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Supreme Court decides Hulteen pregnancy discrimination case

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in Human Resources,Maternity Leave Laws

Claims of pregnancy discrimination have gained attention again with the U.S. Supreme Court’s recent decision in AT&T Corp. v. Hulteen (07-543, U.S., 2009).

In Hulteen, a current employee and other retired employees who had taken pregnancy leave while employed by AT&T alleged in 1998 that the company violated the Pregnancy Discrimination Act (PDA) when it paid pension benefits calculated in part under an accrual rule that gave less retirement credit for pregnancy leave than for general medical leave.

This differential treatment of pregnancy leave had been AT&T’s policy before the PDA was enacted in 1978. In 1976, the Supreme Court—in General Elec. Co. v. Gilbert (429 U.S. 125, 1976)—found that kind of treatment to be nondiscriminatory and lawful under Title VII of the Civil Rights Act.

When the PDA took effect in 1979, AT&T adopted a new disability plan that modified its provision of service credit for pregnancy leave to be determined “on the same basis as leave taken for other temporary disabilities.” AT&T, however, did not retroactively adjust the service credit calculations for women who had been subject to the earlier policy.

The employees in Hulteen contended that AT&T violated Title VII and the PDA when it calculated the current, post-PDA retirement eligibility by incorporating the pre-PDA accrual rules that had differentiated on the basis of pregnancy.

High Court: no discrimination

The Supreme Court rejected that assertion, ruling that “reliance on a pre-PDA differential accrual rule [based in part on reduced service credits for pregnancy leave] to determine pensions benefits does not constitute a current violation of Title VII.”

In reaching its conclusion, the Supreme Court noted that employers can defend against discrimination claims by showing that “[b]enefit differentials produced by a bona fide seniority-based pension plan are permitted unless they are ‘the result of an intention to discriminate.’”

‘Given the law at the time’

Although the employees asserted that the current use of the pre-PDA accrual rules, which clearly violated the PDA, demonstrated “an intention to discriminate” and perpetuated the effects of the pre-PDA actions, the Supreme Court held that AT&T’s plan nevertheless was bona fide and had no discriminatory terms, because the pre-PDA accrual rules were not discriminatory as a matter of law under Gilbert before the PDA was enacted.

The court said that, “given the law at the time, … the calculations of credited service that determine pensions are the results of a permissibly different standard ... today.” The court also noted that had AT&T not changed its service credit rules in 1979 to eliminate the differential treatment based on pregnancy, the result would have been different because such conduct could be regarded as an intention to perpetuate what was currently unlawful.

Hulteen & the Ledbetter Act

The Hulteen case was the Supreme Court’s first opportunity to review the applicability of the recently enacted Lilly Ledbetter Fair Pay Act of 2009. The Ledbetter Act allows a discrimination claim to proceed as being timely when an employee is paid a wage or benefit and can show that, at some time during the worker’s employment, the employer engaged in a discriminatory act or decision that affected pay or benefits, even if the alleged unlawful act or decision was made earlier than the 180-day filing limitation period in which the pay or benefit was received. (There is a 300-day limitation in states like Florida that have state anti-discrimination agencies.)

The employees in Hulteen argued that the payment of the pension benefits under the AT&T retirement plan marked the moment at which they were affected by a discriminatory compensation decision. They asserted that the Ledbetter Act prohibited the “decision or practice” of applying the pregnancy leave differential from being used to their disadvantage.

Significantly, the Supreme Court implied that this argument might have had merit if it were not for the facts that prior to 1979, AT&T’s failure to award the employees full-service credit for pregnancy leave was not unlawful discrimination as a matter of law and that upon the effective date of the PDA, AT&T changed is practice to comply with the PDA’s new requirements.

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