Wal-Mart Settles Bias Suit Over Gay Couples’ Health Benefits

(Bloomberg) -- Wal-Mart Stores Inc. agreed to pay $7.5 million to settle a lawsuit accusing the company of discriminating against gay workers by failing to offer health insurance benefits to their spouses.

The settlement covers employees who were affected by Wal-Mart’s conduct from January 2011 to December 2013, according to documents filed Friday in Boston federal court. A few thousand current and former workers were affected, Wal-Mart said in a statement without providing an exact number. The company employs 1.5 million people in the U.S. and Puerto Rico.

“We’re happy both sides could come together to reach a resolution,” Sally Welborn, Wal-Mart’s senior vice president of Global Benefits, said in the statement. “Respect for the individual, diversity and inclusion are among the core values that made Wal-Mart into the company that it is today.”

The suit was filed in July 2015, just weeks after the U.S. Supreme Court legalized same-sex marriage nationwide. Wal-Mart employee Jacqueline Cote argued the company failed to provide health insurance to her wife for years in violation of the federal Civil Rights Act of 1964 and a Massachusetts fair-employment law.

Wal-Mart extended benefits to same-sex couples in January 2014, just two months after the Supreme Court overturned a federal law defining marriage as only a heterosexual union, but by then Cote’s wife Diana “Dee” Smithson had already racked up more than $150,000 in out-of-pocket expenses battling ovarian cancer, according to the complaint.

Equal Treatment

“I’m pleased that Wal-Mart was willing to resolve this issue for me and other associates who are married to someone of the same sex,” Cote said in the joint statement with the retailer. “It’s a relief to bring this chapter of my life to a close.”

As part of the settlement, Bentonville, Arkansas-based Wal-Mart agreed to continue to “treat same-sex and opposite-sex spouses equally in the provision of health insurance benefits”, according to the filing. The deal requires court approval.

Cote argued Wal-Mart, the world’s biggest retailer, had engaged in sex discrimination because it would have extended the benefits to her spouse if she had been a man. There is no federal law against workplace discrimination based on sexual orientation.

Cote had previously taken her case to the U.S. Equal Employment Opportunity Commission, which said in a final determination in January 2015 that Wal-Mart’s treatment constituted unlawful sex discrimination.

Cote’s spouse, whom she married in Massachusetts in 2004, was diagnosed with ovarian cancer in 2012 and later lost her own health insurance, according to the complaint. Massachusetts was the first U.S. state to legalize gay marriage.

The case is Cote v. Wal-Mart Stores Inc., 1:15-cv-12945, U.S District Court, District of Massachusetts (Boston).

--With assistance from Shannon Pettypiece To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net. To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Sophia Pearson, Michael Hytha