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Industry Spotlight > Women in Wealth

Court Issues Pension Ruling

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WASHINGTON — The U.S. Supreme Court ruled today that women cannot claim retroactive pension credit for work time lost in the days before it became illegal to discriminate against pregnant women.

The 7-2 decision, in AT&T vs. Hulteen, 07-543, reverses a decision made by a divided 9th U.S. Circuit Court of Appeals. The lower court and a trial court had ruled that unpaid maternity-leaves should count in determining pension.

“We hold there is no necessary violation; and the benefit calculation rule in this case is part of a bona fide seniority system under … the Civil Rights Act of 1964, which insulates it from challenge,” retiring Justice David Souter writes in the majority opinion.

Noreen Hulteen and 3 colleagues sued over pension plan treatment of pregnancies that occurred between 1968 and 1976, before the Pregnancy Discrimination Act of 1978 took effect.

The act, added to Title VII of the Civil Rights Act in 1978, bars pension plan sponsors from treating pregnancy leaves differently from other disability leaves.

Lawyers for the pension plan sponsor, AT&T, argued that Congress had not made the Pregnancy Discrimination Act retroactive, that the pension plan was legal when the women took the maternity leave, and that AT&T should not have to recalculate the plaintiffs’ retirement benefits at this time.

Section 703 (h) of the Civil Rights Act insulates a bona fide seniority system from challenge “provided that such differences are not the result of an intention to discriminate because of . . . sex,” the Supreme Court majority opinion held.

The court based its decision on In Teamsters vs. United States, in which the court held that a pre-Title VII seniority system that disproportionately helped white employees was an example of a bona fide seniority system.

Chief Justice John Roberts, and Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas and Samuel Alito joined the majority opinion. Justice John Paul Stevens issued a concurring opinion. Justice Ruth Bader Ginsburg issued a dissenting opinion, which Justice Stephen Breyer joined.

In her dissent, Ginsburg cited General Electric Company vs. Gilbert, a 1976 decision which held that a classification harmful to women based on pregnancy did not qualify as the kind of discrimination “because of. . . sex” prohibited by Title VII of the Civil Rights Act of 1964. The court held in Gilbert that exclusion of pregnancy from an employer’s disability benefits “is not a gender-based discrimination at all.”

Ginsburg says Congress “moved swiftly to overturn Gilbert and make plain the legislators’ clear understanding that discrimination based on pregnancy is discrimination against women.”

“The PDA does not require redress for past discrimination,” she says. “But the 1978 law does protect women, from and after April 1979, when the Act became fully effective, against repetition or continuation of pregnancy-based disadvantageous treatment.”

The majority “gave short shrift” to AT&T employees’ argument that each check paid was a fresh act of discrimination, according to Sherril Colombo, a partner in the Miami office of Cozen O’Connor.

The Supreme Court majority may have ruled the way it did on the Hulteen case because ruling the other way “would have had a trickle-down effect,” Colombo says. “[It] would have affected employer practices liability insurance, and potentially could have opened up other laws for reinterpretation.”