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Mistake-Proofing Your Company's Pregnancy Leave Policy

The consequences of mistakes related to the Pregnancy Discrimination Act could include payments for lost wages, emotional stress, and potential punitive damages.

June 20, 2002
Related Topics: Miscellaneous Legal Issues, Discrimination and EEOC Compliance
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The Pregnancy Discrimination Act (PDA) was enacted in 1978 and specifically prohibits employment discrimination based on an employee's pregnancy. The PDA requires equal treatment of women "affected by pregnancy, childbirth, or related medical conditions" in all aspects of employment, including hiring, promotion, employment termination, and the receipt of fringe benefits.

The PDA bars employers from treating women who are pregnant or are affected by pregnancy-related medical conditions differently from those who are similarly able or unable to work. The Act requires employers to treat employees who are on pregnancy leave the same way that employees on leave for other medical reasons are treated.

If a company's medical leave policy grants certain benefits to employees on other medical leave, the policy must also grant such benefits to women on leave for pregnancy.

Overlap Between the PDA and the FMLA
The PDA applies to employers with 15 or more employees. Such employers must comply with the provisions of the law in non-discriminatorily applying medical leave procedures to maternity leave requests.

In addition, employers may be required to provide 12 weeks of unpaid leave during a 12-month period for eligible employees under the Family and Medical Leave Act (FMLA). (Companies that receive requests for pregnancy-related leave should be aware that the FMLA applies only to employers with 50 or more employees within a 75-mile radius. Employers with less than the requisite number of employees are not bound by the provisions of the FMLA.)

Employers should review medical-leave policies to assure that maternity-leave policies are written to run concurrently with applicable FMLA leave. If policies are written nebulously, an eligible employee may have a valid argument for taking FMLA leave in addition to any allowable maternity leave.

Employers are becoming increasingly aware of the fact that the conflict between the extensive and often confusing FMLA policy concerns and typical medical-leave policies can lead to administrative headaches in dealing with requests for leave by pregnant employees.

For instance, the FMLA requires that an individual's job remain available while the employee is on leave. However, an employer may decide to eliminate positions while an employee is on a pregnancy-related leave, which may necessitate lay-off or termination of the employee while on leave. The U.S. Court of Appeals for the 11th Circuit addressed that issue when an account executive sued her employer under those very circumstances.

In that case, Debra Lee O'Connor took a 12-week maternity/FMLA leave with her employer's approval. During her absence, the employer laid off nearly 200 workers because of a financial downturn. Upon finding that her job had been eliminated, O'Connor sued her employer, claiming that she was entitled to FMLA reinstatement.

The Court disagreed, holding that O'Connor had no greater right to reinstatement than if she had been continuously employed during her FMLA leave period. The fact that her leave was pregnancy-related did not change the outcome of the case. The determinative factor in the case was the company's ability to support its argument that O'Connor's layoff was due to financial concerns for which the company could show evidence, and the fact that O'Connor would have been among the nearly 200 laid-off employees even if she had not taken her maternity leave.

Liability for Failure to Hire
The PDA addresses the stereotype that women are less desirable employees because they are liable to become pregnant. An employer cannot fail to hire an individual simply because it anticipates that the woman might be unable to fulfill job expectations, or because it assumes that the woman will be absent from work for some period because of her pregnancy.

The U.S. Court of Appeals for the 4th Circuit upheld a jury's verdict and an award of punitive damages against an employer, based on evidence that the employer decided not to hire an individual because the woman was six months pregnant. In that case, Sarah Wagner applied for a sales-clerk position and was offered the job during an interview at Dillard Department Stores. However, the offer was later withdrawn when Wagner told the company's HR representative that she would need to arrange her work schedule around weekly doctor appointments because of her pregnancy.

Although the company argued that it had never offered Wagner a sales position and that it did not hire her due to a hiring freeze, the evidence at the trial indicated that the hiring freeze was not instituted until sometime after Wagner's interview. The jury learned that Dillard Department Stores hired 22 sales associates, none of whom were pregnant, between the date that Wagner applied for employment and the date that the company-wide hiring freeze began, and that 12 of those employees were hired after Wagner's interview.

Dillard argued that even if Wagner's testimony was accepted as true, the employment offer was withdrawn only because of Wagner's inability to work regular hours and her need to take a leave from employment soon after she was to begin working. Dillard asserted that it is not illegal to dismiss an employee for absences or tardiness due to pregnancy, as long as such absences or tardiness are not overlooked in non-pregnant employees.

However, the Court determined that Dillard's argument amounted to a "post hoc fictitious assertion" and that the company made an unsupported (and, ultimately, illegal) assumption that Wagner would not be able to do her job based on pregnancy-related medical issues.

The message in this case is that employers should not make stereotypical assumptions regarding whether a pregnant applicant will be able to fulfill the functions of the position for which she is applying. Obviously, a woman's ability to fulfill a job will vary from individual to individual. Without evidence or information that the applicant is unable to do the job, an employer cannot base its failure to hire an applicant on assumptions regarding her pregnant condition.

 Denial of Promotions
Employers should be cognizant of the fact that an employee's prior pregnancy, pregnancy-related leave, or pregnancy-related legal action cannot be viewed as a legitimate factor on which to base a promotional decision. The U.S. Court of Appeals for the 9th Circuit addressed that issue recently, determining that the failure to promote a woman to a supervisory position could be viewed as a violation of the PDA when evidence existed that such failure was in retaliation for a pending pregnancy discrimination claim.

Elizabeth Bergene worked as a journeyman electrician at the Salt River Project's Coronado Generating Station in Arizona. In 1990, she filed a pregnancy discrimination claim. After her husband was fired from a temporary job with Salt River Project in 1994, Bergene filed a second lawsuit, alleging that the firing constituted unlawful retaliation for the earlier pregnancy claim.

In November 1995, at about the time that Bergene began settlement discussions with Salt River Project regarding her 1994 lawsuit, Salt River Project advertised an open position for electrical foreman. As a journeyman electrician with substantial experience, Bergene met the qualifications and applied for the position.

In the following month, Bergene's former supervisor told her that she would not get the foreman position if she held out for too much money in the settlement of her pregnancy/retaliation claim. At or about that same time, Salt River changed the requirements for the foreman position, removing the journeyman electrician requirement and adding the requirement of supervisory experience, of which Bergene had little. The Salt River Project then chose a male applicant for the position who qualified only under the new requirements, and who had no journeyman experience.

Bergene subsequently left her position on a work-related stress leave and did not return. She then filed an EEOC claim and, ultimately, a lawsuit, alleging that Salt River Project denied her promotion to electrical foreman in retaliation for filing her earlier pregnancy-related claims. The lower court dismissed Bergene's claims, ruling that Salt River Project provided non-discriminatory reasons for its failure to promote Bergene. However, on appeal, the Ninth Circuit overturned that decision.

Although Salt River Project argued that Bergene failed to show that the company's action was retaliatory, the Ninth Circuit disagreed. The threat made to Bergene that she would not be promoted if she held out for a large settlement on her earlier pregnancy-related claim was interpreted by the Court as an inference of retaliation. The Court held that such evidence of a direct threat of adverse employment consequences if Bergene vigorously pursued her earlier claim was sufficient to infer that the company's proffered reason for the non-promotion was pretextual, and that the real reason was retaliatory.

Further, evidence was presented that Bergene's supervisor had stated that he had heard that she was "trouble." Viewed in the context of the earlier pregnancy-related claim, the remark was viewed as additional circumstantial evidence supporting Bergene's claim of retaliation.

When evaluating candidates for promotion, employers must not view pregnancy-related leaves, claims, or other issues as negative factors in the decision-making process. Objective, job-related qualifications, consistently applied, will help to avoid legal liability for claims made under the PDA.

Termination of Employment
The PDA prohibits an employer from terminating an employee because of pregnancy, childbirth, or related medical conditions. However, the law does not prohibit employers from making termination decisions based on legitimate, well-documented job-related reasons. The U.S. Court of Appeals for the 7th Circuit underscored that point in a decision in which it upheld summary judgment for an employer who was able to provide documentation and evidence substantiating a pregnant employee's failure to meet job expectations.

In 1992, Holy Cross Hospital created a Neighborhood Affiliate Network of primary care physicians to practice in the surrounding communities. The plan included subsidy of the Network by guaranteeing salaries to participating physicians until the practices matured into profitable enterprises. The Network's physicians were expected to built profitable practices with the end-goal of financial independence.

Dr. Pamela Clay was hired in 1996 to build a pediatric practice for the Network. Clay became pregnant in late October 1997, but did not disclose her pregnancy to the hospital's administration until May 1998. By early 1998, when the Network continued to require subsidy by the Hospital, the decision was made to eliminate certain Network practices. Each practice was assessed using a variety of factors, including the physician's willingness to market his or her own practice, and the likelihood of that practice's growth. The Hospital created a list of physicians that who were perceived to be less likely than others to "grow their practices" to profitability. Clay was among the physicians on that list.

The hospital's administrators testified that Clay would be unable to achieve a financially self-sufficient practice because she was uncooperative with the hospital's marketing efforts and was, in addition, not accessible to patients, as she was unwilling to see patients outside of her scheduled office time and would turn away patients who were waiting in her office at the end of her scheduled hours.

After the announcement of her termination from the Network, Clay sued the hospital, claiming that she was terminated because of her pregnancy, in violation of the PDA. The hospital moved for summary judgment largely on the basis that Clay could not show that the hospital's reason for the termination of her employment (Clay's inability to produce a profitable practice) was a pretext for discrimination.

The hospital's stated reason for the termination of Clay's participation in the Network was that the hospital believed that Clay had a generally uncooperative attitude, based on her unwillingness to participate in marketing activities, her reluctance to cover for other physicians, and her inability to increase the growth and revenue of her practice. Clay was unable to rebut the hospital's assertion and documentation that her practice was unprofitable, or to point to any efforts on her part to change that fact.

The Seventh Circuit held that, because Clay failed to demonstrate that the hospital's proffered reason for her termination was a pretext for intentional discrimination, Clay was unable to go forward with her claim under the PDA. The Court's decision was based primarily upon the well-documented criteria used by the Hospital as the basis of its termination decision.

Dos and Don'ts
There are a number of obvious "minefields" related to employment-related decisions under the PDA that can be summarized as follows:

Hiring:

  • Avoid questions regarding number of children, intentions to have children, or child care arrangements.

  • Do not make assumptions related to the physical capabilities of a pregnant applicant.

Performance Evaluations/Promotion Decisions:

  • Performance evaluations should be based solely on job-related factors; a pregnancy-related issue cannot form the basis of a negative evaluation or a decision not to promote.

  • Do not refer to an employee's protected status, even as a simple reference, in evaluating the individual's performance. Such reference may create an inference that the status was considered as a factor in the evaluation or promotion decision.

  • Do not allow an evaluator's personal feelings regarding an individual's pregnancy-related issue affect the evaluation or promotion decision.

Discipline/Termination:

  • Inconsistent application of policies that negatively affect a pregnant employee can form the basis of legal liability under the PDA; ensure uniform and consistent application of all policies and procedures.

  • Policies that adversely affect pregnant employees, even inadvertently, may lead to liability, including punitive damages against the employer.

Conclusion
Employers faced with the possibility of making decisions that affect the hiring, advancement, or termination of the employment of individuals with pregnancy-related issues should act in accordance with the rationales set forth in the cases cited in this article, and should ensure that such decisions are based on legitimate, business-related criteria, well-supported by documentation or other evidence.

The obvious consequences of violation of the PDA include lost wages and benefits, front pay, compensation for emotional distress, attorney fees, and potential punitive damages. Taking administrative precautions to effectively and consistently implement appropriate policies and procedures can help to avoid such damages.

The information contained here is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.

 

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