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Retirement math must comply with PDA, Title VII—For now

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in Discrimination and Harassment,Human Resources,Maternity Leave Laws

Can employees sue for a company practice that was perfectly lawful when it was implemented but has since become illegal? Yes, according to a recent 9th Circuit Court of Appeals case in which employees complained that a company policy didn’t give them full-service credit toward their retirement benefits during their pregnancy leave.

Recent case: A group of AT&T employees, who had taken pregnancy leave before the Pregnancy Discrimination Act (PDA) became law in 1978, sued their employer for allegedly violating the law. They said AT&T gave only partial credit toward retirement benefits for pregnancy leave but gave full credit for other medical leave. They argued that the PDA required treating their pregnancy-related time off just like other medical leave.

The federal district court originally sided with the women, but a panel of the 9th Circuit Court of Appeals overturned that decision.

Then, in a surprise move, the full 9th Circuit reversed the panel decision, concluding that AT&T violated the PDA and Title VII by treating pregnancy leave differently than other medical leave for retirement calculations.

The decision is interesting in light of this year’s U.S. Supreme Court decision in Ledbetter v. Goodyear Tire & Rubber, in which a female employee tried to argue that sex discrimination that occurred many years ago affected her present pay by putting her permanently behind male colleagues. The Supreme Court said Ledbetter couldn’t wait years to file suit, even if her current paycheck reflected the effects of past discrimination.

The 9th Circuit said this case was different because AT&T continued to use a pension calculation that excluded pregnancy leave. (Hulteen v. AT&T Corporation, No. 04-16087, 9th Cir., 2007)

Final note: Check with your pension counsel to make sure your plan complies with the PDA and Title VII. Stay tuned for more news on this case, as it conflicts with several other federal appeals court decisions in other circuits. It may find its way to the Supreme Court. 

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