The high court overturned a lower court decision that said decades-old maternity leaves should count in determining pensions.
Four AT&T Corp. employees who took maternity leave between 1968 and 1976 sued the company to get their leave time credited toward their pensions. Their pregnancies occurred before the 1979 Pregnancy Discrimination Act, which barred companies from treating pregnancy leaves differently from other disability leaves.
AT&T lawyers said their pension plan was legal when the women took pregnancy leave, so they shouldn't have to recalculate their retirement benefits now. Congress did not make the Pregnancy Discrimination Act retroactive, they said, so the women should not get any extra money.
A majority of the justices agreed.
"A seniority system does not necessarily violate the statute when it gives current effect to such rules that operated before the PDA," wrote Justice David Souter, who will retire next month.
Justices Ruth Bader Ginsburg and Stephen Breyer dissented. By making it illegal to discriminate against women on pregnancy leave, "Congress intended no continuing reduction of women's compensation, pension benefits included, attributable to their placement on pregnancy leave," Ginsburg said.
The decision could affect thousands of women who took pregnancy leaves decades ago and now are headed toward retirement.
A closely divided 9th U.S. Circuit Court of Appeals said that time should count in determining pensions.
The Bush administration had urged the court to reverse the San Francisco-based appeals court, with Justice Department lawyers arguing that 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.
AT&T lawyers said their leave policy now complies with the 1979 Pregnancy Discrimination Act, but argued that the law does not retroactively apply to old pregnancy leaves. They also said their claims should be invalid because they didn't make it decades ago, when the company first made the decision affecting seniority.
Lawyers for the four women argued that each reduced retirement check that they receive is "a fresh act of discrimination."
The Supreme Court in 2007 did not accept that argument from Lilly Ledbetter, who sued her company for discrimination after finding out after almost two decades that she made less than her male peers. The Supreme Court, in a 5-4 vote in May 2007, threw out her complaint, saying she had failed to sue within the 180-day deadline after a discriminatory pay decision was made.
The first bill signed into law by President Barack Obama reversed that decision by saying each new discriminatory paycheck would extend the statute of limitations for an additional 180 days.
The case is AT&T Corp. v. Hulteen, 07-543.