On December 9th, the Department of Labor (“DOL”) published a new final rule “prohibiting discrimination on the bases of sexual orientation and gender identity in the federal contracting workforce.”  This rule implements Executive Order 13672, signed by President Obama on July 21, and marks the first federal action ensuring LGBT workplace equality that implicates the private sector.

Prior to implementation of this rule, as a result of Executive Order 11246, federal regulations prohibited federal contractors and subcontractors from discriminating on the basis of race, color, religion, sex, and national origin, and required them to take affirmative steps  to prevent discrimination on those bases from occurring.  Now, however, the list of classifications will be amended to substitute  “sex, sexual orientation, gender identity, or national origin” for “sex or national origin.”  The new language must be inserted into the Equal Opportunity Clause by federal agencies in all covered contracts and by prime contractors into covered subcontracts.  The new language will apply to contracts entered into or modified on or after April 8, 2015 (the effective date).

On December 3rd, following DOL’s announcement of the final rule, Rep. John Kline, Chair of the House Education and Workforce Committee, and Rep. Tim Walberg, Chair of the House Subcommittee on Workforce Protections, sent a letter to the Director of DOL’s Office of Federal Contract Compliance Program (“OFCCP”) urging that the Office allow for a 60-day period for the public to comment on the regulation.  The Congressmen asserted that Section 553 of the Administrative Procedure Act (“APA”) requires general notice of a proposed rulemaking with an opportunity for public participation.  DOL, of course, disagreed. The agency  indicated that implementation without prior notice and comment “is consistent with agency precedent under other Administrations,” and that because the Executive Order was “very clear” and “left no discretion regarding how to proceed,” principles of administrative law allow DOL to publish the final rule without prior notice or comment.

The changes implemented by the final rule will be enforced by OFCCP.  Notably, the final rule does not require contractors to collect any information about applicants’ or employees’ sexual orientation or gender identity, and makes no changes to the provisions governing reporting and information collection.  It also does not require contractors to conduct any data analysis or set placement goals with respect to the sexual orientation or gender identity of their applicants or employees; nor does it make any changes to the written affirmative action program  requirements.  The final rule indicates OFCCP will use both statistical and non-statistical data in determining whether contractors have complied with their nondiscrimination obligations, although how OFCCP will accomplish this is unclear.

Both federal contractors and subcontractors should be aware of these new compliance requirements and update their Equal Opportunity Clause language accordingly in subcontracts and purchase orders.  The rule will also apply to federally-assisted construction contractors and subcontractors who do more than $10,000 in government business per year