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May 19, 2009
High Court Backs AT&T in Pregnancy-Bias Case

The U.S. Supreme Court has ruled against employees who sued AT&T because they received smaller pensions than they thought they were owed as a result of a pre-1978 policy that gave less service credit for pregnancy leave than for other medical leaves.

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Prior to 1978, AT&T had a pension plan that gave less retirement credit for pregnancy absences than for medical leave generally.

In 1978, Congress passed the Pregnancy Discrimination Act (PDA) to clarify “that it is discriminatory to treat pregnancy-related conditions less favorably than other medical conditions.”

In response, AT&T replaced its old plan with one that provided the same service credit for pregnancy leave as for other disabilities prospectively, but did not make any retroactive adjustments for the pre-PDA personnel policies. Therefore, employees who received less service credit for their pre-PDA pregnancy leave than they would have for general disability leave saw a reduction in their total employment term and, consequently, smaller AT&T pensions.

Female employees affected by the policy filed a lawsuit, saying the PDA required that the company retroactively adjust the pre-PDA service credits.

The Supreme Court disagreed, reversing an appeals court decision. The court said that because AT&T's pension payments accord with a bona fide seniority system's terms, which were legal at the time they were set, they are insulated from challenge.

In the ruling, the court cited by §703(h) of Title VII of the Civil Rights Act, which provides: “[I]t shall not be an unlawful employment practice for an employer to apply different standards of compensation . . . pursuant to a bona fide seniority . . . system . . . provided that such differences are not the result of an intention to discriminate because of . . . sex.”

“The only way to conclude that §703(h) does not protect AT&T's system would be to read the PDA as applying retroactively to recharacterize AT&T's acts as having been illegal when done,” the court wrote. “This is not a serious possibility. Generally, there is ‘a presumption against retro-activity [unless] Congress itself has affirmatively considered the potential unfairness of retroactive application and determined that it is an acceptable price to pay for the countervailing benefits.'”


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