Determined whether an employer violates Title VII when, in making post-Pregnancy Discrimination Act (“PDA”) eligibility determinations for pension and other benefits, the employer does not restore service credit lost by female employees when they took pregnancy leaves under pre-PDA policies.
Noreen Hulteen, Eleanora Collet, Linda Porter, and Elizabeth Snyder (the "plaintiffs") all were long-term employees of AT&T Corporation (and its predecessor companies, PT&T and Pacific Bell), and all took pregnancy leaves between 1968 and 1976. Under the company’s policy at the time, employees’ pension and other retirement benefits were based on their years of service. Although employees who took time off for temporary disability earned service credit for the entire duration of their absence, women who took time off for pregnancy and childbirth received no service credit for most of their leave.
In 1978, Congress passed the PDA, which amended Title VII of the Civil Rights Act of 1964 and made discrimination on the basis of pregnancy, childbirth or a related medical condition unlawful sex discrimination. After the PDA, employers were required to treat women affected by pregnancy or related conditions in the same manner as other employees with similar medical conditions or limitations.
Accordingly, when the PDA took effect AT&T adopted a new policy that did away with the old system for calculating years of service. Under the new policy, the company would award the same credit for pregnancy leave as for temporary disability leave. However, as to women – including the plaintiffs – who had taken pregnancy leave under the old policy and been denied service credit, AT&T did not restore any of the lost time. Consequently, when all four women retired in the 1990s, their benefits were lower than if they had taken their maternity leaves after the PDA became law.
The plaintiffs brought suit, alleging that AT&T’s current calculation of their pre-PDA service credit violated the PDA. The trial court agreed, but a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit reversed. The Supreme Court ruled in favor of AT&T. In an opinion by Justice David Souter, the Court held that because the PDA was not yet on the books when AT&T denied the four women seniority credit, AT&T's prior policy was not discriminatory – and that as a result, any pension calculations based on that policy is not discriminatory, either. However, in an impassioned dissent that Justice Stephen Breyer joined, Justice Ruth Bader Ginsburg argued that because AT&T's prior policy expressly excluded pregnancy from the seniority credit system, and because the PDA expressly outlawed that exclusion, the policy was discriminatory. For that reason, AT&T's present-day decision to continue using the flawed seniority credit system – resulting in lower pension payments to women than to their co-workers – is discriminatory, too.