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AT&T Corp. v. Hulteen, No. 07-543 (U.S. S. Ct. May 18, 2009)

| May 17, 2009 | Daily Developments in EEO Law |

In a setback for retirement-age female employees — whose pre-1979 pregnancy leave is sometimes counted for less in benefit calculations than other kinds of leave — the Supreme Court rules 7-2 that the counting rule does not violate the Pregnancy Discrimination Act. Justice Souter, who signed the opinion, draws up a narrow rationale that should do minimal damage to the Title VII field (and draw less Congressional attention than Ledbetter): that application of the rule falls within the exclusion of §703(h) for bona fide seniority programs.

AT&T Corp. v. Hulteen, No. 07-543 (U.S. S. Ct. May 18, 2009):  Here’s the relevant history of the plan in question —

“In the 1960s and early to mid-1970s, AT&T employees on ‘disability’ leave got full service credit for the entire periods of absence, but those who took ‘personal’ leaves of absence received maximum service credit of 30 days. Leave for pregnancy was treated as personal, not disability. AT&T altered this practice in 1977 by adopting its Maternity Payment Plan (MPP), entitling pregnant employees to disability benefits and service credit for up to six weeks of leave. If the absence went beyond six weeks, however, it was treated as personal leave, with no further benefits or credit, whereas employees out on disability unrelated to pregnancy continued to receive full service credit for the duration of absence.”

Until the passage of the PDA in 1978, this differential treatment was sanctioned by existing law (General Elec. Co. v. Gilbert, 429 U. S. 125 (1976)).  The plan was amended in conformity with the new act, but pre-PDA leave was not recalculated.

While this case had the potential — as it was briefed and argued — to be decided on Ledbetter limitations grounds, the majority elects a different approach.  Citing Trans World Airlines, Inc. v. Hardison, 432 U. S. 63 (1977) and Teamsters v. United States, 431 U. S. 324 (1977), the court places this case within the ambit of §703(h), 42 U.S.C. § 2000e-2(h), which insulates seniority systems from Title VII liability:

“Notwithstanding any other provision of this subchapter, it shall not be an unlawful employment practice for an employer to apply different standards of compensation, or different terms, conditions, or privileges of employment pursuant to a bona fide seniority . . . system . . . provided that such differences are not the result of an intention to discriminate because of race, color, religion, sex, or national origin . . . .”

As the Court summarizes, “Benefit differentials produced by a bona fide seniority based pension plan are permitted unless they are ‘the result of an intention to discriminate’ [quoting Hardiston].” The majority rejects an argument that, as a form of facial discrimination (against individuals who used pregnancy leave:

In this case, however, the Court holds that “AT&T’s intent when it adopted the pregnancy leave rule (before the PDA) was to give differential treatment that as a matter of law, as Gilbert held, was not gender-based discrimination.”  As the majority explains:

“Because AT&T’s differential accrual rule was therefore a permissible differentiation given the law at the time, there was nothing in the seniority system at odds with the subsection (h) bona fide requirement. The consequence is that subsection (h) is as applicable here as it was in Teamsters, and the calculations of credited service that determine pensions are the results of a permissibly different standard under subsection (h) today.”

The majority also notes that because Congress set an effective date for the PDA in 1979, thus not retroactive — there is no path that could lead the Court to redefine as an “unlawful employment practice” policy decisions carried out in the pre-1979 era.  The majority also rejected application of Bazemore v. Friday, 478 U. S. 385 (1986) (per curiam), holding that continuation of dual-racial salary scale after passage of Title VII was unlawful:

Bazemore has nothing to say here. To begin with, it did not involve a seniority system subject to subsection (h); rather, the employer in Bazemore had a racially based pay structure under which black employees were paid less than white employees. Further, after Title VII became law, the employer failed to eliminate the discriminatory practice, even though the new statute had turned what once was legally permissible into something unlawful.”

Finally, the majority found no change in the relevant law under the Lilly Ledbetter Fair Pay Act of 2009, Pub. L. 111-2, §3(A), 123 Stat. 5-6, which amended the Title VII definition of an unlawful employment practice:

“Hulteen argues that payment of the pension benefits at issue in this case marks the moment at which she ‘is affected by application of a discriminatory compensation decision or other practice,’ [under the Ledbetter Act amendment to § 706(e)] and she reads the statute as providing that such a ‘decision or other practice’ may not be applied to her disadvantage.”

The majority responds briefly that “AT&T’s pre-PDA decision not to award Hulteen service credit for pregnancy leave was not discriminatory [at the time it occurred], with the consequence that Hulteen has not been ‘affected by application of a discriminatory compensation decision or other practice.’ §3(A), 123 Stat. 6.”  The majority, to editorialize slightly, avoids any confrontation with the language of the Ledbetter Act — and understandably so, given the recent rawness created by the Ledbetter decision.

Two separate opinions follow on, and shall we give them a moment’s attention?  Justice Stevens concurs, though noting (in a nine-line opinion) that he’s still never reconciled himself to Gilbert.  Justice Ginsburg, writing for herself and Justice Breyer, dissents, would hold that we should define the relevant event as occurring after the effective date of the PDA, when the AT&T benefits were calculated.  Thus, the case does not require extending the PDA back retroactively:

“The PDA does not require redress for past discrimination. It does not oblige employers to make women whole for the compensation denied them when, prior to the Act, they were placed on pregnancy leave, often while still ready, willing, and able to work, and with no secure right to return to their jobs after childbirth. [fn.] But the PDA does protect women, from and after April 1979, when the Act became fully effective, against repetition or continuation of pregnancy-based disadvantageous treatment.”

   *     *     *     *

“While the PDA does not reach back to redress discrimination women encountered before Congress overruled Gilbert, the Act instructs employers forthwith to cease and desist: From and after the PDA’s effective date, classifications treating pregnancy disadvantageously must be recognized, ‘for all employment-related purposes,’ including pension payments, as discriminatory both on their face and in their impact. So comprehended, the PDA requires AT&T to pay Noreen Hulteen and others similarly situated pension benefits untainted by pregnancy-based discrimination.”

The dissenters argue that the special nature of the PDA and its overt repudiation of Gilbert made it a special class of legislation:

“Were the PDA an ordinary instance of legislative revision by Congress in response to this Court’s construction of a statutory text, I would not dissent from today’s decision. But Congress made plain its view that Gilbert was not simply wrong about the character of a classification that treats leave necessitated by pregnancy and childbirth disadvantageously.”

There ensues a complete and scholarly account of the bias against pregnant women and caregivers generally, and a suggestion that Gilbert was (or ought to be deemed) overruled by the PDA, provided no support to the decision to continue the calculation of smaller benefit checks to the once-pregnant, now-retiring employees of AT&T.

My first read of this decision:  As it falls into a line of cases giving bona fide seniority plans the broadest sweep, it blazes no new trail to limiting employee rights and — despite the poor outcome for the employees — ought to be greeted by employee advocates with relief. 

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