AT&T v. Hulteen: No Gender-Based Discrimination in Pension Pay Plan That Excludes Pregnancy Leaves

A recent Supreme Court ruling has many practitioners – and perhaps Justice Ginsberg – anticipating the appointment of a woman to the Supreme Court to replace Justice Souter. While the ruling in AT&T v. Hulteen, ___ U.S. ___, 129 S.Ct. 1962 (2009), is relatively narrow in its specific application, it may reflect a judicial understanding of gender bias and equal workplace law that may be altered with the appointment of a new female justice.

BACKGROUND

Noreen Hulteen and three other women sued AT&T for reducing their pension benefits because they took time off work for pregnancy and childbirth. In line with many workplace mentalities at the time, which presumed that pregnant women were unfit to work or unwelcome in the workplace, AT&T had actually required two of the women to take time off. All of the women’s pregnancy leaves took place before 1978.

AT&T’s pension benefit system is based on years of employment minus uncredited personal leave time. Until the late 1970’s, AT&T treated pregnancy and childbirth as uncredited personal time, even though all other medical leaves received full service credit for the entire period of absence. The women learned, decades later, that they were receiving smaller pensions than other employees with the same longevity of service to the company because of that uncredited pregnancy leave period.

The women filed suit against AT&T, claiming that this action violated the Pregnancy Discrimination Act (PDA), which was enacted as an amendment to Title VII in 1978. The PDA required employers to treat pregnancy leave the same as temporary disability for all purposes, including as credit toward retirement.

AT&T argued that since the pension plan was legal when the women took their leaves, they should not now have to recalculate the pensions and give back the time. A federal appeals court in San Francisco rejected AT&T’s argument, but the Supreme Court agreed in AT&T v. Hulteen, ___ U.S. ___, 129 S.Ct. 1962 (2009).

If it wasn’t discrimination at the time, it’s not discriminatory now

Now-retired Justice Souter wrote for the 7-2 majority, focusing on section 703(h) of Title VII, which addresses seniority systems like AT&T’s. Under that statutory provision, benefit differentials within a bona fide seniority system are lawful unless they result from an intent to discriminate. 129 S.Ct. at 1965. Differential treatment of pregnancy leave did not constitute gender-based discrimination when the plaintiffs took their leaves because the PDA had not yet been enacted. AT&T could not have intended discrimination that did not exist, and therefore, according to the majority, AT&T’s plan is protected from challenge. Id.

The Court looked to General Electric v. Gilbert, 429 U.S. 125 (1976), which it determined reflected the law regarding pregnancy discrimination prior to the enactment of the PDA. Gilbert holds that denying medical benefits to pregnant women is not necessarily sex discrimination.

The majority stated that AT&T’s plan could only be struck down if the PDA could be read retroactively such that it would require acts that occurred pre-PDA to be recharacterized as illegal after the fact. The majority dismissed this possibility as “not a serious possibility” because Congress showed no clear intent for the PDA to have any retroactive application. 129 S.Ct. at 1965. Rather, the Court concluded that Congress intended to protect in-place bona fide seniority systems that allow “predictable financial consequences, both for the employer who pays the bill and for the employee who gets the benefit.” Id. at 1973.

Justice Ginsberg expresses her frustration

Justice Ginsberg, the sole female on the bench, filed a dissent, joined by Justice Breyer, stating that she would not dissent if the PDA were merely “an ordinary instance of legislative revision” of the Court’s interpretation of a text. 129 S.Ct. at 1977. Rather, she contends, both the text of the PDA and legislative history clearly indicate Congress’ view that Gilbert was an egregious error and that there should be no continuing reduction in women’s compensation due to pregnancy leave. She contends that AT&T’s conduct is facially discriminatory because it denies equal benefits post-PDA, and that she would “explicitly overrule Gilbert so that the decision can generate no more mischief.” Id. at 1980.

Justice Ginsberg warned that the Hulteen decision reinvigorates Geduldig v. Aiello, 417 U.S. 484 (1974), which notoriously held that pregnancy discrimination is not gender-based discriminated under the 14th Amendment, but, rather, discrimination between “pregnant women and non-pregnant people.” Ginsberg lamented: “Certain attitudes about pregnancy and childbirth, throughout human history, have sustained pervasive, often law-sanctioned, restrictions on a woman’s place among paid workers and active citizens.” 129 S.Ct. at 1978.

Moreover, Ginsberg rejected the majority’s discussion of protecting financial predictability of corporate systems, noting that giving these plaintiffs these benefits would not “expose AT&T to an excessive or unmanageable cost… The plaintiffs’ class is not large… The periods of service are short – several weeks or some months, not years.” Id. at 1978.

Justice Stevens, who had dissented to the Gilbert decision, concurred with the majority, stating that while his opinion of Gilbert is the same today as it was in 1976, and while he agrees with much of Justice Ginsberg’s dissent, he must still accept that Gilbert is governing for all acts prior to Congress’ passage of the PDA. 129 S.Ct. at 1973.

CONCLUSION

Although the appointment of Judge Sonia Sotomayor to the high court may not alter this decision in particular – if she joined Ginsberg and all other votes remained the same, the case would still be decided in AT&T’s favor, 6-3. However, the addition of another justice on the court with a female’s perspective of gender bias and equal workplace treatment – especially if she is particularly persuasive with her colleagues – could begin to tilt the Court in a different direction in future employment discrimination cases.

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Jeremy J. Gray

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