New Rule Prohibits Government Contractors from Discriminating Against Employees Based on Sexual Orientation and Gender Identity

On Wednesday, the Department of Labor announced a new rule aimed at protecting those working for government contractors from discrimination based upon their sexual orientation or gender identity. The new rule implements Executive Order 13672, which was signed by President Obama on July 21, 2014.

Government contractors and subcontractors and federally-assisted construction contractors and subcontractors with contracts over $10,000 are prohibited from discriminating against employees on the basis of race, color, religion, sex or national origin (and also are required to take affirmative action to make sure that equal opportunity is provided to employees) pursuant to Executive Order 11246. Based on the rule issued this week which amends Executive Order 11246, the protection offered by Executive Order 11246 now extends to sexual orientation and gender identity.

According to the DOL’s Press Release, Secretary of Labor Thomas E. Perez stated that “[l]aws prohibiting workplace discrimination on the bases of sexual orientation and gender identity are long overdue, and we’re taking a big step forward today to fix that.” The DOL had been directed to update the rules putting Executive Order 11246 in effect to add sexual orientation and gender identity as protected classes. Some states already offer this protection, but this is the first federal action that relates to equality regardless of sexual orientation or gender identity in workplaces in the private sector.

Government contractors are required to include an equal opportunity clause guaranteeing that it will not discriminate in each of its nonexempt government contracts. If a government contractor fails to comply with the non-discrimination provisions, it is a violation of the contract. In such a situation, a contractor faces potential cancellation, suspension or termination of its contract and could possibly be debarred, meaning it would not be eligible for future government contracts.

According to the DOL’s Press Release, Patricia Shiu, director of the OFCCP, explained that “This rule will extend protections to millions of workers who are employed by or seek jobs with federal contractors and subcontractors, ensuring that sexual orientation and gender identity are never used as a justification for workplace discrimination by those that profit from taxpayer dollars.”