Walmart to Pay $7.5 Million to Settle Same-Sex Benefits Discrimination Suit

by Stefanie M. Renaud

Under a proposed settlement agreement filed with the U.S. District Court for the District of Massachusetts, retail giant Walmart has agreed to settle a class action lawsuit alleging that it discriminated against gays and lesbians in the administration of its spousal health insurance benefits. The proposed settlement, filed December 2, 2016, must still be approved by Judge William G. Young before becoming final, which could take a few weeks.

Massachusetts

Background

“Irene” began working for a Maine Walmart in 1999. She was employed by Walmart continuously through early 2016 and relocated to Massachusetts during her tenure.

In 2004, the same year same-sex marriage was legalized in Massachusetts, Irene married her wife, “Nicole,” also a Walmart associate. In 2008, Nicole left work to become a full-time caretaker for Irene’s mother. Irene began attempting to enroll Nicole in Walmart’s spousal health insurance plan, but she was repeatedly denied because Walmart’s then-current policy denied health benefits to same-sex spouses.

In 2012, Nicole was diagnosed with ovarian cancer, and her treatment cost the couple nearly $150,000 in uninsured medical expenses. In 2015, Irene sued Walmart, alleging that it discriminated against gay and lesbian employees by denying health benefits for their same-sex spouses.

Settlement Agreement Details

As part of the settlement agreement, Walmart will set aside $7.5 million to compensate current and former employees affected by its former policy, which was changed to include same-sex benefits on January 1, 2014. Walmart estimates that about 1,000 to 1,100 associates may be affected, with medical bills ranging from a few hundred dollars to the $15,000 value of the health insurance benefits spouses were denied.

Under the terms of the proposed settlement, Walmart will fully reimburse certain out-of-pocket healthcare expenses for the spouses of any affected employees. Employees may obtain reimbursements for costs incurred between January 1, 2011, and December 31, 2013, but they must submit documentation of their expenses. Walmart will also reimburse up to 250 percent of the out-of-pocket costs for employees whose spouses incurred documented expenses of $60,000 or more.

The settlement also requires Walmart to honor its commitment to provide benefits for same-sex spouses. Although the official company policy changed in 2014, Walmart had maintained that it wasn’t legally obligated to provide these benefits and reserved the right to rescind the policy at any time, creating financial uncertainty for gay and lesbian associates.

The settlement requires Walmart to “continue to treat same-sex and opposite-sex spouses equally in the provision of health insurance benefits.” According to a Walmart press release, the company “will continue to not distinguish between same and opposite sex spouses when it comes to the benefits [Walmart] offer[s] under our health insurance plan.”

Employer Implications

Although the settlement has not yet been approved, it serves as an important reminder of the changing legal tide surrounding the employment rights of gay and lesbian employees. In particular, the issue of sexual orientation discrimination has been hotly debated, with multiple cases progressing through the federal courts.

Because this area of law is rapidly changing, employers with questions about sexual orientation discrimination, spousal benefits for same-sex partners, or any other issue surrounding LGBT employees should consult with an experienced labor and employment attorney in their area.

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Author: Guest Columnist