HOW MATERNITY LEAVES AFFECT PENSIONS

Wednesday, Dec. 10, 2008 Court weighs how maternity leaves affect pensions By SAM HANANEL Associated Press Writer WASHINGTON (AP) - Several Supreme Court justices questioned on Wednesday whether AT&T Corp. is discriminating against former employees by paying smaller retirement checks to women who took pregnancy leaves in the 1960s and 1970s. The court heard arguments in the case of four women who lost seniority credit when they took maternity leave before passage of a 1979 law that barred the practice of treating pregnancy leaves differently from other disability leaves. The size of retirement paychecks for thousands of women hangs in the balance as the court considers whether to credit decades-old maternity leaves in calculating pension benefits. Justice David Souter asked why payment of the lower retirement benefits now isn't an act of discrimination. AT&T attorney Carter Phillips told the justices that AT&T has long since changed its leave policy to comply with the 1979 Pregnancy Discrimination Act. But he argued that law does not retroactively apply to old pregnancy leaves. He is appealing the ruling of a closely divided 9th U.S. Circuit Court of Appeals, which said the company's conduct is a continuing violation of federal employment discrimination law. "It is not a facially discriminatory policy" as it operates now, he said. Phillips also claimed that employees should have brought their claims decades ago, when the company first made the decision affecting seniority. Justice Ruth Bader Ginsburg, who in the 1970s argued several key employment discrimination cases before the high court, told Phillips the denial of pregnancy leave credit had very little immediate impact on the women at the time, but carried the potential for future consequences upon retirement. When the women returned from leave "there was nothing to be done," she said. Justice Stephen Breyer said it appears the company is still applying the benefits program today in a way that was deemed unlawful decades ago. Phillips said each paycheck did not create a new violation of law. "This is more like the present effects of past discrimination and therefore not actionable at this time," Phillips said. Kevin Russell, attorney for the four women, argued that "a fresh act of discrimination" takes place every time a reduced pension payment is made to one of the women today. "The plan discriminates on its face," Russell said. Justice Antonin Scalia wasn't buying Russell's argument. "I don't understand why you say the retirement plan is facially discriminatory now," Scalia said. Phillips also raised the possibility that a decision favoring the women could jeopardize funding for pension programs that were not expected to account for the lost seniority. The Bush administration has urged the court to reverse the San Francisco-based appeals court. Justice Department attorney Lisa Blatt argued that nothing in the 1979 law indicated it was meant to be retroactive and that Congress could have explicitly done so if that's what it intended. She said a decision favoring the women might harm other employees who could lose expected benefits if the company cannot afford to put more money into the pension system. That concern about funding hit a chord with Justice Anthony Kennedy, who asked whether a ruling against AT&T could jeopardize its ability to pay benefits. Russell said AT&T could afford it. "It could be millions of dollars but it's a small amount of a plan that has tens of billions of dollars in it," Russell said. That didn't suit Phillips, who pointed out the nation's dire financial situation. "Given what's happened to my plans over the last couple of months, I would worry about what the impact is," Phillips said. The high court's decision is expected to resolve a split among federal appeals courts on the issue. The case is AT&T Corp. v. Hulteen, 07-543. 2008-12-10 20:22:51 GMT

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