Supreme Court Sides With Employer In Pregnancy Discrimination Case

(Published June 1, 2009)

 

On May 18, the U.S. Supreme Court held that the Pregnancy Discrimination Act (PDA) does not apply retroactively. In doing so, the High Court reversed a 9th Circuit Court decision that AT&T violated the PDA by refusing to adjust pension benefits that were partially based on pre-PDA calculations.

 

Background: AT&T calculated pension benefits based on seniority. In the 1960s and 1970s, prior to the passage of the PDA, its policy provided employees with full service credit while on disability leave, but only provided up to 30 days for employees on personal leave, which included pregnancy leave. It later changed the policy to provide employees on pregnancy leave with service credit for up to six weeks.

 

The PDA, which amended Title VII, became effective in 1979. At that time, AT&T changed its policy so that employees on pregnancy leave received the same service credit as employees on disability leave. It did not make retroactive adjustments for the pre-PDA policies. The women who had taken pregnancy leave before the PDA was passed received less service credit, and, therefore, received smaller pensions. Subsequently, four women sued the company for sex and pregnancy discrimination under Title VII.

 

Lower court rulings: The 9th Circuit agreed with the district court that a Title VII violation existed where post-PDA retirement eligibility calculations incorporated pre-PDA accrual rates that differentiated based on pregnancy.

 

Supreme Court says: The Supreme Court ruled 7-2 that AT&T did not violate the PDA because its policy of subtracting more leave time from pregnant employees' service was not discriminatory at the time it occurred. To rule otherwise would mean applying the PDA retroactively to recharacterize AT&T's acts as having been illegal when done.

 

Fair Pay Act Argument Gets Shot Down

The Supreme Court also looked at whether the Lilly Ledbetter Fair Pay Act of 2009 applied in this case. The women argued that they experienced illegal discrimination each time they received a pension payment.

 

The law states that "an unlawful employment practice occurs…when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or practice."

 

The High Court reiterated that, because the company's pre-PDA policies were not discriminatory at the time, the women had not been "affected by application of a discriminatory compensation decision or other practice."

 

Dissenting Opinion

The dissent argued that AT&T committed a current violation of Title VII when, post-PDA, it did not totally discontinue reliance upon the pregnancy-based pension calculations. While Congress did not provide a remedy for pregnancy-based discrimination already experienced before the PDA became effective, wrote Justice Ginsburg, Congress intended no continuing reduction of women's compensation, pension benefits included, attributable to their placement on pregnancy leave.

 

She also pointed out that the relief the plaintiffs requested was not retroactive in character. They didn't seek back pay or other compensation for past injury; they sought pension benefits, now and in the future, equal to the benefits received by others employed for the same length of time. (AT&T Corp. v. Hulteen, et al., U.S. Sup. Ct., No. 07-543, 2009)

 

Related Topic(s): Discrimination/Pregnancy Discrimination Act,  Discrimination/Sex Discrimination