Suit Charges Wal-Mart with Discrimination Against Gay Employees Over Health Benefits

Wal-Mart Stores Inc. was accused of discriminating against gay employees in a lawsuit that pits the biggest U.S. retailer against rights activists just weeks after same-sex marriage was legalized nationwide.

In a proposed class-action complaint, Wal-Mart employee Jacqueline Cote says 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, 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 a complaint filed Tuesday in Boston federal court.

“We want to send a message to companies big and small that it is illegal to deny benefits to the same-sex spouses of their employees if they provide the same benefits to employees with opposite-sex spouses,” said Carisa Cunningham, a spokeswoman for Gay & Lesbian Advocates & Defenders, which represents Cote.

Cote, 52, argues Wal-Mart 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.

Wal-Mart ultimately changed its policy two months after the U.S. Supreme Court in 2013 overturned a federal law defining marriage as only a heterosexual union. The company, based in Bentonville, Arkansas, began offering coverage to same-sex spouses in January 2014.

Cote has a good chance of prevailing since her case focuses on gender discrimination, said Thomas Wassel, a lawyer who usually represents companies in employment disputes and isn’t involved in the case.

“The plaintiffs have a strong argument,” said Wassel, of Cullen and Dykman LLP in Garden City, New York. “A corporation does have a right to extend benefits as it sees fit, but it can’t do so in violation of the law.”

“Our benefits coverage previous to the 2014 update was consistent with the law,” Brian Nick, a spokesman for Wal-Mart, said in an e-mail.

The case is the first of its kind since gay marriage was legalized nationwide by the U.S. Supreme Court in June, though the case relates to employment law rather than marriage rights.

Cote seeks a court order that Wal-Mart is legally required to offer the benefits.

“Benefits provided as a matter of grace, not right, are not secure,” Cunningham said. “Wal-Mart’s policy change was voluntary, and we seek a court order to ensure that the change is permanent.”

Cote previously took her case to the U.S. Equal Employment Opportunity Commission, which said in a final determination in January that Wal-Mart’s treatment of Cote 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.

A divided U.S. Supreme Court overturned the federal law that defined marriage as a heterosexual union on June 26, 2013, saying it violated the rights of married gay couples by denying them government benefits. Exactly two years later, the court legalized gay marriage nationwide.

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

Related:

• How Supreme Court Gay Marriage Ruling Affects Employee Benefit Plans
• How Supreme Court Marriage Ruling Affects Gay Couples’ Finances
• Supreme Court Case Has Tax, Benefits Implications for Married Gay Couples
• Gay Marriage Ruling Boosts Benefits for Many, Leaves Confusion in Some States
• Wal-Mart Will Offer Health Insurance to U.S. Employees’ Domestic Partners