Wal-Mart Settles Discrimination Case in Big Win for LGBTQ Worker Rights

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Case Marks Change in Tide as Companies Find It Pays to Be Inclusive

Nearly a decade ago, Jackie Cote sat down at a computer to take care of some important business. She needed to enroll her spouse, Diana “Dee” Smithson, in her health insurance. Jackie had worked for Wal-Mart since 1999, and the world’s largest publicly owned corporation by revenue allows employees to add their spouses to their health benefits. As Dee continued to deal with the repercussions of a breast cancer diagnosis from 1995, it was imperative to maintain health insurance, but paying for Dee’s insurance on top of Jackie’s was impossible for the couple.

As Jackie navigated the enrollment system, she entered Dee’s sex – female – into the program. A notification immediately blocked her view. The system could no longer process her request. Jackie and Dee had legally tied the knot in Massachusetts in 2004, but the system – and Wal-Mart – refused to acknowledge the marriage.   

Jackie then turned to the legal system. In 2015, she and other LGBTQ Wal-Mart employees waged a class action lawsuit alleging violations of Title VII of the Civil Rights Act of 1964, the Equal Pay Act and the Massachusetts Fair Employment Practices Law.

The complaint claimed “Wal-Mart’s intentional discriminatory actions were outrageous, egregious, and taken with malice or reckless indifference to the rights of Jackie and other members…Wal-Mart’s discriminatory conduct was a conscious or purposeful effort to demean employees who were married to a person of the same sex.”

Two years later, on May 16, 2017, a judge approved a settlement for $7.5 million, closing the door on the lawsuit and marking an important stepping stone on the path to equal protections for LGBTQ employees.

“Respect for the individual, diversity and inclusion are among the core values that made Walmart into the company that it is today,” the company’s Senior Vice President, Global Benefits, Sally Welborn said in a December statement announcing a tentative settlement.

Suzanne Goldberg, head of Columbia Law School’s Center for Gender and Sexuality Law, notes Cote v. Wal-Mart Stores Inc. not only solidified Dee’s health-care coverage, but also marked a new trend in how corporations are addressing the rights of LGBTQ employees.

Goldberg takes care to note that this case by no means exists in a vacuum, and that LGBTQ employees have challenged discrimination by both large and small employers for decades. For example, she recalls working on a case in the early 1990s against AT&T by a lesbian who was denied death benefits when her partner died.

So, what makes this case significant? First, there is the consideration of scale. Wal-Mart is the nation’s largest private employer, with over 1.3 million associates nationwide. Then there’s the large size of the settlement. But, beyond the numbers, Goldberg notes the case is the latest in support of two trends: increasing recognition among the courts that Title VII of the Civil Rights Act covers LGBTQ rights, and an overall shift among companies in realizing that “discrimination is bad for business.”

In Cote v. Wal-Mart Stores Inc., “the company reversed course. It made an effort to justify discrimination, and then it backed off,” said Goldberg. This reflects the changing tide of the courts in applying Title VII to LGBTQ issues, despite the fact that the Civil Rights Act does not explicitly address issues of sexual orientation. Title VII does, however, protect against sex discrimination. Increasingly, says Goldberg, the trend in the courts is to recognize that discrimination based on sexual orientation or gender identity is indeed a form of sex discrimination.

In addition to changes spurred by social pressures and norms, Goldberg notes companies are coming to the realization that discrimination is, simply, “bad for business.” This is twofold, and applies to both consumers and employees. When companies fail to protect employees from discrimination, they risk damaging media coverage and alienating a wide consumer base. In addition, discrimination interferes with recruitment and retention of LGBTQ employees.

“To have one part of the population – in this instance, LGBT employees – not want to work at a firm because the firm is known to discriminate, winds up limiting the talent pool that the firm can draw from,” said Goldberg. “Most employers try to expand the talent pool that they have access to, rather than limit it.”

With the settlement, Dee will be able to enroll in Jackie’s healthcare, along with the spouses of other LGBTQ Wal-Mart employees. And while the settlement appears to be in line with a national trend toward equal protections for LGBTQ employees, Goldberg cautions the battle’s not over quite yet.

“There are bumps in the road,” she said. “There is still plenty of workplace discrimination against LGBT people.” She notes most employees who face discrimination never bring a lawsuit.  

“They suffer…They suffer personally, their productivity suffers, and either they find other jobs or they stay in the workplace, but less effectively than they might if they were being treated as a fully respected employee.”

Still, according to court documents, “this class action settlement breaks new ground. To the knowledge of Class Counsel, this is the first class action brought on behalf of LGBTQ workers to be certified and settled, and hopefully the settlement of this action will inspire other LGBTQ workers to employ the class action device to secure equal rights in the future.”

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