Benefit Calculations, If Legal When Made, Will Not Invalidate Seniority System

Yesterday, the United States Supreme Court held that a bona fide seniority system does not violate Title VII even if earlier calculation methods within the system were later held to be discriminatory by Congress.  In AT&T Corp. v. Hulteen, the Court's primary focus was on whether an employer necessarily violates the Pregnancy Discrimination Act (PDA) when it pays pension benefits calculated under an accrual rule, applied only prior to the PDA, that gave less retirement credit for pregnancy leave than for medical leave. 

Prior to enactment of the PDA, the Court held that a disability benefit plan excluding disabilities related to pregnancy was not discriminatory under Title VII.  Congress responded by enacting the PDA, thereby making it discriminatory for employers to treat pregnancy-related conditions less favorably than other medical conditions.  In response, AT&T changed its benefit plan to provide credit for pregnancy leave on the same basis as leave taken for other temporary disabilities. Hulteen and other employees sued alleging that AT&T discriminated against them for not retroactively applying the post-PDA benefit plan calculations. The Court emphasized that Congress did not intend for seniority systems to violate Title VII unless they are in place for purposes of intentional discrimination against the protected class.  Since the Court held that the system and its calculations did not violate Title VII prior to the PDA, AT&T's intent could not be considered discriminatory. 

The Lilly Ledbetter Fair Pay Act of 2009 Did Not Apply

The Court briefly discussed whether its ruling should be different given the provisions of the recently-enacted Lilly Ledbetter Fair Pay Act.  The Court concluded that its ruling would not have been different because the employer's decision not to award the same credit for pregnancy leave as was awarded for other medical leave prior to the PDA was not discriminatory as to the employee's later compensation or benefits.  If the facts were different and the employer continued to use the same calculation method post-PDA, the outcome of this case would have probably been different.  Under this scenario, the employer would have been in violation of the PDA, thereby making its continued conduct discriminatory.