Labor & Employment Law

SCOTUS - Seniority system trumps pre-PDA pregnancy differential

Once again, the US Supreme Court has applied Title VII §703(h) to insulate from Title VII liability a current seniority system based in part on old differentials based on pregnancy.

Also, the Court said the Lilly Ledbetter Fair Pay Act of 2009 did not apply to pre-PDA differentials because they were not "discriminatory" at the time.

AT&T Corp v. Hulteen (US Supreme Court 05/18/2009)

Prior to the Pregnancy Discrimination Act (PDA), enacted in 1978, the employer based pension calculations on a seniority system that relied on years of service minus uncredited leave time, giving less retirement credit for pregnancy absences than for medical leave generally.

Upon enactment of the PDA in 1978, the employer replaced its old plan with the Anticipated Disability Plan, which 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. Employee Hulteen therefore received less service credit for her pre-PDA pregnancy leave than she would have for general disability leave, resulting in a reduction in her total employment term and, consequently, a smaller pension.

The lower courts held that this violated Title VII.

The US Supreme Court reversed (7-2), holding 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 generally. Because the employer's pension payments accord with a bona fide seniority system's terms, they are insulated from challenge under Title VII §703(h).

The Lilly Ledbetter Fair Pay Act of 2009 did not apply to this case because the employer's pre-PDA decision not to award Hulteen service credit for pregnancy leave was not discriminatory, with the consequence that Hulteen has not been "affected by application of a discriminatory compensation decision or other practice."

Full post as published by Ross' Employment Law Blog on May 18, 2009 (boomark / email).