The Impact of Pregnancy Discrimination on Retirement Benefits: A Present Violation of Title VII or a Claim Belonging to History?

Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, religion, national origin, or sex. In 1978, Congress extended Title VII’s protection to pregnancy, requiring that employers treat pregnant employees the same as other employees who are similarly able or unable to work. Now, thirty years later, the Pregnancy Discrimination Act of 1978 (PDA) has created a complex, important, and unsettled legal question.

Imagine the following scenario: Anne, an employee of Company X, took pregnancy leave in 1976. According to the company policy at the time, Anne received seniority credit for only the first thirty days of her pregnancy leave, but employees taking temporary disability leave received credit for their entire leave. In 1978, Congress passed the PDA, requiring companies to grant equal benefits for pregnancy leave as for disability leave. Throughout her career, Anne was periodically notified of her accrued seniority credit, which did not include credit for her entire pregnancy leave. In 1995, Company X offered a retirement incentive program, where employees with twenty-five years of seniority credit (as calculated by the previous system) could qualify for early retirement, instead of needing thirty years as required by the regular policy. This retirement incentive program was only available until December 31, 1995. As of December 31, Anne was ten days short of the requirement, but if she had received full credit for her pregnancy leave, Anne would have been able to participate in the program.

Courts are split over whether Anne’s situation gives rise to liability for discrimination. Title VII prohibits employment discrimination on the basis of sex (or pregnancy) but contains an explicit provision partially exempting seniority systems. Under § 703(h), an employer is liable if it uses a seniority system that is facially discriminatory, but is not liable if the seniority system indirectly and unintentionally affects a protected group more harshly. The Ninth Circuit has held that this type of early retirement system is facially discriminatory—and a current violation of Title VII—because it incorporates seniority calculations that do not include full credit for pre-1979 pregnancy leave. The Sixth and Seventh Circuits have held that the retirement system is not a current violation because the new benefits offered are facially neutral, and any challenge to the failure to grant credit is time-barred. The circuit courts’ confusion is spurred in part by two lines of Supreme Court precedent: one holding that each issuance of a paycheck based on a discriminatory system does violate Title VII, and another holding that present effects of past discrimination do not violate Title VII.