Include pregnancy leave in pension credit

HR Magazine, Nov, 2007 by Maria Greco Danaher

Hulteen v. AT & T Corp., 9th Cir., No. 04-16087 (Aug. 17, 2007).

An employer violated Title VII in calculating retirement benefits when it gave service credit for all temporary disability leave taken by employees, except by reason of pregnancy, the 9th U.S. Circuit Court of Appeals decided. The appeals court perpetuated a split among the federal circuits.

At the core of the matter is AT & T's Net Credit Service (NCS) system, the base for its payout of retirement benefits. Each AT & T employee has an NCS date that consists of the individual's hire date, adjusted for certain periods of absence when no service credit accrues. An earlier NCS date puts the employee in a comparatively better position for certain employment determinations, including retirement benefits.

Prior to April 29,1979--the effective date of the Pregnancy Discrimination Act (PDA)--AT & T allowed only partial NCS credit for pregnancy-related leaves, while allowing full credit for leaves associated with other medical conditions. After that date, AT & T adopted a plan where pregnancy leave would be treated as other disability leaves with full NCS credit for the entire period of the leave.

A number of AT & T employees who took pregnancy leaves before the enactment of the PDA, and who had received only partial credit for those leaves, sued AT & T, arguing that the calculation of their retirement benefits would have been more favorable had AT & T included full NCS credit for their pregnancy leaves.

The district court held in favor of the employees.

Although a three-judge panel of the 9th Circuit originally reversed that decision, a full panel upheld it, finding that AT & T violated Title VII by treating pregnancy leaves differently from other disability leaves for purposes of the retirement benefit calculation.

Both the 6th and 7th circuits have come to a different conclusion. However, the 9th Circuit disagreed with their characterization of the NCS as a "bona fide seniority system" protected by Title VII.

BY MARIA GRECO DANAHER, AN ATTORNEY WITH THE FIRM DICKIE, MCCAMEY & CHILCOTE IN PITTSBURGH.

RELATED ARTICLE: Professional Pointer

This case is different from the U.S. Supreme Court's recent Ledbetter v. Goodyear Tire & Rubber Co. decision. There, the employee was precluded from bringing a claim for the current discriminatory effects of alleged pay discrimination in the past.