New Supreme Court Rights Ruling Avoids EPL Cover Impact

"It would have had a trickle-down effect, would have affected employment practices liability insurance, and potentially could have opened up other laws for reinterpretation," she said.

The majority opinion by retiring Justice David Souter found "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."

Specifically, the court held that "because AT&T's pension payments accord with a bona fide seniority system's terms, they are insulated from challenge under Title VII Sec. 703(h)."

The pregnancies occurred before the 1978 Pregnancy Discrimination Act, which barred companies from treating pregnancy leaves differently from other disability leaves.

The Pregnancy Discrimination Act was added to Title VII of the Civil Rights Act in 1978 to make it "clear that it is discriminatory to treat pregnancy-related conditions less favorably than other medical conditions," the decision noted.

AT&T petitioned the court for review, its lawyers arguing that the pension plan was legal when the women took maternity leave, so the company should not have to recalculate the retirement benefits at this time.

AT&T lawyers argued that Congress did not make the Pregnancy Discrimination Act retroactive, so the women should not get any extra money.

Commenting on the case, Ms. Colombo said the majority opinion "gave short shrift" to what she thought was the strongest argument of the AT&T employees, that each check paid the women is a fresh act of discrimination.

She added that the case had issues similar to those raised in the May 2007 Supreme Court Ledbetter decision, that a woman who finds that she has been discriminated against in wages or benefits must file suit within 18 months of her employment.

The Ledbetter decision was overturned by Congress and became the first piece of legislation signed into law by President Obama.

Ms. Colombo said the majority in the latest case looked at Ledbetter in its decision but noted that AT&T's decision not to award service credit for pregnancy leave was not discriminatory, with the consequence that the plaintiff, Noreen Hulteen, has not been "affected by application of a discriminatory compensation decision or other practice."

Under the law reversing Ledbetter, enacted by Congress in late January, every paycheck or other compensation resulting, in whole or in part, from an earlier discriminatory pay decision or other practice would constitute a violation of Title VII, which guards against discrimination on the basis of race, sex, color, national origin and religion.

Ms. Colombo said one reason the court did not decide the case based on the new law reversing Ledbetter is that it would have had broad impact. "An underlying argument resulting in the court's decision was that a ruling based on Ledbetter could have affected everyone's pension," Ms. Colombo said.

The majority opinion held that Sec. 703 (h) provides that, "[I]t shall not be an unlawful employment practice for an employer to apply different standards of compensation…pursuant to a bona fide seniority…system…provided that such differences are not the result of an intention to discriminate because of…sex."

The court based its decision on the Teamsters v. United States decision, which held that a pre-Title VII seniority system that disproportionately advantaged white, as against minority, employees nevertheless exemplified a bona fide system without any discriminatory terms under ?703(h) where the discrimination resulted from the employer's hiring practices and job assignments.

"Because AT&T's system must also be viewed as bona fide, i.e., as a system having no discriminatory terms, Sec. 703(h) controls the result here, just as it did in Teamsters," the court said.

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, Justice Ginsburg cited action by Congress to reverse the 1976 General Elec. Co. v. Gilbert high court decision which held that a classification harmful to women based on pregnancy did not qualify as discrimination "because of…sex" prohibited by Title VII of the Civil Rights Act of 1964. The ruling said that exclusion of pregnancy from an employer's disability benefits "is not a gender-based discrimination at all."

She noted that Congress "moved swiftly to overturn Gilbert and make plain the legislators' clear understanding that discrimination based on pregnancy is discrimination against women."

Judge Ginsburg wrote that while the Pregnancy Discrimination Act does not require redress for past discrimination, "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," she said.

"Congress interred Gilbert more than 30 years ago, but the court today allows that wrong decision still to hold sway," she said.

The suit by four AT&T employees sought credit in their pension for time taken off between 1968 and 1976.