Same-Sex Spousal Benefits Lawsuit Settles for $7.5 Million

Lev Craig

Last Friday, the parties submitted a settlement agreement for approval in Cote v. Walmart, a class action suit filed in federal court alleging that Walmart discriminated against gay Walmart employees by denying spousal health insurance coverage to same-sex married couples. The settlement would provide $7.5 million for current and former Walmart employees who could not obtain employer health insurance benefits for their same-sex spouse.

The suit was the first class action filed on behalf of gay employees after the Supreme Court’s June 2015 ruling extending marriage equality in Obergefell v. Hodges, according to the Boston-based LGBT legal advocacy group GLAD. Jackie Cote filed suit in the District of Massachusetts in July 2015, bringing claims against Walmart under Title VII of the Civil Rights Act of 1964 (Title VII) and the Massachusetts Fair Employment Practices Law on behalf of Walmart employees who were married to a same-sex spouse and did not receive spousal health insurance benefits from Walmart between 2011 and 2013.

Cote had been employed by Walmart since 1999 and received employee health insurance as part of her benefits package. In 2004, Cote married her partner, Diana Smithson. Beginning in 2008, Cote repeatedly tried to enroll her wife, who was suffering from ovarian cancer, in Walmart’s employee health insurance plan. However, all of Cote’s requests for coverage were denied, according to the complaint: When Cote attempted to enroll Smithson in her employee insurance plan, Walmart’s online enrollment program refused to let her continue after she marked her spouse’s sex as “female.” Each time Cote contacted Walmart about the issue, she alleged, she was told that Walmart “did not offer health insurance coverage to same-sex spouses.”

We have previously reported on the disconnect between the Equal Employment Opportunity Commission (EEOC)—the federal agency responsible for interpreting and enforcing Title VII—and the courts on the extent of Title VII’s sex discrimination provision. While the EEOC takes the position that Title VII’s prohibition against sex discrimination already incorporates discrimination on the basis of sexual orientation, the agency’s position is not binding on the courts, which have consistently ruled that sexual orientation discrimination is not covered by Title VII.

Here, Cote argued that her claims fell within the scope of Title VII’s sex discrimination provision. Cote asserted first that a spousal health insurance policy which excluded same-sex spouses was discriminatory on the basis of sex: If Cote had been a man married to a woman, rather than a woman married to another woman, Cote would have been eligible for spousal insurance coverage. Second, the policy was derived from a gender-based stereotype—namely, a belief that men should only marry women and that women should only marry men—which Cote had defied by marrying a woman; therefore, the policy violated Title VII, in light of the 1989 Supreme Court decision Price Waterhouse v. Hopkins, which established that gender stereotyping is actionable under Title VII. Finally, Cote argued that treating same-sex and opposite-sex couples differently for insurance purposes constituted associational sex discrimination: that is, Walmart discriminated against Cote because of an association with someone of a particular sex, i.e., her marriage to a woman.

Though federal law still does not explicitly prohibit sexual orientation discrimination, LGBT New York employees are protected by the New York State and City Human Rights Laws. If your employer has discriminated against you on the basis of your sexual orientation, contact The Harman Firm, LLP.