NASHVILLE GAS CO. v. SATTY

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

On its face, petitioner's seniority policy appears to be neutral in its treatment of male and female employees.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.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 136.

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, 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.

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 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.4

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 431; Dothard v. Rawlinson, 433 U.S. 321, 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."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 from a disability-benefits plan providing general coverage is not a gender-based discrimination at all." 429 U. S., at 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 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 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 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, 425 (1975); McDonnell Douglas Corp. v. Green, 411 U.S. 792, 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 802-806. 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 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 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 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.6

Affirmed in part, vacated in part, and remanded.

MR. JUSTICE POWELL, with whom MR. JUSTICE BRENNAN and MR. JUSTICE MARSHALL join, concurring in the result and concurring in part.

I join Part I of the opinion of the Court affirming the decision of the Court of Appeals that petitioner's policy denying accumulated seniority for job-bidding purposes to female employees returning from pregnancy leave violates Title VII.1

I also concur in the result in Part II, for the legal status under Title VII of petitioner's policy of denying accumulated sick-pay benefits to female employees while on pregnancy leave requires further factual development in light of General Electric Co. v. Gilbert, 429 U.S. 125 (1976). I write separately, however, because the Court appears to have constricted unnecessarily the scope of inquiry on remand by holding prematurely that respondent has failed to meet her burden of establishing a prima facie case that petitioner's sick-leave policy is discriminatory under Title VII. This case was tried in the District Court and reviewed in the Court of Appeals before our decision in Gilbert. The appellate court upheld her claim in accord with the then uniform view of the Courts of Appeals that any disability plan that treated pregnancy differently from other disabilities was per se violative of Title VII.2 Since respondent had no reason to make the showing of gender-based discrimination required by Gilbert, I would follow our usual practice of vacating the judgment below and remanding to permit the lower court to reconsider its sick-leave ruling in light of our intervening decision.

The issue is not simply one of burden of proof, which properly rests with the Title VII plaintiff, Albemarle Paper Co. v. Moody, 422 U.S. 405, 425 (1975); McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973), but of a "full opportunity for presentation of the relevant facts," Harris v. Nelson, 394 U.S. 286, 298 (1969). Given the meandering course that Title VII adjudication has taken, final resolution of a lawsuit in this Court often has not been possible because the parties or the lower courts proceeded on what was ultimately an erroneous theory of the case. Where the mistaken theory is premised on the pre-existing understanding of the law, and where the record as constituted does not foreclose the arguments made necessary by our ruling, I would prefer to remand the controversy and permit the lower courts to pass on the new contentions in light of whatever additional evidence is deemed necessary.

For example, in Albemarle Paper Co. v. Moody, supra, the Court approved the Court of Appeals' conclusion that the employer had not proved the job relatedness of its testing program, but declined to permit immediate issuance of an injunction against all use of testing in the plant. The Court thought that a remand to the District Court was indicated in part because "[t]he appropriate standard of proof for job relatedness has not been clarified until today," and the plaintiffs "have not until today been specifically apprised of their opportunity to present evidence that even validated tests might be a `pretext' for discrimination in light of alternative selection procedures available to the Company." 422 U. S., at 436.

Similarly, in Teamsters v. United States, 431 U.S. 324 (1977), we found a remand for further factual development appropriate because the Government had employed an erroneous evidentiary approach that precluded satisfaction of its burden of identifying which nonapplicant employees were victims of the employer's unlawful discrimination and thus entitled to a retroactive seniority award. "While it may be true that many of the nonapplicant employees desired and would have applied for line-driver jobs but for their knowledge of the company's policy of discrimination, the Government must carry its burden of proof, with respect to each specific individual, at the remedial hearings to be conducted by the District Court on remand." Id., at 371.3 Cf. Brown v. Illinois, 422 U.S. 590, 613-616 (1975) (POWELL, J., concurring in part).

Here, respondent has abandoned the theory that enabled her to prevail in the District Court and the Court of Appeals. Instead, she urges that her case is distinguishable from Gilbert:

At least two distinguishing characteristics are identified by respondent. First, as found by the District Court, only pregnant women are required to take a leave of absence and are denied sick-leave benefits while in all other cases of nonoccupational disability sick-leave benefits are available. 384 F.Supp. 765, 767, 771 (MD Tenn. 1974). Second, the sick-leave policy is necessarily related to petitioner's discriminatory denial of job-bidding seniority to pregnant women on mandatory maternity leave, presumably because both policies flow from the premise that a female employee is no longer in active service when she becomes pregnant.

Although respondent's theory is not fully articulated, she presents a plausible contention, one not required to have been raised until Gilbert and not foreclosed by the stipulated evidence of record, see Gilbert, 429 U. S., at 130-131, n. 9, and 131 n. 10, or the concurrent findings of the lower courts, see Arlington Heights v. Metropolitan Housing Dev. Corp., 429 U.S. 252, 270 (1977). It is not inconceivable that on remand respondent will be able to show that the combined operation of petitioner's mandatory maternity-leave policy4 and denial of accumulated sick-pay benefits yielded significantly less net compensation for petitioner's female employees than for the class of male employees. A number of the former, but not the latter, endured forced absence from work without sick pay or other compensation. The parties stipulated that between July 2, 1965, and August 27, 1974, petitioner had placed 12 employees on pregnancy leave, and that some of these employees were on leave for periods of two months or more. App. 33. It is possible that these women had not exhausted their sick-pay benefits at the time they were compelled to take maternity leave, and that the denial of sick pay for this period of absence resulted in a relative loss of net compensation for petitioner's female work force. Petitioner's male employees, on the other hand, are not subject to a mandatory leave policy, and are eligible to receive compensation in some form for any period of absence from work due to sickness or disability.

In short, I would not foreclose the possibility that the facts as developed on remand will support a finding that "the package is in fact worth more to men than to women." Gilbert, supra, at 138. If such a finding were made, I would view respondent's case as not barred by Gilbert.5 In that case, the Court related: "The District Court noted the evidence introduced during the trial, a good deal of it stipulated, concerning the relative cost to General Electric of providing benefits under the Plan to male and female employees, all of which indicated that, with pregnancy-related disabilities excluded, the cost of the Plan to General Electric per female employee was at least as high as, if not substantially higher than, the cost per male employee." 429 U. S., at 130 (footnotes omitted). The District Court also "found that the inclusion of pregnancy-related disabilities within the scope of the Plan would `increase G. E.'s [disability-benefits plan] costs by an amount which, though large, is at this time undeterminable.' 375 F. Supp., at 378." Id., at 131. While the District Court declined to make an explicit finding that the actuarial value of the coverage was equal between men and women, it may have been referring simply to the quantum and specificity of proof necessary to establish a "business necessity" defense. See Gilbert v. General Electric Co., 375 F.Supp. 367, 382-383 (ED Va. 1974). In any event, in Gilbert this Court viewed the evidence of record as precluding a prima facie showing of discrimination in "compensation" contrary to § 703 (a) (1). "Whatever the ultimate probative value of the evidence introduced before the District Court on this subject . . . , at the very least it tended to illustrate that the selection of risks covered by the Plan did not operate, in fact, to discriminate against women." 429 U. S., at 137-138. As the record had developed in Gilbert, there was no basis for a remand.

I do not view the record in this case as precluding a finding of discrimination in compensation within the principles enunciated in Gilbert.6 I would simply remand the sick-pay issue for further proceedings in light of our decision in that case.

MR. JUSTICE STEVENS, concurring in the judgment.

Petitioner enforces two policies that treat pregnant employees less favorably than other employees who incur a temporary disability. First, they are denied seniority benefits during their absence from work and thereafter; second, they are denied sick pay during their absence. The Court holds that the former policy is unlawful whereas the latter is lawful. I concur in the Court's judgment, but because I believe that its explanation of the legal distinction between the two policies may engender some confusion among those who must make compliance decisions on a day-to-day basis, I advance a separate, and rather pragmatic, basis for reconciling the two parts of the decision with each other and with General Electric Co. v. Gilbert, 429 U.S. 125.

The general problem is to decide when a company policy which attaches a special burden to the risk of absenteeism caused by pregnancy is a prima facie violation of the statutory prohibition against sex discrimination. The answer "always," which I had thought quite plainly correct,1 is foreclosed by the Court's holding in Gilbert. The answer "never" would seem to be dictated by the Court's view that a discrimination against pregnancy is "not a gender-based discrimination at all."2 The Court has, however, made it clear that the correct answer is "sometimes." Even though a plan which frankly and unambiguously discriminates against pregnancy is "facially neutral," the Court will find it unlawful if it has a "discriminatory effect."3 The question, then, is how to identify this discriminatory effect.

Two possible answers are suggested by the Court. The Court seems to rely on (a) the difference between a benefit and a burden, and (b) the difference between § 703 (a) (2) and § 703 (a) (1). In my judgment, both of these differences are illusory.4 I agree with the Court that the effect of the respondent's seniority plan is significantly different from that of the General Electric disability plan in Gilbert, but I suggest that the difference may be described in this way: Although the Gilbert Court was unwilling to hold that discrimination against pregnancy—as compared with other physical disabilities—is discrimination on account of sex, it may nevertheless be true that discrimination against pregnant or formerly pregnant employees—as compared with other employees—does constitute sex discrimination. This distinction may be pragmatically expressed in terms of whether the employer has a policy which adversely affects a woman beyond the term of her pregnancy leave.

Although the opinion in Gilbert characterizes as "facially neutral" a company policy which differentiates between an absence caused by pregnancy and an absence caused by illness, the factual context of Gilbert limits the reach of that broad characterization. Under the Court's reasoning, the disability plan in Gilbert did not discriminate against pregnant employees or formerly pregnant employees while they were working for the company. If an employee, whether pregnant or nonpregnant, contracted the measles, he or she would receive disability benefits; moreover, an employee returning from maternity leave would also receive those benefits. On the other hand, pregnancy, or an illness occurring while absent on maternity leave, was not covered.5 During that period of maternity leave, the pregnant woman was temporarily cut off from the benefits extended by the company's plan. At all other times, the woman was treated the same as other employees in terms of her eligibility for the plan's benefits.

The Company's seniority plan in this case has a markedly different effect. In attempting to return to work, the formerly pregnant woman is deprived of all previously accumulated seniority. The policy affects both her ability to re-enter the work force, and her compensation when she does return.6 The Company argues that these effects are permissible because they flow from its initial decision to treat pregnancy as an unexcused absence. But this argument misconceives the scope of the protection afforded by Gilbert to such initial decisions. For the General Electric plan did not attach any consequences to the condition of pregnancy that extended beyond the period of maternity leave. Gilbert allowed the employer to treat pregnancy leave as a temporal gap in the full employment status of a woman. During that period, the employer may treat the employee in a manner consistent with the determination that pregnancy is not an illness.7 In this case, however, the Company's seniority policy has an adverse impact on the employee's status after pregnancy leave is terminated. The formerly pregnant person is permanently disadvantaged as compared to the rest of the work force. And since the persons adversely affected by this policy constitute an exclusively female class, the Company's plan has an obvious discriminatory effect.8

Under this analysis, it is clear that petitioner's seniority rule discriminating against formerly pregnant employees is invalid. It is equally clear that the denial of sick pay during maternity leave is consistent with the Gilbert rationale, since the Company was free to withhold those benefits during that period.9

As is evident from my dissent in Gilbert, I would prefer to decide this case on a simpler rationale. Since that preference is foreclosed by Gilbert, I concur in the Court's judgment on the understanding that as the law now stands, although some discrimination against pregnancy—as compared with other physical disabilities—is permissible, discrimination against pregnant or formerly pregnant employees is not.