Yesterday, the Department of Labor announced a Final Rule prohibiting discrimination based on sexual orientation and gender identity by federal contractors and subcontractors.  The Rule, which implements Executive Order 13672 signed by President Obama in July 2014, will be effective 120 days from the date of publication in the Federal Register.

If, as anticipated, the Rule is published this Friday, the Rule will be effective April 4, 2015. Any contract entered into or modified after the effective date will be subject to the new Rule.  Although eighteen states, the District of Columbia and many businesses, large and small, already offer workplace protections to lesbian, gay, bisexual and transgender employees, July’s Executive Order was the first federal action specifically addressing LGBT workplace equality in the private sector.

EO 13672 amended EO 11246, which previously only prohibited discrimination by Federal contractors and subcontractors on the basis of race, color, religion, sex, and national origin.  EO 13672 amended section 202 and section 203 of EO 11246, by substituting the phrase “sex, sexual orientation, gender identity, or national origin” for “sex or national origin.”  This final rule implements EO 13672 by making the same substitution wherever the phrase “sex or national origin” appears in the regulations implementing EO 11246.  The new rule will apply both to applicants and employees.

The Executive Order and implementing Rules clarify the protections that OFCCP had been extending, in part, under a ‘sex stereotyping’ theory.  OFCCP’s revised Federal Contract Compliance Manual (FCCM), which was released last year, instructs compliance officers conducting audits to examine whether contractors policies make prohibited distinctions in the conditions of employment based on sex-based stereotypes.  OFCCP has issued several notices of violation recently based on this theory.

It will be critical for contractors to update their internal and external policies, third-party notifications and affirmative action plans to include these new protected categories.  In addition, as with any protected category, it is critical to train managers concerning their non-discrimination obligations and to monitor compliance with the contractor’s anti-discrimination policies.  It is not enough to “talk the talk,” you have to “walk the walk” to ensure compliance and avoid discrimination and harassment claims.

The Final Rule, Executive Orders 11246 and 13672, Final Rule FAQs and a “Fact Sheet” can be found here.