contractor's particular business or enterprise, the 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. Such unlawful 
sex-based discriminatory practices include, but are not limited to, the 
following:
    (1) Making a distinction between married and unmarried persons that 
is not applied equally to men and women;
    (2) Denying women with children an employment opportunity that is 
available to men with children;
    (3) Treating men and women differently with regard to the 
availability of flexible work arrangements;
    (4) Firing, or otherwise treating adversely, unmarried women, but 
not unmarried men, who become parents;
    (5) Applying different standards in hiring or promoting men and 
women on the basis of sex;
    (6) Steering women into lower-paying or less desirable jobs on the 
basis of sex;
    (7) Imposing any differences in retirement age or other terms, 
conditions, or privileges of retirement on the basis of sex;
    (8) Restricting job classifications on the basis of sex;
    (9) Maintaining seniority lines and lists on the basis of sex;
    (10) Recruiting or advertising for individuals for certain jobs on 
the basis of sex;
    (11) Distinguishing on the basis of sex in apprenticeship or other 
formal or informal training programs; in other opportunities such as 
on-the-job training, networking, mentoring, sponsorship, individual 
development plans, rotational assignments, and succession planning 
programs; or in performance appraisals that may provide the basis of 
subsequent opportunities;
    (12) Making any facilities and employment-related activities 
available only to members of one sex, except that if the contractor 
provides restrooms, changing rooms, showers, or similar facilities, the 
contractor must provide same-sex or single-user facilities;
    (13) Denying transgender employees access to the restrooms, 
changing rooms, showers, or similar facilities designated for use by 
the gender with which they identify; and
    (14) Treating employees or applicants adversely because they have 
received, are receiving, or are planning to receive transition-related 
medical services designed to facilitate the adoption of a sex or gender 
other than the individual's designated sex at birth.
    (c) Disparate impact. 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 Executive Order 11246, as 
amended, and this part. Examples of policies or practices that may 
violate Executive Order 11246 in terms of their disparate impact on the 
basis of sex include, but are not limited to:
    (1) Height and/or weight qualifications that are not necessary to 
the performance of the job and that negatively impact women 
substantially more than men;
    (2) Strength, agility, or other physical requirements that exceed 
the actual requirements necessary to perform the job in question and 
that negatively impact women substantially more than men;
    (3) Conditioning entry into an apprenticeship or training program 
on performance on a written test, interview, or other selection 
procedure that has an adverse impact on women where the contractor 
cannot establish the validity of the selection procedure consistent 
with the Uniform Guidelines on Employee Selection Procedures, 41 CFR 
part 60-3; and
    (4) Relying on recruitment or promotion methods, such as ``word-of-
mouth'' recruitment or ``tap-on-the-shoulder'' promotion, that have an 
adverse impact on women where the contractor cannot establish that they 
are job-related and consistent with business necessity.


Sec.  60-20.3  Sex as a bona fide occupational qualification.

    Contractors may not hire and employ employees on the basis of sex 
unless sex is a bona fide occupational qualification (BFOQ) reasonably 
necessary to the normal operation of the contractor's particular 
business or enterprise.


Sec.  60-20.4  Discriminatory compensation.

    Compensation may not be based on sex. Contractors may not engage in 
any employment practice that discriminates in wages, benefits, or any 
other forms of compensation, or denies access to earnings 
opportunities, because of sex, on either an individual or systemic 
basis, including, but not limited to, the following:
    (a) Contractors may not pay different compensation to similarly 
situated employees on the basis of sex. For purposes of evaluating 
compensation differences, the determination of similarly situated 
employees is case-specific. Relevant factors in determining similarity 
may include tasks performed, skills, effort, levels of responsibility, 
working conditions, job difficulty, minimum qualifications, and other 
objective factors. In some cases, employees are similarly situated 
where they are comparable on some of these factors, even if they are 
not similar on others.
    (b) Contractors may not grant or deny higher-paying wage rates, 
salaries, positions, job classifications, work assignments, shifts, 
development opportunities, or other opportunities on the basis of sex. 
Contractors may not grant or deny training, apprenticeships, work 
assignments, or other opportunities that may lead to advancement to 
higher-paying positions on the basis of sex.
    (c) Contractors may not provide or deny earnings opportunities 
because of sex, for example, by denying women equal opportunity to 
obtain regular and/or overtime hours, commissions, pay increases, 
incentive compensation, or any other additions to regular earnings.

[[Page 39168]]

    (d) Contractors may not implement compensation practices that have 
an adverse impact on the basis of sex and are not shown to be job-
related and consistent with business necessity.
    (e) A contractor will be in violation of Executive Order 11246 and 
this part any time it pays wages, benefits, or other compensation that 
is the result in whole or in part of the application of any 
discriminatory compensation decision or other practice.


Sec.  60-20.5  Discrimination on the basis of pregnancy, childbirth, or 
related medical conditions.

    (a) In general.--(1) Discrimination on the basis of pregnancy, 
childbirth, or related medical conditions, including childbearing 
capacity, is a form of unlawful sex discrimination. Contractors must 
treat people of childbearing capacity and those affected by pregnancy, 
childbirth, or related medical conditions the same for all employment-
related purposes, including receipt of benefits under fringe-benefit 
programs, as other persons not so affected, but similar in their 
ability or inability to work.
    (2) Related medical conditions include, but are not limited to, 
lactation; disorders directly related to pregnancy, such as 
preeclampsia (pregnancy-induced high blood pressure), placenta previa, 
and gestational diabetes; symptoms such as back pain; complications 
requiring bed rest; and the after-effects of a delivery.
    (b) Examples. Examples of unlawful pregnancy discrimination 
include, but are not limited to:
    (1) Refusing to hire pregnant people or people of childbearing 
capacity, or otherwise subjecting such applicants or employees to 
adverse employment treatment, because of their pregnancy or 
childbearing capacity;
    (2) Firing female employees or requiring them to go on leave 
because they become pregnant or have a child;
    (3) Limiting pregnant employees' job duties based solely on the 
fact that they are pregnant, or requiring a doctor's note in order for 
a pregnant employee to continue working; and
    (4) Providing employees with health insurance that does not cover 
hospitalization and other medical costs for pregnancy, childbirth, or 
related medical conditions to the same extent that hospitalization and 
other medical costs are covered for other medical conditions.
    (c) Accommodations--(1) Disparate treatment. It is a violation of 
Executive Order 11246 for a contractor to deny alternative job 
assignments, modified duties, or other accommodations to employees who 
are unable to perform some of their job duties because of pregnancy, 
childbirth, or related medical conditions where:
    (i) The contractor denies such assignments, modifications, or other 
accommodations only to employees affected by pregnancy, childbirth, or 
related medical conditions;
    (ii) The contractor provides, or is required by its policy or by 
other relevant laws to provide, such assignments, modifications, or 
other accommodations to other employees whose abilities or inabilities 
to perform their job duties are similarly affected, and the denial of 
accommodations imposes a significant burden on employees affected by 
pregnancy, childbirth, or related medical conditions and the 
contractor's asserted reasons for denying accommodations to such 
employees do not justify that burden; or
    (iii) Intent to discriminate on the basis of pregnancy, childbirth, 
or related medical conditions is otherwise shown.
    (2) Disparate impact. Contractors that have policies or practices 
that deny alternative job assignments, modified duties, or other 
accommodations to employees who are unable to perform some of their job 
duties because of pregnancy, childbirth, or related medical conditions 
must ensure that such policies or practices do not have an adverse 
impact on the basis of sex unless they are shown to be job-related and 
consistent with business necessity. For example, where a contractor's 
policy of offering light duty only to employees with on-the-job 
injuries has an adverse impact on employees affected by pregnancy, 
childbirth, or related medical conditions, the policy would be 
impermissible unless shown to be job-related and consistent with 
business necessity.
    (d) Leave--(1) In general. To the extent that a contractor provides 
family, medical, or other leave, such leave must not be denied or 
provided differently on the basis of sex.
    (2) Disparate treatment. (i) A contractor must provide job-
guaranteed medical leave, including paid sick leave, for employees' 
pregnancy, childbirth, or related medical conditions on the same terms 
that medical or sick leave is provided for medical conditions that are 
similar in their effect on employees' ability to work.
    (ii) 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.
    (3) Disparate impact. Contractors that have employment policies or 
practices under which insufficient or no medical or family leave is 
available must ensure that such policies or practices do not have an 
adverse impact on the basis of sex unless they are shown to be job-
related and consistent with business necessity.


Sec.  60-20.6  Other fringe benefits.

    (a) It shall be an unlawful employment practice for a contractor to 
discriminate on the basis of sex with regard to fringe benefits.
    (b) As used herein, the term ``fringe benefits'' includes, but is 
not limited to, medical, hospital, accident, life insurance, and 
retirement benefits; profit-sharing and bonus plans; leave; and other 
terms, conditions, and privileges of employment.
    (c) The greater 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.


Sec.  60-20.7  Employment decisions made on the basis of sex-based 
stereotypes.

    Contractors must not make employment decisions on the basis of sex-
based stereotypes, such as stereotypes about how males and/or females 
are expected to look, speak, or act. Such employment decisions are a 
form of sex discrimination prohibited by Executive Order 11246, as 
amended. Examples of discrimination based on sex-based stereotyping may 
include, but are not limited to:
    (a) Adverse treatment of an employee or applicant for employment 
because of that individual's failure to comply with gender norms and 
expectations for dress, appearance, and/or behavior, such as:
    (1) Failing 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;
    (2) Harassing a man because he is considered effeminate or 
insufficiently masculine; or
    (3) Treating employees or applicants adversely based on their 
sexual orientation where the evidence establishes that the 
discrimination is based on gender stereotypes;
    (b) Adverse treatment of employees or applicants because of their 
actual or perceived gender identity or transgender status;
    (c) Adverse treatment of a female employee or applicant because she 
does not conform to a sex stereotype about women working in a 
particular job, sector, or industry; and
    (d) Adverse treatment of employees or applicants based on sex-based 
stereotypes about caregiver

[[Page 39169]]

responsibilities. For example, adverse treatment of a female employee 
because of a sex-based assumption that she has (or will have) family 
caretaking responsibilities, and that those responsibilities will 
interfere with her work performance, is discrimination based on sex. 
Other examples of such discriminatory treatment include, but are not 
limited to:
    (1) Adverse treatment of a male employee because he has taken or is 
planning to take leave to care for his newborn or recently adopted or 
foster child based on the sex-stereotyped belief that women and not men 
should care for children;
    (2) Denying opportunities to mothers of children based on the sex-
stereotyped belief that women with children should not or will not work 
long hours, regardless of whether the contractor is acting out of 
hostility or belief that it is acting in the employee's or her 
children's best interest;
    (3) Evaluating the performance of female employees who have family 
caregiving responsibilities adversely, based on the sex-based 
stereotype that women are less capable or skilled than their male 
counterparts who do not have such responsibilities; and
    (4) Adverse treatment of a male employee who is not available to 
work overtime or on weekends because he cares for his elderly father, 
based on the sex-based stereotype that men do not have family 
caregiving responsibilities that affect their availability for work, or 
that men who are not available for work without constraint are not 
sufficiently committed, ambitious, or dependable.


Sec.  60-20.8  Harassment and hostile work environments.

    (a) Harassment on the basis of sex is a violation of Executive 
Order 11246, as amended. Unwelcome sexual advances, requests for sexual 
favors, offensive remarks about a person's sex, and other verbal or 
physical conduct of a sexual nature constitute sexual harassment when:
    (1) Submission to such conduct is made either explicitly or 
implicitly a term or condition of an individual's employment;
    (2) Submission to or rejection of such conduct by an individual is 
used as the basis for employment decisions affecting such individual; 
or
    (3) Such conduct has the purpose or effect of unreasonably 
interfering with an individual's work performance or creating an 
intimidating, hostile, or offensive working environment.
    (b) Harassment because of sex includes sexual harassment (including 
sexual harassment based on gender identity or transgender status); 
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.

Appendix to Part 60-20--Best Practices

    Best practices. Although not required by this part, following 
are best practices for contractors:
    (1) Avoiding the use of gender-specific job titles such as 
``foreman'' or ``lineman'' where gender-neutral alternatives are 
available;
    (2) Designating single-user restrooms, changing rooms, showers, 
or similar single-user facilities as sex-neutral;
    (3) Providing, as part of their broader accommodations policies, 
light duty, modified job duties or assignments, or other reasonable 
accommodations to employees who are unable to perform some of their 
job duties because of pregnancy, childbirth, or related medical 
conditions;
    (4) Providing appropriate time off and flexible workplace 
policies for men and women;
    (5) Encouraging men and women equally to engage in caregiving-
related activities;
    (6) Fostering a climate in which women are not assumed to be 
more likely to provide family care than men; and
    (7) Fostering an environment in which all employees feel safe, 
welcome, and treated fairly, by developing and implementing 
procedures to ensure that employees are not harassed because of sex. 
Examples of such procedures include:
    (a) Communicating to all personnel that harassing conduct will 
not be tolerated;
    (b) Providing anti-harassment training to all personnel; and
    (c) Establishing and implementing procedures for handling and 
resolving complaints about harassment and intimidation based on sex.

[FR Doc. 2016-13806 Filed 6-14-16; 8:45 am]
 BILLING CODE P