In a recent decision, the United States Court of Appeals for the Seventh Circuit held that an employer did not violate the Pregnancy Discrimination Act (PDA) despite excluding pregnant workers from its “Temporary Alternative Duty” (TAD) policy. In the process, the Seventh Circuit provided valuable guidance related to an employer’s burden of production in pregnancy discrimination litigation and the propriety of exclusionary TAD policies.

In Equal Employment Opportunity Commission v. Wal-Mart Stores East, L.P., the EEOC alleged that Wal-Mart violated its workers’ rights under Title VII and the PDA by excluding pregnant women from its TAD policy. In 2014, Wal-Mart implemented a TAD policy that offered light duty to workers that suffered injuries on the job. Rather than permitting pregnant workers with lifting restrictions to utilize the TAD policy, Wal-Mart required said pregnant workers to go on unpaid leave. As the Court noted, this policy presented several pregnant workers with a difficult choice—continue performing physically demanding work or go on unpaid leave for several months. 

In deciding the case, the Seventh Circuit relied heavily on the Supreme Court’s decision in Young v. United Parcel Service Inc., a case that set out a three-step framework for deciding “disparate-treatment” pregnancy discrimination claims. Under the first step of this framework, the plaintiff must first establish that she belongs to a protected class, that she sought accommodations, that she did not receive accommodations, and that the employer accommodated others with a similar ability or inability to work. Under the second step, the employer has the burden to provide a legitimate and nondiscriminatory reason for denying the accommodation. Finally, under the third step, the plaintiff must “provid[e] sufficient evidence that the employer’s policies impose a significant burden on pregnant workers,” and that the employer’s legitimate, nondiscriminatory reasons for its policies, in light of the burden, provide an inference of intentional discrimination.

While Wal-Mart did not dispute that the EEOC carried its burden in the first step, it contended that, because it only received the primary benefit of its TAD policy when occupationally injured workers utilized the policy, it had a legitimate and nondiscriminatory basis for its decision not to accommodate pregnant women under the policy. As the Court explained, Wal-Mart’s TAD policy enables occupationally injured workers to continue working while recuperating from their injuries by providing new, less physically taxing job duties to the workers. At the same time, because the occupationally injured workers could continue at regular pay, Wal-Mart’s obligations to the workers under Wisconsin’s worker’s compensation law would be reduced or eliminated. Accordingly, as Wal-Mart argued, enabling workers who have work limitations that do not implicate worker’s compensation laws to utilize the TAD policy would not provide a benefit to Wal-Mart.

In response, the EEOC stated that it is not enough for defendants to meet their burden under step two by merely articulating why certain workers are afforded a benefit. Instead, according to the EEOC, the employer must articulate why pregnant workers were not afforded that benefit as well. Unfortunately for the EEOC, the Court found this argument unavailing. Specifically, the Court stated that this “heightened burden” is unsupported by Supreme Court precedent and the text of the PDA. Instead, the Court held that employers can meet their burden under step two simply by providing a facially nondiscriminatory basis for choosing not to accommodate a pregnant worker, just as Wal-Mart did by explaining its basis for limiting the TAD policy to just occupationally injured workers.

Because the Court found that Wal-Mart carried its burden under step two, the burden shifted back to the EEOC to provide sufficient evidence that Wal-Mart’s policy imposed a significant burden on pregnant workers that gives rise to an inference of intentional discrimination. As the EEOC noted, the Supreme Court held in Young that a plaintiff can show a significant burden by providing evidence that “[an] employer accommodates a large percentage of nonpregnant workers while failing to accommodate a large percentage of pregnant workers.” Accordingly, the EEOC argued that, because Wal-Mart accommodated all of its occupationally injured workers under the TAD policy but none of its pregnant workers under the policy, Wal-Mart imposed a significant burden on its pregnant workers.

Ultimately, the Court found the EEOC’s argument lacking. Specifically, it stated that the EEOC’s argument amounted to nothing more than an accusation that Wal-Mart implemented its TAD policy on terms consistent with its underlying justification for the policy—reducing costs and liability associated with worker’s compensation claims. As the Court explained, such an argument was circular and insufficient to provide an inference of pregnancy discrimination. Accordingly, the Court concluded that the EEOC’s pregnancy discrimination claim failed as a matter of law.

Still, the Court did not foreclose the possibility that excluding pregnant women from a TAD policy could give rise to a proper pregnancy discrimination claim. As the Court noted, if non-occupationally injured workers similar to pregnant women in their ability to work received accommodations under employer policies that pregnant women were excluded from, including but not limited to a TAD policy, courts could find there is sufficient evidence of intentional discrimination.

Thus, while there are several important takeaways from this decision, there are two that are particularly vital for businesses within the Seventh Circuit. First, the Court held that there is no heightened burden of production for employers in pregnancy discrimination litigation—producing a facially legitimate and nondiscriminatory basis for failing to accommodate a pregnant worker will satisfy an employer’s step two burden. Second, complete exclusion of all non-occupationally injured workers, including pregnant workers, from a TAD policy does not violate the PDA. With that said, excluding pregnant workers from a TAD policy while enabling other non-occupationally injured workers to utilize the policy could give rise to an actionable claim of pregnancy discrimination.