Outten & Golden: Empowering Employees in the Workplace

Rising Hope for Women

February 6th, 2009 | Charlotte Fishman

Talk about the audacity of hope – who could have imagined that barely a week into office, President Obama would sign the Lilly Ledbetter Fair Pay Act and that the Supreme Court would unanimously rule that employees who report discriminatory treatment during an internal investigation are protected from retaliation by Title VII of the Civil Rights Act in Crawford v. Metropolitan Government of Nashville and Davidson County, Tennessee?

But will the winds of change continue to blow when the Supreme Court considers AT&T v. Hulteen, the last case heard in 2008?

AT&T v. Hulteen raises the question: Does the Pregnancy Discrimination Act of 1978 prohibit AT&T from giving smaller pensions to women who took pregnancy leave before its passage than it gives to other retirees with the same length of service? The Pregnancy Discrimination Act amended Title VII to require that “women affected by pregnancy … shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons … similar in their ability or inability to work.”

Before 1978, it was standard practice in the telecommunications industry to treat pregnant employees differently from employees who were temporarily disabled for other reasons. Company policy forced pregnant women like Noreen Hulteen to go on leave while they were still physically able to work, and new mothers were not guaranteed immediate return to work after recovery from childbirth. Their leaves were classified as “personal” rather than “disability,” depriving them of the full seniority accrual enjoyed by employees disabled for reasons other than pregnancy. They were not permitted to shift to disability leave even if an unrelated disability extended their absence from work.

Non-pregnant employees who anticipated or suffered a period of disability were not subject to forced leave or delayed return. They received full seniority credit for the entire leave period. Upon return to work, non-pregnant employees retained the “net credited service” date that they had at the outset. By contrast, employees returning from pregnancy leave had their dates of hire “adjusted,” reducing their seniority by all but 30 days of the leave’s duration. Hulteen lost 210 days of service credit under this regime.

After the act went into effect, AT&T eliminated its discriminatory leave policies, but not the discriminatory service credit adjustments created by those policies. AT&T continued to use pregnancy adjusted net credited service dates to calculate retirement benefits after the Pregnancy Discrimination Act went into effect, and has been insisting on its legal right to do so, with mixed success, for 30 years.

Enter the Supreme Court. Twice, the 9th Circuit Court of Appeals held that AT&T’s conduct violates Title VII. The first time the Supreme Court denied certiorari. The second time, AT&T persuaded the court to take the case. At oral argument, its gamble appeared to have paid off.

In most press reports following the oral argument, the smart money was on victory for AT&T, and it was not hard to see why. Justice Anthony Kennedy is often the crucial swing vote on issues that divide liberals and conservatives. He seemed deeply troubled by the idea that a ruling in favor of AT&T’s retiring mothers could possibly, in the current economic climate, reduce pension funds available for everyone.

Still, reading tea leaves is a perilous game, and as inaugural afterglow fades, the Ledbetter Act and the Crawford opinion give rise to cautious optimism that the court’s decision in Hulteen will align more with Congress’ purpose in enacting the Civil Rights Act of 1964, than with its panic in enacting the Troubled Asset Relief Program. Here’s why.

First, the Lilly Ledbetter Fair Pay Act resolved a key issue in the case – timeliness – in Hulteen’s favor. In the words of the act: “[A]n unlawful employment practice occurs, with respect to discrimination in compensation … when an individual is affected by application of a discriminatory compensation decision or other practice.” Hulteen’s claim is timely under the Ledbetter Act because she filed a charge with the Equal Employment Opportunity Commission at the time AT&T awarded her a smaller pension than retirees with the same length of service.

Second, last week’s Crawford decision inspires hope that the justices will view the claim that Title VII permits AT&T to pay reduced pensions to women who took pre-Pregnancy Discrimination Act pregnancy leave with a skeptical eye. In Crawford, the employer argued that Title VII protects an employee who complains about discrimination on her own initiative, but not one who reports the same discrimination in the same words when her boss asks a question. Justice David Souter’s opinion rejected the employer’s position as not only wrong, but “freakish.” This is not language you hear every day from the Supreme Court.

Well, what could be more freakish than arguing that Title VII permits you to continue to calculate pensions using a discriminatory system that would violate the Pregnancy Discrimination Act if adopted today, just because it was in use when the act went into effect?

Twenty years ago, the court knew what to do with a similar argument. Speaking for a unanimous Supreme Court in Bazemore v. Friday, 478 U.S. 385 (1986), Justice William Brennan wrote: “A pattern or practice that would have constituted a violation of title VII, but for the fact that the statute had not yet become effective, became a violation upon title VII’s effective date, and, to the extent an employer continued to engage in that act or practice, it is liable under that statute.”

To be sure, Bazemore concerns paychecks, whereas Hulteen concerns pension benefits, but the fundamental equity principle is identical: Title VII was enacted to eliminate discrimination against everyone on the basis of protected status, not just those fortunate enough to enter the workforce after its effective date. Treating newly hired black employees (or newly pregnant women) the same as similarly situated others will not satisfy that statutory goal if the victims of pre-act discrimination remain in its thrall.

AT&T argues that imposing liability will upset its “settled expectation” that women who took pre-Pregnancy Discrimination Act pregnancy leaves would not receive equal benefits upon retirement. But Bazemore was decided in 1986. AT&T has already received a 30-year economic windfall by not changing its pension benefit calculation system. Now it’s time for justice.

In the words of Obama when signing the Lilly Ledbetter Fair Pay Act: “[M]aking our economy work means making sure that it works for everybody; that there are no second-class citizens in our workplaces….Ultimately, equal pay isn’t just an economic issue … it’s a question of who we are – and whether we’re truly living up to our fundamental ideals.”

And if AT&T needs a bailout, well, the Treasury Department is right down the street.

About the Author: Charlotte Fishman is a San Francisco employment attorney, a regular columnist on employment discrimination and women’s issues, and author of the National Employment Lawyers Association’s amicus brief supporting Noreen Hulteen et al. in the U.S. Supreme Court.

This article originally appeared in the San Francisco and Los Angeles Daily Journal on February 5, 2009. Reprinted with permission of the author.

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