• Supreme Court Rules on Challenge to Pension Benefits under Pregnancy Discrimination Act
  • June 18, 2009
  • Law Firm: Elarbee, Thompson, Sapp & Wilson, LLP - Atlanta Office
  • On May 18, 2009, the U.S. Supreme Court decided in AT&T Corp. v. Hulteen, No. 07-543, that an employer does not necessarily violate the Pregnancy Discrimination Act ("PDA") when it pays pension benefits calculated in part under an accrual rule, applied only pre-PDA, that gave less retirement credit for pregnancy than for medical leave generally. Because AT&T's pension payments were in accordance with a bona fide seniority system's terms, those payments were insulated from challenge under Title VII of the Civil Rights Act of 1964.

    The plaintiffs had taken pregnancy leave in the 1960's and early to mid-1970's, and AT&T had treated that leave as personal -- not disability -- leave. AT&T's treatment of pregnancy leave did not violate the law as it existed at that time. Congress, however, subsequently enacted the PDA in 1978, which prohibited employers from treating pregnancy-related conditions less favorably than other medical conditions.

    Beginning on the effective date of the PDA, AT&T began providing service credits for pregnancy leave on the same basis as leave taken for other temporary disabilities, but did not make any retroactive adjustments to the service credit calculations of women who had been subject to the pre-PDA personnel policies. Upon their retirement, the plaintiffs sued the Company, alleging that they had been denied a greater pension benefit based upon AT&T's treatment of their pre-PDA pregnancy leave. The Court, however, rejected the plaintiffs' arguments, finding that AT&T's system simply provided future benefits based on past, completed events that were entirely lawful at the time they occurred.

    The Court held that although adopting a service credit rule unfavorable to female employees out on pregnancy leave would violate Title VII today, a seniority system does not necessarily violate the statute when it gives current effect to such rules that operated before the PDA.

    The facts presented in the case were unique and may not be applicable to many employers. Nevertheless, there was concern on the part of employment-defense lawyers that the Supreme Court might indicate a greater general acceptance of the so-called “continuing violation” doctrine in the face of the recently-enacted Lily Ledbetter Fair Pay Act of 2009, which created an extremely employee-friendly charge-filing period for claims of “discrimination in compensation.” The Court in AT&T v. Hulteen, however, specifically found that the Ledbetter Act was inapplicable because AT&T’s actions with regard to the plaintiffs simply was not unlawful at the time it took place. Therefore, at least for now, and with the exception of hostile-environment claims and compensation claims, the Court continues to hold that plaintiffs may not base lawsuits on the mere current effects of time-barred acts of alleged employment discrimination.