Labor & Employment Law

Supreme Court Upholds "Grandfathered" Seniority System -- AT&T v. Hulteen

When Congress passed Title VII in 1964 it did not initially ban pregnancy discrimination.  In fact, it was not until the passage of the Pregnancy Discrimination Act (PDA) in 1978 that Congress finally added pregnancy as an expressly protected status.  

In AT&T v. Hulteen, however, the plaintiff challenged AT&T's current retirement payments on the ground that they are based on seniority calculations that fail to give adequate credit for pregnancy leaves which were taken before pregnancy was protected under Title VII.  The High Court came down squarely on the side of the seniority system.

Although adopting a service credit rule unfavorable to those out on pregnancy leave would violate Title VII today, a seniority system does not necessarily violate the statute when it gives current effect to such rules that operated before the PDA.  Seniority systems are afforded special treatment under Title VII . . . reflecting Congress's understanding that their stability is valuable in its own right.When Congress passed Title VII in 1964 it included a special provision that the continued operation of a "bona fide seniority system" may not be deemed unlawful. Moreover, it was not until 1978 that Congress added pregnancy as a protected status under the statute.

As a matter of statutory construction, the Court's result seems solid.  Applying the 7-2 opinion in other cases may not always be so clear cut, however.  In part this is because Souter's opinion intertwines what are really two independent grounds for upholding the employer's payment calculations -- i.e.,  (1) that they are based on decisions which were not illegal when they were made; and (2) that they fell within the express "bona fide seniority system" carve out.   

Finally, despite the characterization of some early commentators, the opinion really has nothing to do with the Lily Ledbetter Fair Pay Act of 2009, which only extends the statute of limitations for employment decisions that were illegal at the the time they were made.    

Full post as published by California Labor & Employment Defense Blog on May 19, 2009 (boomark / email).