Old maternity leave won't count toward pensions, Supreme Court rules

AT&T's decision to exclude pregnancy leave taken before the 1978 Pregnancy Discrimination Act from pensions today is not illegal discrimination, the court said.

Working women who were denied paid pregnancy leave in the 1960s and 1970s have lost an appeal at the US Supreme Court aimed at forcing their employer to grant compensatory service credits to boost their pensions.

In a 7-to-2 decision announced Monday, the high court ruled that the company, AT&T Corp., did not engage in gender discrimination when it calculated lower pension benefits for the women based on company pregnancy leave policies that were later deemed illegal gender discrimination.

At the heart of the case is a heated debate among legal scholars over whether the present effects of past discrimination can amount to a current and ongoing violation of antidiscrimination laws.

The question is of critical interest to working women who are at or approaching retirement age and who endured unequal treatment in the workplace in the 1960s and 1970s.

In 1978, Congress passed the Pregnancy Discrimination Act, which required companies to offer pregnancy leave on equal terms with disability leave policies for men.

Prior to the new law, many employers forced women to take unpaid personal time off for pregnancy and birth. AT&T was among them.

Upon passage of the new law, AT&T changed its policy to provide paid-leave benefits to expectant employees.

At issue in AT&T v. Hulteen was whether the company could continue to rely on service records from the 1960s and 1970s that exclude credit for pregnancy time off to calculate pension benefits 30 or 40 years later as those female employees approach retirement.

Lawyers for the women argued that failing to credit the prior unpaid pregnancy leave in determining pension benefits would amount to a new and current form of gender discrimination in violation of Title VII of the Civil Rights Act and the Pregnancy Discrimination Act.

"Impermissible retroactive effect"

Three former employees, Noreen Hulteen, Eleanora Collet, Elizabeth Snyder, and a current worker at AT&T, Linda Porter, first filed a discrimination charge with the Equal Employment Opportunity Commission. The women's union, Communication Workers of America, also joined the suit.

The EEOC found reasonable cause to believe that AT&T engaged in gender discrimination against the four women and other similarly situated female employees by refusing to grant full-service credit for pregnancy leaves taken before the 1978 Pregnancy Discrimination Act. The agency permitted the four women to file a federal lawsuit.

In the subsequent lawsuit, a federal judge ruled that the women were victims of gender discrimination. An appeals court panel reversed. That decision was reversed by the full Ninth US Circuit Court of Appeals, which agreed with the trial judge that AT&T had engaged in a current violation of the antidiscrimination law.

In appealing to the US Supreme Court, AT&T said its policy denying paid leave for childbirth was not an illegal form of gender discrimination in the 1960s and 1970s. The company said it was entitled to calculate pension benefits without having to retroactively apply the provisions of the Pregnancy Discrimination Act to what had been a legal policy followed in prior years.

In reversing the Ninth Circuit, the Supreme Court ruled that the appeals court had given impermissible retroactive effect to the PDA.

"Although adopting a service credit rule unfavorable to those 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," Justice David Souter wrote in the majority opinion.

Ginsburg's dissent

In a dissent, Justice Ruth Bader Ginsburg said that under her reading of the law, Congress intended to outlaw any reliance on past discriminatory practices in the calculation of current pension benefits.

"[The women] in this action will receive, for the rest of their lives, lower pension benefits than colleagues who worked for AT&T no longer than they did," Justice Ginsburg wrote. "They will experience this discrimination not simply because of the adverse action to which they were subjected pre-PDA. Rather, they are harmed today because AT&T refused fully to heed the PDA's core command."

Ginsburg said the core command is that companies may not treat employees differently based on pregnancy or childbirth, including in making current pension calculations.

The majority justices rejected that view. Congress considered whether to apply the PDA retroactively and declined to do so, Souter wrote.

The high court also rejected an argument that the recently enacted Lilly Ledbetter Fair Pay Act bolstered the women's claim against AT&T.

Congress passed the act last August – and President Obama signed it into law on Jan. 29 – to overturn a 2007 Supreme Court decision in Ledbetter v. Goodyear, in which the high court threw out Ms. Ledbetter's pay discrimination lawsuit because it said she needed to file the suit years earlier when the original pay decisions were made.

Ledbetter's suit charged that Goodyear paid her less than her male coworkers. Her lawyers argued that her ability to sue for discrimination should continue with each new paycheck, as the lower compensation was a current manifestation of prior illegal gender discrimination.

The high court rejected that view and Congress responded by passing the Lilly Ledbetter law.

Lawyers for the women in the AT&T case argued that the new Ledbetter law makes AT&T legally liable for the present effects of its past unequal treatment of female employees.

Although it was not a violation of the law until 1978, the law has been clear since then that companies must treat men and women equally in paid leave, they said. Failing to credit female workers for pregnancy leave in their pensions amounts to a current violation of antidiscrimination laws because the pension decision is only now being made, and workers are only now suffering injury from the decision, they said.

AT&T argued in response that the pregnancy leave issue is different from the Ledbetter pay discrimination case. Pay discrimination has always been illegal. In contrast, AT&T's pregnancy leave policy was legal prior to 1978. Upon passage of the law, AT&T changed its leave policy.

The high court majority agreed with AT&T, concluding that the company's pre-PDA decision not to award the women service credit for pregnancy leave was not illegal discrimination at the time it took place.