Walmart to pay $7.5 million for failure to provide same-sex benefits

shopping cartIn July 2015, a Wal-Mart employee sued her employer in federal court, alleging that the corporation had intentionally deprived her of spousal health insurance benefits because she and her spouse were of the same sex. She’d worked for the company for 15 years.

This lawsuit was filed a few weeks after same-sex marriage was legalized by the United States Supreme Court in Obergefell v. Hodges. This holding had broad implications for many areas of law, including the issue of health insurance provided to the spouses of employees. Prior to this holding and an earlier ruling related to federal spousal benefits that struck down the federal Defense of Marriage Act, employers tended to believe they were entitled not to recognize same-sex marriage. For three years before 2014, the company would not pay health insurance benefits to employees involved in same-sex marriages.

Wal-Mart started to provide benefits to same-sex couples in 2014. About 1,200 employees signed up to get these benefits. By then, the named plaintiff’s wife had developed ovarian cancer and had incurred $150,000 in out-of-pocket expenses.

The employee sued under Title VII of the Civil Rights Act of 1964, as well as the Equal Pay Act and state law. She sought various forms of relief as well as class action certification. Wal-Mart has 1.5 million employees in America and Puerto Rico, and a few thousand current and former workers were affected, according to the company. More than 300 plaintiffs eventually joined the class identified by the lawsuit.

In 2016, a class-wide settlement was proposed. The class was identified as current and former employees of Wal-Mart who were legally married to someone of the same sex between January 1, 2011 and December 31, 2013 and who would have been eligible for spousal health insurance benefits had they been married to someone of the opposite sex.

The proposed settlement involved Wal-Mart paying $7.5 million, a $25,000 service payment to the named plaintiff, and other costs and damages. If a class member had sustained harm in the form of actual medical expenses, those got priority. The leftover money was to be distributed to the other class members but capped at $5,000 per class member. Class members who chose to opt out kept the right to bring an individual lawsuit against the employer. The settlement agreement included a provision in which the employer committed to treating opposite-sex and same-sex couples the same way with regard to providing health insurance benefits as long as this remained consistent with the law.

The judge granted the parties’ motion to have the settlement approved on a preliminary basis, and the employer was supposed to notify class members. This would give them the opportunity to object if needed before the final hearing in May 2017. At the final hearing, a federal judge approved the settlement, finding that the employer had violated sex discrimination laws for years by denying spousal benefits to same-sex couples. The federal judge found the settlement “fair and reasonable.”

It can be important to obtain representation from an experienced employment lawyer when you have a dispute with your employer regarding discrimination or other matters. Contact us at (214) 528-6500 or via our online intake form.

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