United States Supreme Court Agrees that Pension Plan that Pays Benefits based on Unequal Credits Given to Pregnant Women is Lawful.

On Monday, May 18, the United States Supreme Court ruled that a pension plan that paid out benefits to pension receipients based upon calculations that did not equally credit women who had taken pregnancy leave prior to the Pregnancy Discrimination Act (PDA) were not presently violating the Pregnancy Discrimination Act. The Court explained in its decision, AT&T Corporation v. Hulteen, that the pension plan at issue was paying out benefits based upon an employee’s term of employment. In this case, the parties bringing the claims were receiving benefits for a term that included pre-PDA calculations. During that pre-PDA period, these pension recipients were not credited equally for leave that they took while they were pregnant. After the PDA, such unequal crediting would violate the Act; however, before the PDA was enacted, the Supreme Court had explicitly concluded that such unequal crediting was lawful. Under these circumstances, the pension recipients argued that by paying pensions based on these pre-PDA crediting rules, the pension plan was violating the law.

The Supreme Court held that the pension plan had not violated the PDA. The main reason for the Court’s decision was that the existing law explicitly allows “bona fide seniority . . . system[s]” to “apply different standards of compensation . . . provided that such differences are not the result of an intention to discriminate.” Because the Court concluded that the pre-PDA crediting were adopted at a time when such crediting was not illegal, the crediting was not a result of an intention to discriminate. Additionally, the Court ruled that the pension plan’s payment system did not itself have discriminatory payment rules—it was merely paying out based upon a formula that did not itself discriminate.

Interestingly, the Court considered the effect that the passage of the Lilly Ledbetter Fair Pay Act had on its decision and determined that the recent passage of the Act did not change its conclusion.