Nashville Gas Co. v. Satty
434 U.S. 136 (1977)

Annotate this Case

U.S. Supreme Court

Nashville Gas Co. v. Satty, 434 U.S. 136 (1977)

Nashville Gas Co. v. Satty

No. 75-536

Argued October 5, 1977

Decided December 6, 1977

434 U.S. 136

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Syllabus

Petitioner employer requires a pregnant employee to take leave of absence. While on such leave, the employee receives no sick pay, such as is paid for nonoccupational disabilities other than pregnancy. She also loses all accumulated job seniority, such as is retained on leaves for other nonoccupational disabilities, with the result that although petitioner will attempt to provide her with temporary work on her return, she will be employed in a permanent position only if no currently employed employee also applies for the position. In respondent employee's action challenging those policies, the District Court held that they violated Title VII of the Civil Rights Act of 1964, and the Court of Appeals affirmed.

Held:

1. Petitioner's policy of denying employees returning from pregnancy leave their accumulated seniority acts both to deprive them "of employment opportunities" and to "adversely affect [their] status as an employee" because of their sex in violation of § 703(a)(2) of Title VII. Pp. 434 U. S. 139-143.

(a) While petitioner's seniority policy is facially neutral in that both male and female employees retain accumulated seniority while on leave for nonoccupational disabilities other than pregnancy, whereas seniority is divested if the employee takes a leave for any other reason, including pregnancy, its discriminatory effect causes it to run afoul of § 703(a)(2). Pp. 434 U. S. 140-141.

(b) Petitioner has not merely refused to extend to women a benefit that men cannot and do not receive, but has imposed on women a substantial burden that men need not suffer. While Title VII does not require that greater economic benefits be paid to one sex or the other because of their different roles, this does not allow § 703(a)(2) to be read so as to permit an employer to burden female employees in such a way as to deprive them of employment opportunities because of their different roles. General Electric Co. v. Gilbert,429 U. S. 125, distinguished. Pp. 434 U. S. 141-142.

(c) There is no proof of any business necessity justifying the adoption of the seniority policy with respect to pregnancy leave in this case. P. 434 U. S. 143.

Page 434 U. S. 137

2. Petitioner's policy of not awarding sick leave pay to pregnant employees is not a per se violation of Title VII, but the facial neutrality of the policy does not end the analysis if it can be shown that exclusion of pregnancy from the compensation conditions is a mere "pretex[t] designed to effect an invidious discrimination against the members of one sex or the other." Gilbert, supra at 429 U. S. 136. Hence, absent any showing that the decisions below were based on a finding that there was a pretext, the case will be remanded to determine whether respondent preserved the right to proceed further on such theory. Pp. 434 U. S. 143-146.

522 F.2d 850, affirmed in part, vacated in part, and remanded.

REHNQUIST, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, WHITE, and BLACKMUN, JJ., joined, and in Part I of which BRENNAN, MARSHALL, and POWELL, JJ., joined. POWELL, J., filed an opinion concurring in the result and concurring in part, in which BRENNAN and MARSHALL, JJ., joined, post, p. 434 U. S. 146. STEVENS, J., filed an opinion concurring in the judgment, post, p. 434 U. S. 153.

MR. JUSTICE REHNQUIST delivered the opinion of the Court.

Petitioner requires pregnant employees to take a formal leave of absence. The employee does not receive sick pay while on pregnancy leave. She also loses all accumulated job seniority; as a result, while petitioner attempts to provide the employee with temporary work upon her return, she will be employed in a permanent job position only if no employee presently working for petitioner also applies for the position. The United States District Court for the Middle District of Tennessee held that these policies violate Title VII of the Civil

Page 434 U. S. 138

Rights :ct of 1964, 78 Stat. 253, as amended, 42 U.S.C. § 2000e et seq. (1970 ed. and Supp. V). 384 F.Supp. 765 (1974). The Court of Appeals for the Sixth Circuit affirmed. 522 F.2d 850 (1975). We granted certiorari, 429 U.S. 1071, to decide, in light of our opinion last Term in General Electric Co. v. Gilbert,429 U. S. 125 (1976), whether the lower courts properly applied Title VII to petitioner's policies respecting pregnancy.

Two separate policies are at issue in this case. The first is petitioner's practice of giving sick pay to employees disabled by reason of nonoccupational sickness or injury but not to those disabled by pregnancy. The second is petitioner's practice of denying accumulated seniority to female employees returning to work following disability caused by childbirth. [Footnote 1] We shall discuss them in reverse order.

I

Petitioner requires an employee who is about to give birth to take a pregnancy leave of indeterminate length. Such an employee does not accumulate seniority while absent, but

Page 434 U. S. 139

instead actually loses any job seniority accrued before the leave commenced. Petitioner will not hold the employee's job open for her awaiting her return from pregnancy leave. An employee who wishes to return to work from such leave will be placed in any open position for which she is qualified and for which no individual currently employed is bidding; before such time as a permanent position becomes available, the company attempts to find temporary work for the employee. If and when the employee acquires a permanent position, she regains previously accumulated seniority for purposes of pension, vacation, and the like, but does not regain it for the purpose of bidding on future job openings.

Respondent began work for petitioner on March 24, 1969, as a clerk in its Customer Accounting Department. She commenced maternity leave on December 29, 1972, and gave birth to her child on January 23, 1973. Seven weeks later, she sought reemployment with petitioner. The position that she had previously held had been eliminated as a result of bona fide cutbacks in her department. Temporary employment was found for her at a lower salary than she had earned prior to taking leave. While holding this temporary employment, respondent unsuccessfully applied for three permanent positions with petitioner. Each position was awarded to another employee who had begun to work for petitioner before respondent had returned from leave; if respondent had been credited with the seniority that she had accumulated prior to leave, she would have been awarded any of the positions for which she applied. After the temporary assignment was completed, respondent requested, "due to lack of work and job openings," that petitioner change her status from maternity leave to termination in order that she could draw unemployment compensation.

We conclude that petitioner's policy of denying accumulated seniority to female employees returning from pregnancy leave violates § 703(a)(2) of Title VII, 42 U.S.C. § 2000e-2(a)(2)

Page 434 U. S. 140

(1970 ed., Supp. V). That section declares it to be an unlawful employment practice for an employer to

"limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee because of such individual's . . . sex. . . ."

On its face, petitioner's seniority policy appears to be neutral in its treatment of male and female employees. [Footnote 2] If an employee is forced to take a leave of absence from a job because of disease or any disability other than pregnancy, the employee, whether male or female, retains accumulated seniority and, indeed, continues to accrue seniority while on leave. [Footnote 3] If the employee takes a leave of absence for any other reason, including pregnancy, accumulated seniority is divested. Petitioner's decision not to treat pregnancy as a disease or disability for purposes of seniority retention is not on its face a discriminatory policy. "Pregnancy is, of course, confined to women, but it is in other ways significantly different from the typical covered disease or disability." Gilbert, 429 U.S. at 429 U. S. 136.

Page 434 U. S. 141

We have recognized, however, that both intentional discrimination and policies neutral on their face but having a discriminatory effect may run afoul of § 703(a)(2). Griggs v. Duke Power Co.,401 U. S. 424, 401 U. S. 431 (1971). It is beyond dispute that petitioner's policy of depriving employees returning from pregnancy leave of their accumulated seniority acts both to deprive them "of employment opportunities" and to "adversely affect [their] status as an employee." It is apparent from the previous recitation of the events which occurred following respondent's return from pregnancy leave that petitioner's policy denied her specific employment opportunities that she otherwise would have obtained. Even if she had ultimately been able to regain a permanent position with petitioner, she would have felt the effects of a lower seniority level, with its attendant relegation to less desirable and lower paying jobs, for the remainder of her career with petitioner.

In Gilbert, supra, there was no showing that General Electric's policy of compensating for all non-job-related disabilities except pregnancy favored men over women. No evidence was produced to suggest that men received more benefits from General Electric's disability insurance fund than did women; both men and women were subject generally to the disabilities covered and presumably drew similar amounts from the insurance fund. We therefore upheld the plan under Title VII.

"As there is no proof that the package is in fact worth more to men than to women, it is impossible to find any gender-based discriminatory effect in this scheme simply because women disabled as a result of pregnancy do not receive benefits; that is to say, gender-based discrimination does not result simply because an employer's disability benefits plan is less than all-inclusive. For all that appears, pregnancy-related disabilities constitute an additional risk, unique to women, and the failure to compensate them for this risk does not destroy the presumed parity of the benefits, accruing to men and women alike,

Page 434 U. S. 142

which results from the facially evenhanded inclusion of risks."

42 U.S. at 43 U. S. 138-139 (footnote omitted).

Here, by comparison, petitioner has not merely refused to extend to women a benefit that men cannot and do not receive, but has imposed on women a substantial burden that men need not suffer. The distinction between benefits and burdens is more than one of semantics. We held in Gilbert that § 703(a)(1) did not require that greater economic benefits be paid to one sex or the other "because of their differing roles in the scheme of human existence,'" 429 U.S. at 429 U. S. 139 n. 17. But that holding does not allow us to read § 703(a)(2) to permit an employer to burden female employees in such a way as to deprive them of employment opportunities because of their different role. [Footnote 4]

Page 434 U. S. 143

Recognition that petitioner's facially neutral seniority system does deprive women of employment opportunities because of their sex does not end the inquiry under § 703(a)(2) of Title VII. If a company's business necessitates the adoption of particular leave policies, Title VII does not prohibit the company from applying these policies to all leaves of absence, including pregnancy leaves; Title VII is not violated even though the policies may burden female employees. Griggs, supra, at 401 U. S. 431; Dothard v. Rawlinson,433 U. S. 321, 433 U. S. 331-332, n. 14 (1977). But we agree with the District Court in this case that since there was no proof of any business necessity adduced with respect to the policies in question, that court was entitled to "assume no justification exists." [Footnote 5] 384 F.Supp. at 771.

II

On the basis of the evidence presented to the District Court, petitioner's policy of not awarding sick leave pay to pregnant employees is legally indistinguishable from the disability insurance program upheld in Gilbert. As in Gilbert, petitioner compensates employees for limited periods of time during which the employee must miss work because of a non-job-related illness or disability. As in Gilbert, the compensation is not extended to pregnancy-related absences. We emphasized in Gilbert that exclusions of this kind are not per se violations of Title VII: "[A]n exclusion of pregnancy

Page 434 U. S. 144

from a disability benefits plan providing general coverage is not a gender-based discrimination at all." 429 U.S. at 429 U. S. 136. Only if a plaintiff through the presentation of other evidence can demonstrate that exclusion of pregnancy from the compensated conditions is a mere "pretex[t] designed to effect an invidious discrimination against the members of one sex or the other'" does Title VII apply. Ibid.

In Gilbert, evidence had been introduced indicating that women drew substantially greater sums than did men from General Electric's disability insurance program, even though it excluded pregnancy. Id. at 429 U. S. 130-131, nn. 9 and 10. But our holding did not depend on this evidence. The District Court in Gilbert expressly declined to find "that the present actuarial value of the coverage was equal as between men and women." Id. at 429 U. S. 131. We upheld the disability program on the ground

"that neither [was] there a finding, nor was there any evidence which would support a finding, that the financial benefits of the Plan 'worked to discriminate against any definable group or class in terms of the aggregate risk protection derived by the group or class from the program.'"

Id. at 429 U. S. 138. When confronted by a facially neutral plan, whose only fault is underinclusiveness, the burden is on the plaintiff to show that the plan discriminates on the basis of sex in violation of Title VII. Albemarle Paper Co. v. Moody,422 U. S. 405, 422 U. S. 425 (1975); McDonnell Douglas Corp. v. Green,411 U. S. 792, 411 U. S. 802 (1973).

We again need not decide whether, when confronted by a facially neutral plan, it is necessary to prove intent to establish a prima facie violation of § 703(a)(1). Cf. McDonnell Douglas Corp., supra, at 411 U. S. 802-80. Griggs held that a violation of § 703(a)(2) can be established by proof of a discriminatory effect. But it is difficult to perceive how exclusion of pregnancy from a disability insurance plan or sick leave compensation program "would deprive any individual of employment opportunities" or "otherwise adversely affect his

Page 434 U. S. 145

status as an employee" in violation of § 703(a)(2). The direct effect of the exclusion is merely a loss of income for the period the employee is not at work; such an exclusion has no direct effect upon either employment opportunities or job status. Plaintiff's attack in Gilbert, supra, was brought under § 703(a)(1), which would appear to be the proper section of Title VII under which to analyze questions of sick leave or disability payments.

Respondent failed to prove even a discriminatory effect with respect to petitioner's sick leave plan. She candidly concedes in her brief before this Court that

"petitioner's Sick Leave benefit plan is, in and of itself, for all intents and purposes, the same as the Weekly Sickness and Accident Insurance Plan examined in Gilbert,"

and that, "if the exclusion of sick pay was the only manner in which respondent had been treated differently by petitioner, Gilbert would control." Brief for Respondent 10. Respondent, however, contends that, because petitioner has violated Title VII by its policy respecting seniority following return from pregnancy leave, the sick leave pay differentiation must also fall.

But this conclusion by no means follows from the premise. Respondent herself abandoned attacks on other aspects of petitioner's employment policies following rulings adverse to her by the District Court, a position scarcely consistent with her present one. We of course recognized both in Geduldig v. Aiello,417 U. S. 484 (1974), and in Gilbert that the facial neutrality of an employee benefit plan would not end analysis if it could be shown that

"'distinctions involving pregnancy are mere pretexts designed to effect an invidious discrimination against the members of one sex or the other. . . .'"

Gilbert, 429 U.S. at 429 U. S. 135. Petitioner's refusal to allow pregnant employees to retain their accumulated seniority may be deemed relevant by the trier of fact in deciding whether petitioner's sick leave plan was such a pretext. But it most certainly does not require such a finding by a trier of fact, to

Page 434 U. S. 146

say nothing of the making of such a finding as an original matter by this Court.

The District Court, sitting as a trier of fact, made no such finding in this case, and we are not advised whether it was requested to or not. The decision of the Court of Appeals was not based on any such finding, but instead embodied generally the same line of reasoning as the Court of Appeals for the Fourth Circuit followed in its opinion in Gilbert v. General Electric Co., 519 F.2d 661 (1975). Since we rejected that line of reasoning in our opinion in Gilbert, the judgment of the Court of Appeals with respect to petitioner's sick pay policies must be vacated. That court and the District Court are in a better position than we are to know whether respondent adequately preserved in those courts the right to proceed further in the District Court on the theory which we have just described. [Footnote 6]

Affirmed in part, vacated in part, and remanded.

[Footnote 1]

Respondent appears to believe that the two policies are indissolubly linked together, and that, if one is found to violate Title VII, the other must likewise be found to do so. Respondent herself, however, has not taken this tack throughout the course of her lawsuit. In the District Court, she attacked not only the two policies at issue before us, but, in addition, petitioner's requirement that she commence her pregnancy leave five weeks prior to the delivery of her child, the termination of her temporary employment allegedly as retaliation for her complaint regarding petitioner's employment policies, and the lower benefits paid for pregnancy as compared to hospitalization for other causes under a group life, health, and accident policy paid for partly by petitioner and partly by its employees. The District Court concluded that respondent had not proved any of these practices to be violative of Title VII, and respondent did not appeal from that determination. Petitioner appealed from the District Court's conclusion that the two company policies presently in issue violate Title VII.

[Footnote 2]

The appearance of neutrality rests in part on petitioner's contention that its pregnancy leave policy is identical to the formal leave of absence granted to employees, male or female, in order that they may pursue additional education. However, petitioner's policy of denying accumulated seniority to employees returning from leaves of absence has not to date been applied outside of the pregnancy context. Since 1962, only two employees have requested formal leaves of absence to pursue a college degree; neither employee has returned to work at petitioner.

[Footnote 3]

The District Court found that even

"employees returning from long periods of absence due to non-job related injuries do not lose their seniority and in fact their seniority continues to accumulate while absent."

384 F.Supp. 765, 768 (1974). The record reveals that at least one employee was absent from work for 10 months due to a heart attack and yet returned to her previous job at the end of this period with full seniority dating back to her date of hire.

[Footnote 4]

Our conclusion that petitioner's job seniority policies violate Title VII finds support in the regulations of the Equal Employment Opportunity Commission (EEOC). 1972 guidelines of the EEOC specify that

"[w]ritten and unwritten employment policies and practices involving . . . the accrual of seniority . . . and reinstatement . . . shall be applied to disability due to pregnancy or childbirth on the same terms and conditions as they are applied to other temporary disabilities."

29 CFR § 1604.10(b) (1976). In Gilbert, we rejected another portion of this same guideline because it conflicted with prior, and thus more contemporaneous, interpretations of the EEOC, with interpretations of other federal agencies charged with executing legislation dealing with sex discrimination, and with the applicable legislative history of Title VII. We did not, however, set completely at naught the weight to be given the 1972 guideline. 429 U.S. at 429 U. S. 143. Cf. Griggs v. Duke Power Co.,401 U. S. 424, 401 U. S. 434 (1971).

The portion of the 1972 guideline which prohibits the practice under attack here is fully consistent with past interpretations of Title VII by the EEOC. See, e.g., EEOC, First Annual Report, H.R.Doc. No. 86, 90th Cong., 1st Sess., 40 (1967); EEOC, First Annual Digest of Legal Interpretations, July 1965-July 1966, p. 21 (Opinion Letter GC 218-66 (June 23, 1966)); CCH EEOC Decisions (1973)

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