Government Contracts Monitor

OFCCP Issues Final Rule Implementing Executive Order 13672

December 16, 2014

Last week, the Office of Federal Contract Compliance Programs (OFCCP) issued a final rule revising its regulations to implement amendments to Executive Order (EO) 11246 and EO 11478 made by EO 13672, which was signed by President Obama on July 21, 2014. Reflecting the recent Executive Order, the new rule adds sexual orientation and gender identity to the prohibited bases of discrimination under the “Equal Opportunity Clause” required in all covered contracts and subcontracts. The rule similarly expands contractors’ duty to take affirmative action to ensure applicants are employed, and that employees are treated during employment, without regard to their sexual orientation and gender identity, in addition to the other, more longstanding protected bases.

Significantly, however, the changes made by the new rule are limited to replacing the words “sex, or national original” with “sex, sexual orientation, gender identity, or national origin” throughout the EO 11246 implementing regulations. The only affirmative action requirements imposed by the new rule are those contained in 41 C.F.R. § 60-1, which can be satisfied by including the modified clause in covered subcontracts, making sure that applicants and employees are not improperly discriminated against, and updating the equal opportunity language in job solicitations and posting updated notices.

This final rule makes no changes to OFCCP provisions governing reporting and information collection. Nor does it alter the additional affirmative action requirements set forth in 41 C.F.R. §§ 60-2 and 60-4 that address the contents of contractors’ affirmative action plans. Thus, those programs will continue to be limited to gender, race, and ethnicity and the final rule does not require contractors to set placement goals based on sexual orientation and gender identity. Similarly, because EO 13672 did not amend the exemption for religious organizations set forth in EO 11246, the final rule does not make any changes to the corresponding regulation.

Section 5 of EO 13672 mandated that the changes to the Equal Opportunity Clause apply to Federal contracts entered into on or after the effective date of the rules promulgated by the Department of Labor. However, since the original Equal Opportunity Clause under EO 11246 defines a “Government contract” as including both agreements and modifications of agreements, the changes also apply to contract modifications after the rule’s effective date. Thus, because the OFCCP promulgated the final rule without notice or an opportunity to comment under the “good cause” exemption of the Administrative Procedure Act, these changes are effective immediately and affect nonexempt contractors with covered contracts or subcontracts entered into or modified on or after December 8, 2014.