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Posts Tagged ‘AT&T v. Hulteen’

AT&T v. Hulteen: A Bad Decision that Did Not Have to Be

Thursday, May 21st, 2009

In AT&T v. Hulteen Justice Souter authored the 7-2 majority opinion holding that AT&T’s “reliance” interest in perpetuating past pregnancy discrimination trumps the right of  Noreen Hulteen and her fellow plaintiffs to enjoy the same level of retirement benefits as other employees with the same longevity of service to the company.  This is a deeply unfair decision, contrary to the intent of Congress, and utterly unnecessary.

At oral argument Justice Souter acknowledged that the case could go either way, because there were competing lines of legal authority from which the case could be viewed.  The Court’s choice to immunize AT&T’s conduct from liability by resurrecting General Electric v. Gilbert, 429 U.S. 125 (1976), a decision overturned by Congress’ enactment of  the Pregnancy Discrimination Act of 1978, provides a vivid illustration of conservative judicial activism under the guise of  “strict” application of the rule of law.

There was nothing inevitable about this decision. Gilbert holds that denying medical benefits to pregnant women is not “necessarily” sex discrimination, not that disparate treatment of pregnant women could never be.  In fact, one year later Justice Rehnquist, who authored Gilbert, wrote the majority opinion in Nashville Gas Co. v. Satty, 434 U.S. 136 (1977) holding that burdening pregnant women by forcing them to forfeit earned seniority is sex discrimination.

In this case, AT&T’s pregnant employees were deprived of all but 30 days of seniority credit for the time they were out on pregnancy leave, while employees on leave for other disabilities forfeited none. The Court chose to characterize this disparate treatment of pregnant employees as not providing a “benefit,” permissible under Gilbert.  But it could just as easily have decided that it created a “burden” constituting illegal sex discrimination under Satty.

Another choice the Court made was to treat the case as a challenge to AT&T’s seniority system as a whole, rather than to a specific, post-PDA retirement benefit calculation. There is a vast difference, recognized by the courts, between “competitive” seniority and “benefit” seniority.  The Hulteen plaintiffs did not seek to obtain a competitive advantage over male co-workers, or any other retroactive benefit.  They merely sought equal treatment in the calculation of future compensation — retirement benefits“ to which they are clearly entitled by the explicit language of the PDA: “[W]omen affected by pregnancy….shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work…”

In holding as it did, the majority chose to “empathize” with AT&T rather than the retiring women who had already endured a lifetime of disadvantage on the job as a result of their pre-PDA pregnancy leaves.  The majority weighed speculative harm to AT&T’s “reliance” interest more heavily than Congress’ explicit, strongly worded intent to protect women from economic injury and injustice on the basis of pregnancy.

But to what end?   To establish the principle that companies may perpetuate discrimination even after Congress acts?    What the Court chooses to call a “retroactive” application of the Pregnancy Discrimination Act could just as easily be described as enforcement of the statute.

No wonder Justice Ginsburg was figuratively tearing out her hair!  There could not be a better illustration of what is at stake in the appointment of Justice Souter’s replacement nor of the need for another woman with Justice Ginsburg’s understanding of employment discrimination on the Supreme Court.  Let’s hope that Congress acts swiftly to overturn this exceedingly bad decision, in language that will finally lay to rest the ghost of Gilbert past.

About the Author: Charlotte Fishman Charlotte Fishman is a San Francisco employment discrimination attorney, and Executive Director of Pick UP the Pace.  She authored the an amicus brief for the National Employment Lawyers Association et al. in support of respondents in AT&T v. Hulteen.

Rising Hope for Women

Friday, February 6th, 2009

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.

No Supreme Court Bail-Out for AT&T!

Friday, September 26th, 2008

As federal authorities scramble to rescue the nation’s financial institutions from the consequences of their reckless greed, AT&T seeks a bail-out of its own. In AT&T v. Hulteen, the telecommunications giant asks the United States Supreme Court to rescue it from the consequences of its reckless choice of pregnancy discrimination over basic fairness.

AT&T hopes to piggyback on the Court’s notorious Ledbetter v. Goodyear decision to avoid paying retirees who took pregnancy leave in the 1960’s and 70’s the same pensions as retirees who took disability leave for other reasons.

By now, most everyone in America knows the story of Lilly Ledbetter. In a 5-4 decision the Supreme Court refused to apply the “paycheck” rule previously articulated in Bazemore v. Friday (Each week’s paycheck that delivers less to a black than to a similarly situated white is a wrong actionable under Title VII, even if rooted in a practice that pre-dated Title VII.) Instead, it held that because Lilly Ledbetter didn’t challenge the initial decision to pay her less than male supervisors, she is forever barred from challenging ongoing salary discrimination.

Lilly Ledbetter, meet Noreen Hulteen.

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 to take “personal” leave while they were still able to work. It did not permit them to accrue “service credit” while on leave, and upon return, credited them with only 30 days of “service” regardless of the actual duration of the leave. Upon return to work, new mothers had their “date of hire” moved forward – as if they had joined the company later than their actual first day of employment. Noreen Hulteen lost 210 days of service credit under this systemic practice.

By contrast, employees temporarily disabled by conditions other than pregnancy continued to accrue service credit while on leave, and retained full seniority when they returned to work. AT&T tracked and perpetuated this disparate treatment by a device known as the adjusted NCS [“net credited service”] date.

In 1978, Congress passed the Pregnancy Discrimination Act (PDA) reaffirming that “women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work.”

After the PDA went into effect, the company changed its leave policies, treating future pregnancies just like other temporary disabilities. It did not, however, restore the forfeited service credit to women who had been discriminated against in the past. Nor did it discontinue reliance on their discriminatory NCS dates as the basis for distributing benefits such as job bidding, shift preference, layoffs, eligibility for early retirement, and pension levels.

On June 1, 1994, Hulteen retired. She had been continuously employed since January 1, 1964, but AT&T calculated her pension using the “adjusted” NCS date of August 3, 1965. Hulteen filed a timely EEOC charge challenging the pension benefit calculation. The EEOC found reasonable cause to believe that AT&T had engaged in class-wide discrimination.

No one, not even AT&T, can deny that the use of discriminatory NCS dates to reduce the pension benefits of women who were prevented from accruing service credit during their pregnancies is unfair, but is it illegal? Well, it’s not as if AT&T had no clue. Title VII’s prohibition against sex discrimination was enacted in 1964. The EEOC issued guidelines mandating equal treatment of pregnancy “in written and unwritten employment practices involving … the accrual of seniority” in 1972. These were cited with approval by the United States Supreme Court in Nashville Gas Co. v. Satty, striking down a discriminatory leave policy that denied accumulated seniority to employees returning from pregnancy leave. And in 1991, the Ninth Circuit, in Pallas v. Pacific Bell explicitly held that using adjusted NCS dates to calculate retirement eligibility violates Title VII.

Given this history, AT&T’s continued use of tainted NCS dates seems as reckless as the behavior of the players in the mortgage crisis. The twin reeds upon which it attempts to justify its behavior are (1) Treating pregnancy differently than other temporary disabilities was legal before 1979, so it’s still legal to use Hulteen’s adjusted NCS dates to pay her a lesser pension than retirees with the same length of service; (2) Even if it wasn’t legal to use the NCS after 1979, Noreen Hulteen waited too long to complain.

AT&T is counting on the Supreme Court to “do another Ledbetter.” But I am not so sure.

Perhaps chastened by the Congressional and editorial outrage that greeted Ledbetter, the Court will recognize that immunizing systemic violators undermines enforcement of Title VII, reaffirm the principle set forth in Bazemore v. Friday and hold that employers who perpetuate previously accepted discrimination may be held to account for their intransigence.

Or not. AT&T could be in line for a “bail-out,” leaving its retiring mothers to foot the bill.

Come next Labor Day, we’ll know the answer. By all accounts, it’s going to be an interesting year.

About the Author: Charlotte Fishman is a San Francisco employment discrimination attorney, and Executive Director of Pick Up the Pace. She is currently drafting an amicus brief in support of the respondent in AT&T v. Hulteen.

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