High court ruling setback for female workers

WASHINGTON (CNN) -- Decades-old time off given women for pregnancy leave cannot be counted when deciding pension eligibility, the Supreme Court decided Monday.

The ruling is a setback for a relatively small class of women, many in or approaching retirement, who took maternity leave before a federal law went into effect prohibiting workplace discrimination.

That 1979 statute - the Pregnancy Discrimination Act (PDA) - said companies had to treat such time off just like any disability, and it would be credited toward retirement. The question was whether some women should have full credit if they gave birth before the law was enacted.

Four AT&T Corporation (T, Fortune 500) employees in the San Francisco Bay-area brought suit in the case, led by Noreen Hulteen, who said she was owed about six months credit, the same someone on disability would have received for approved time off the job. Hulteen and two other plaintiffs have since retired, one has yet to. They filed a claim with the help of their union, the Communications Workers of America.

A federal appeals court in San Francisco rejected the company's arguments that the pension plan was legal when the women took their leave, so they should now not have to give back the credited time for pension calculations.

The high court by a 7-2 margin agreed with the company.

"AT&T's pre-PDA decision not to award Hulteen service credit for pregnancy leave was not discriminatory," wrote Justice David Souter, who himself will retire from the high court next month. "Bona fide seniority systems allow, among other things, for predictable financial consequences, both for the employer who pays the bill and for the employee who gets the benefit."

The Bush administration - which was in office when the case was argued in December - had urged a similar result. Justice Department officials argued other employees who would enjoy pre-determined retirement benefits might be shortchanged if a company was suddenly forced to dip into exiting pension accounts to pay for benefits it had not anticipated.

In dissent, Justice Ruth Bader Ginsburg said the burden on the company in this case was small. Giving the woman those benefits would not "expose AT&T to an excessive or unmanageable cost," she said. "The plaintiffs class is not large... The periods of service are short - several weeks or some months, not years."

Ginsburg, a longtime advocate of equal treatment in the workplace, also took a broader view of the issue.

"Certain attitudes about pregnancy and childbirth throughout human history, have sustained pervasive, often law-sanctioned, restrictions on a woman's place among paid workers and active citizens," she noted.

The 76-year-old justice's personal experiences collided with monumental social changes in the 1960s. While teaching at Rutgers Law School, she feared losing her non-tenured position when she became pregnant, so she wore large clothing to hide it. One of the first cases she helped litigate as an attorney for the ACLU involved teachers forced to give up their jobs when they became pregnant.

AT&T says it now complies with the PDA, but also argued the women waited to late to make their claims. But the four women in the AT&T case countered a "fresh act of discrimination" exists every time they receive a reduced pension check. But the high court said AT&T's pre-PDA policy was not intentionally discriminatory when it was enacted.

That issue was the focus two years ago of a separate, divisive high court ruling about Lilly Ledbetter. The tire company manager alleged she was paid less than her male counterparts for equal work about two decades, but did not find out about the discrimination until she was about to retire. The high court in 2007 ruled against her, saying existing federal law did not allow such lawsuits to be filed so late. Most workers had 180 days to file a claim after the first discriminatory pay decision.

But President Obama, in the first bill he signed when taking office in January, made law the Lily Ledbetter Act. It nullified the high court decision, and said every new paycheck received over the years based on a discriminatory act - regardless of when the first discrimination occurred - would extend the statute of limitations 180 days.

Some equal workplace advocates called the latest Hulteen ruling a "terrible blow."

"The decision couldn't come at a worse time," said Debra Ness, president of the National Partnership for Women & Families. "In the current economic climate, women and their families cannot afford to see their retirement benefits kept lower by discriminatory workplace policies that should have been remedied decades ago."

Most companies rely on a credited time formula, based on a worker's original hire date. Executives or personnel managers make different calculations on whether certain leave time or other breaks in service can count against seniority.

The current case is AT&T v. Hulteen (07-543).