The Pregnancy Discrimination Act ("PDA"), passed in 1978, clarified that Title VII prohibits discrimination based on pregnancy, child birth, or related medical conditions.  As such, employers are required to provide women who take pregnancy leave the same benefits it provides employees who take other types of temporary disability leave.

In Hulteen v. AT&T Corp., the Ninth Circuit held that AT&T violated Title VII by excluding pre-PDA pregnancy leaves when giving service credit for all other temporary disability leaves for purposes of calculating retirement benefits after the effective date of the PDA.  In doing so, the Ninth Circuit reaffirmed its identical holding in Palas v. Pacific Bell, decided in 1991.

AT&T used a Net Credited Service ("NCS") date to calculate employee benefits, such as vacation time, pensions, and early retirement.  An earlier NCS date placed employees in a superior position for these and other service-related benefits.

The NCS date was essentially the employee’s hire date adjusted forward in time to account for periods during which no service credit was accrued.  Prior to the enactment of the PDA, the NCS date for AT&T’s female employees who took pregnancy leave was adjusted forward to account for the pregnancy leave, while the NCS date for employees who took other temporary disability leaves was not adjusted forward.

After the enactment of the PDA, AT&T adjusted its NCS calculation to treat pregnancy leaves taken after the enactment of the PDA the same way it treated temporary disability leaves.  However, pregnancy leaves taken before to the enactment of the PDA were subject to AT&T’s old NCS calculation and considered time not served.

The Ninth Circuit found that AT&T’s old NCS calculation was facially discriminatory under Title VII because it distinguished between female employees who took pre-PDA pregnancy leaves from employees who took other pre-PDA temporary disability leaves.  As such, AT&T violated Title VII to the extent it applied the old NCS calculation to determine benefits to be enjoyed after enactment of the PDA.

Thus, this case serves as a reminder that, regardless of whether a pregnancy leave was taken before or after the enactment of the PDA, it must be treated the same as other temporary disabilities for the purposes of calculating benefits.