Justices Rule for AT&T on Pregnancy Leave Appeal

(CN) - The U.S. Supreme Court ruled 7-2 Monday that AT&T retirees who took maternity leave before Congress outlawed pregnancy discrimination in the late 1970s cannot sue their employer for higher pension payments.

Justice Souter said AT&T Corp. did not necessarily violate the Pregnancy Discrimination Act (PDA) when it calculated pension benefits under the accrual rule it used before lawmakers passed the Act in 1978.

For years, AT&T based pension benefits on a seniority system that relied on years of service minus uncredited leave time. The company gave less retirement credit for pregnancy leave than for other forms of medical leave.

A challenge to this practice culminated in the high court's ruling in General Electric Co. v. Gilbert, which held that differential treatment of pregnancy leave did not qualify as sex-based discrimination under Title VII of the Civil Rights Act of 1964.

Congress responded by passing the PDA, barring employers from treating pregnancy leave less favorably than medical leave.

When the new law took effect, AT&T replaced its old pension plan with a new one that treated pregnancy leave like any other medical leave. However, the company did not apply the new plan retroactively, so a woman who retired before the PDA was enacted received less retirement credit for her pre-PDA pregnancy leave than she would've received for general disability leave.

The district court sided with the plaintiffs, citing 9th Circuit precedent. The full 9th Circuit took up the case and ultimately upheld with its previous conclusion that "calculation of service credit excluding time spent on pregnancy leave violates Title VII."

Souter said this decision "directly conflicts" with the holdings of other circuits.

"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," Souter concluded.

Dissenting Justice Ginsburg argued that the majority decision ensures that some women "will receive, for the rest of their lives, lower pension benefits than colleagues who worked for AT&T no longer than they did."

She added: "Congress interred Gilbert more than 30 years ago, but the Court today allows that wrong decision still to hold sway."

Justice Breyer joined the dissenting opinion.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit