President Barack Obama signed an executive order this week barring federal contractors from discriminating against employees on the basis of sexual orientation or gender identity.

Executive order 11246, first issued by President Lyndon B. Johnson in 1965, prohibits federal contractors and subcontractors from discriminating against employees on the basis of race, color, religion, sex or national origin. President Obama amended that executive order to include the categories of sexual orientation and gender identity, meaning transgender employees.

President Obama also amended existing executive order 11478 to protect federal employees from discrimination based on gender identity. That executive order was first issued by President Richard Nixon in 1969 and subsequently amended by President Bill Clinton in 1998 to include sexual orientation.

Obama's executive order will affect roughly 24,000 companies that employ roughly 28 million employees, roughly one-fifth of the nation’s workforce.  

The executive order does not include exemptions for federal contractors with religious affiliations, as some religious leaders hoped.  It does, however, leave intact an order by President George W. Bush, which allows federal contractors with religious affiliations to choose workers of their own faith for religious positions.

Practical Implications

The Office of Federal Contract Compliance Programs, which likely will be tasked with enforcing the new compliance obligations, could potentially include affirmative action obligations “much like the well-established requirements for women and minorities,” a Proskauer client alert states.

From a practical standpoint, according to a client alert from the law firm Duane Morris, federal contractors and subcontractors “may want to review their employment policies, particularly policies on equal employment opportunity and anti-harassment, to ensure that they prohibit discrimination and harassment on the basis of sexual orientation and gender identity.”

“Federal contractors and subcontractors may also consider training managers and employees regarding these new protections, to the extent the contractor does not already have such protections in place,” the Duane Morris client alert adds.

The executive order directs the Secretary of Labor to issue proposed regulations implementing the order by Oct. 19, 2014.