In 1978, Congress passed an amendment to Title VII making it illegal for an employer to discriminate against an employee on the basis of pregnancy, childbirth, or pregnancy-related conditions. The amendment, also known as the "Pregnancy Discrimination Act" ("PDA"), went into effect in 1979. This week, the United States Supreme Court held that it is not generally impermissible for an employer to apply a bona fide seniority system (a scheme having no discriminatory terms that allots additional rights and benefits to employees relative to their length of creditable employment) in effect prior to 1979 to pregnancy leaves taken prior to 1979—even if that seniority system would violate the PDA if enacted today.
In AT&T Corp. v. Hulteen, four female employees brought an unlawful discrimination suit against AT&T challenging the company’s application of a seniority system with an accrual calculation that treated pregnancy leave less favorably that other disability leave prior to 1979. All four plaintiffs took pregnancy leave between 1968 and 1976. While AT&T changed its accrual calculation in 1979 to comply with the PDA, it did not make retroactive adjustments to the plaintiffs’ seniority accrual calculations. As a result, each plaintiff had between 63 and 261 less days of credit toward pension benefits than she would have if she had taken her pregnancy leave after 1979.
The Supreme Court found in favor of AT&T. In a 7 to 2 opinion, the Court held that "an employer does not necessarily violate the 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 in general." The Court explained that seniority systems are afforded special treatment under the law. As long as there is no evidence that the pre-PDA system was enacted with an intent to discriminate pursuant to the law in place at the time, employers are permitted to give them current effect when calculating pension payments. In AT&T’s case, the Court found no evidence of discriminatory intent.
While this case can be seen as a victory for employers, the holding was carefully tailored to the specific benefit policy at issue. Thus, employers should still consult with legal counsel when giving current effect to pre-PDA policies that differentiate pregnancy leave from other types of disability leave.