The President’s latest amendment to Executive Order 11246 does 3 primary things:

  1. Amends four specific provisions of Executive Order 11246 to now insert and compel “sexual orientation” and “gender identity” (aka informally referred to in society as Lesbian, Gay, Bisexual & Transgender=LGBT) compliance obligations by:
    1. making discrimination on the basis of “sexual orientation” and “gender identity” unlawful pursuant to the Executive Order;

    3. requiring the contractor to take “affirmative action” to ensure that applicants and employees are treated without regard to “sexual orientation” and “gender identity;”

    5. requiring covered contractors to add to their solicitations for employment that the contractor will consider qualified applicants for employment without regard to “sexual orientation” and “gender identity;” and

    7. requiring bidders for a covered federal contract to state in a “Compliance Report” the bidder’s employment policies and practices do not unlawfully discriminate based on “sexual orientation” and “gender identity.”
  2. Requires the Secretary of Labor to propose regulations to implement the requirements of the amendment within 90 days of his July 21, 2014 signing of the amendment (i.e., on or before October 19, 2014…in other words BEFORE the November Mid-Term elections);
  3. Delays the effective date of the protections for sexual orientation and gender identity until the first day a contractor has “entered into” a covered federal contract AFTER the effective date of OFCCP’s Rules implementing the amendment (so compliance will likely not attach, at the earliest, before the middle of 2015 (when OFCCP’s regulations might first become “legally effective”) or for many years thereafter if a company does not enter into a new federal contract promptly thereafter). NOTE, however: a federal contractor enters into a “new” federal contract every time a contractor “alters” or “amends” or “extends” an existing federal contract.

Significantly, the President’s amendment will require OFCCP to issue regulations requiring federal contractors to take affirmative action based on “sexual orientation” and “gender identity.” While that does not necessarily mean that OFCCP will establish employment “goals” for “sexual orientation” and “gender identity,” OFCCP has many other “positive steps” or “good faith efforts” it could order up (such as outreach and recruitment and accommodation-like tolerance systems; training, etc. for LGBT applicants and employees), and will undoubtedly do so. Goals for LGBT are highly unlikely because there are no databases available reporting the number or percentage of available LGBT applicants for employment or promotion. Moreover, unlike OFCCP’s recent newly innovated approach to build an availability database for “Protected Veterans“ (for which there also are no reliable databases), I predict that OFCCP will bow to personal privacy concerns of LGBT applicants and employees and will accordingly be loath to require, at this time, covered federal contractors to compel LGBT applicants to self-identify to assist OFCCP to start building a documented in-the-field availability database. Important to this issue is a provision in ENDA (“Employment Non-Discrimination Act of 2013”), which specifically prohibits the EEOC and the Secretary of Labor from compelling employers, federal contractors and other entities the bill covers to collect or produce “statistics on actual or perceived sexual orientation or gender identity.” See Section 9 of ENDA as passed in the U.S. Senate on November 7, 2013 and introduced in the U.S. House of Representatives on November 12, 2013. (ENDA has not passed the House and is legislatively dead in this 113th Congress,

9. Collection of statistics prohibited

The Commission and the Secretary of Labor shall neither compel the collection of nor require the production of statistics on actual or perceived sexual orientation or gender identity from covered entities pursuant to this Act.”

 With the exception of the 109th Congress, a bill to protect the employment rights of at least gay and lesbian applicants and employees has been introduced and failed passage in each and every year of the last 40 years).

It is also very safe to predict that there will be lawsuits to enjoin and set aside OFCCP’s coming proposed regulations before they go to final and become legally effective (presumably the Labor Department will shoot for mid-2015). First, numerous religious institutions and religiously oriented federal contractors will object that the President’s new amendment to EO 11246, and OFCCP’s implementing regulations, do not go far enough to protect religious beliefs as the Supreme Court recently ordered in its Hobby Lobby decision–which trimmed back part of the Affordable Care Act (i.e. Obama Care). Second, I believe the amendment is clearly illegal pursuant to the constitutional precedent established in the Steelworker’s case (which requires the President to either trace his authority to act to a specific power rooted in the Constitution or one the Congress has delegated to him to enforce). Since the Congress refuses to pass LGBT protective legislation year-in and year-out, the President’s claim to Congressional authority to act is at its lowest possible ebb.

Whether federal contractors will rise up to strike down OFCCP’s proposed LGBT regulations, of course, is another matter and remains to be seen. While three realities push against that result, my strong sense is that enough federal contractors are weary of the cost burdens of OFCCP that there are many now ready to pour their monies into trade associations to fight this latest cost burden (as most federal contractors will see it) on federal contracting. “The straw that broke the camel’s back.” However, pushing against possible legal challenge is:

First, federal contractors are a notoriously complacent and resilient group of companies which typically seek to maximize their efficiency and shy away from litigation.

Second, 18 states (and the District of Columbia) already have some form of protection for “sexual orientation” and/or “gender identity.” Employers in those states (territory) have already made the transition to not discriminate based on “sexual orientation” and “gender identity.” Absent onerous “Affirmative Action” requirements, federal contractors operating in those states will wonder what all the fuss is about.

Third, the President is well aware that his popularity is currently ebbing, he is now a “Lone Ranger” in Washington unable to rally support on Capitol Hill for most of his current political agenda and that his influence may take another large step down after the November election (as the President transparently signaled by ordering OFCCP to publish regulations in 90 days-before the mid-term elections—and not within the 120 days he recently ordered OFCCP to use as a publication runway for two other sex-based initiatives). To publish a proposed regulation in 120 days is a Herculean task. To publish proposed regulations in 90 days is a strong sign of not just concern, but panic and desperation. Like Thor without his Hammer, the President knows he is losing his superpowers and others could soon overcome his will. OFCCP will thus likely be smart enough to craft its regulations very “narrowly” to provide as little provocation as possible while still planting the seed of protection for LGBT. If so, many sage political pundits in Washington will then advise contractor lobbyists to wait for the next Administration and reshape OFCCP when the next President is wielding The Hammer. But, on balance, contractors are currently very weary of OFCCP. And, it is my strong sense that ultimately, when reports of needed new budget dollars to comply with OFCCP’s latest requirements start again flooding up corporate tower elevators to the offices of CFOs and CEOs, many are going to react poorly. A number of them will say, I predict, “enough is enough,” and will call their Washington D. C. trade associations to pledge litigation money to stop further cost burdens given the high likelihood of success to stop these regulations even if the company is not otherwise ideologically opposed to LGBT protections.

-John C. Fox

John C. Fox
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