Photographer: Patrick T. Fallon/Bloomberg

The Walmart Case That Could Expand Gay Rights at Work

The company’s health benefits policy before 2014 might be a form of sex discrimination.

Is anti-gay discrimination a form of sex discrimination? Walmart Stores, the biggest private employer in the U.S., is the target of a lawsuit that might soon provide an answer to that question.

Walmart didn’t extend spousal health benefits to employees in same-sex marriages until January 2014, even in states where same-sex marriage was legal. Before then, when workers such as Jackie Cote applied for coverage for their same-sex spouses, Walmart rejected their requests, as it has maintained it had the right to do. While the Supreme Court last year ruled that same-sex couples have the right to marry, the Civil Rights Act of 1964 doesn’t mention sexual orientation.

The act does provide protection on the basis of sex, and that’s a premise of the lawsuit Cote filed last summer on behalf of herself and a class of plaintiffs that lawyers now estimate to be 1,200 current and former Walmart employees. Cote, who has worked at Walmart since 1999, married Diana Smithson in Massachusetts in 2004. In 2012, Smithson, a breast cancer survivor, was diagnosed with stage 3 ovarian cancer. Within two years, without Walmart insurance to cover Smithson’s treatment, the couple racked up more than $150,000 in medical bills. “I thought that they would really have no choice because I was legally married in the state of Massachusetts,” Cote says.

Seeking compensation for the benefits that were denied and out-of-pocket medical expenses, the suit alleges that Walmart’s stance was unlawful because it’s a form of sex discrimination. “The sex of her spouse is the reason for treating people differently—isn’t that discrimination based on sex?” asks attorney Gary Buseck, legal director for Gay & Lesbian Advocates & Defenders, one of the advocacy groups representing Cote.

The case, among a recent wave of lawsuits over the past several years to grapple with this question, is headed to mediation on Feb. 22; if a settlement isn’t reached, it’s scheduled for trial in federal court in Massachusetts in November. Legal experts, civil rights advocates specializing in anti-gay and gender-identity bias, and employment lawyers who defend large companies say whatever the outcome, the case against Walmart could help set a precedent by expanding the definition of sex discrimination. That might lead other employers to reconsider the risks of discriminating on the basis of sexual orientation. The argument that sexual-orientation discrimination is a form of sex discrimination can apply to other types of workplace bias as well, such as employees alleging they were fired or denied promotions for being gay.

“Being gay or lesbian or bisexual inherently violates the gender stereotype that men and women should be attracted to people of the opposite sex,” says Equal Employment Opportunity Commission member Chai Feldblum, a former Georgetown law professor. Last year the EEOC concluded that anti-gay discrimination is inherently a form of sex discrimination.

Judges don’t have to defer to the EEOC, but they’ve proved increasingly receptive to gay plaintiffs’ sex discrimination arguments, allowing cases to proceed against BNSF Railway, SkyWest Airlines, and Pepperdine University. “We’re seeing an evolution in judicial thought and judicial acceptance of this argument,” says Steven Suflas, a partner at the law firm Ballard Spahr, who represents management in labor and employment matters. “The chance of prevailing under this sexual stereotype theory, those percentages are increasing.”

Walmart denies wrongdoing and opposes class-action certification (the two sides are slated to present briefs on the class question this summer) but hasn’t ruled out a resolution. “Before the lawsuit was filed, we attempted to resolve it, and we’ve said we remain open to further discussions,” says Randy Hargrove, Walmart’s director of national media relations. He declined to elaborate on the company’s legal strategy.

If the company continues defending its old policy, that could carry significant reputational risks. Walmart boasts a 90 percent rating on the Corporate Equality Index compiled by the LGBT nonprofit Human Rights Campaign and last year drew friendly media attention for joining LGBT activists in opposing a religious liberty bill in its home state of Arkansas that would have shielded businesses that discriminated against LGBT customers. Walmart didn’t move to dismiss the Cote case after it was filed in July; efforts to settle the dispute through the EEOC before Cote sued were unsuccessful.

In 2014, when a former Saks Fifth Avenue employee filed a lawsuit alleging she was harassed and discriminated against for being transgender, Saks’s lawyer asked for the case to be dismissed because “transsexuals are not a protected class” under the Civil Rights Act. That filing, which might have drawn little attention a decade earlier, spurred swift pushback from advocacy groups and harsh media attention. Within three months, Saks settled. The company declined to comment.

“Any large employer, they have to worry about their public image,” says Suflas. “Do you want your consumer base to think that you are not a good corporate citizen?”

Last July a group of LGBT and labor groups urged Walmart in an open letter to settle the case rather than argue in court that anti-LGBT bias is legal. Walmart could send a powerful message to employers by settling, says Emily Martin, general counsel of the National Women’s Law Center.

“It would be really meaningful if Walmart chose to resolve the case and recognize that under Title VII [of the Civil Rights Act], it was bound to provide these benefits,” Martin says. “When you have a major corporate player like Walmart either implicitly or explicitly recognizing this is what the law required it to do, other employers take notice.”

If Cote’s approach is successful, other plaintiffs could be emboldened to come forward and file similar claims—helping advocates further develop the law and more clearly define Title VII’s protections.

Some advocates see an upside if Walmart holds out for a trial. “This is a compelling case that could make its way through the federal courts to the Supreme Court and make good law that applies nationwide,” says Tico Almeida, founder of the LGBT nonprofit Freedom to Work. Because the facts of the case are relatively clear-cut, Cote’s case could offer LGBT advocates a chance to set a precedent on the scope of sex discrimination. “I think the courts have reached the point where they are more and more ready to accept what has always been straightforwardly true,” says Cote’s attorney, Buseck. “I do think ultimately this is where the Supreme Court will end up.”

Cote has promised to keep up the fight. “Unfortunately my wife doesn’t have much time left on earth. … She wants the people that tried to save her life and tried to extend her life to be paid,” she says.

With the law unsettled, defense lawyers are urging caution. “If an employer comes to us and asks, ‘Is there a risk that I could be sued under the theory that Title VII extends to LGBT individuals?’ I think the answer is yes,” says Cameron Smith, a labor and employment partner at Seyfarth Shaw. “This is absolutely going to be a hotly litigated issue, and it’s going to play up through the courts. And if that means that employers and employees get greater clarity about what the law provides, that to me seems like a welcome development.”

The bottom line: A theory that sexual-orientation discrimination is a form of sex discrimination will be tested in a case against Walmart.

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