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Audit past leave credits when crafting early retirement plan

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in Human Resources,Maternity Leave Laws

If your organization is considering early retirement as an incentive to move out highly compensated employees, do your homework first. To properly calculate seniority, you’ll need to check how unpaid leave was handled years ago and make sure you treated all unpaid leave consistently.

For example, if in the early 1970s you subtracted unpaid maternity leave from credited service but allowed those who took unpaid leave for other reasons to apply their time off to their seniority, you may run afoul of the Pregnancy Discrimination Act (PDA). That may be the case even though the PDA wasn’t yet the law and even if the employee didn’t complain at the time or after the PDA became law.

Recent case: Linda Leffman sued Sprint after her position was eliminated in 2000. She had worked for Sprint since 1973, with two brief breaks to give birth. Her first unpaid maternity leave came in 1976, when she took three months off. Sprint subtracted those months from her credited service.

She had another baby in 1978, and that maternity leave time was also deducted from her service tally. When the PDA became law, Sprint credited back only her 1978 leave.

Leffman would have qualified for Sprint’s early retirement plan had the 1976 leave been added back in. She sued, alleging that the PDA required Sprint to credit all earlier leaves. Sprint said she waited too long to complain.

The 6th Circuit upheld Sprint’s pension calculation because Leffman hadn’t shown that employees who took unpaid leave back in the 1970s for nonpregnancy-related reasons had received credit for their time off. In other words, Leffman and other women who went on maternity leave hadn’t been treated worse than others had been. (Leffman v. Sprint, No. 06-3211, 6th Cir., 2007)

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