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.