A high-profile lawsuit against mega retailer Wal-Mart signals a likely wave of legal action against businesses that allegedly discriminate against gay employees, underlining the need for proper insurance coverage and adequate limits.
The suit filed Tuesday claims that Wal-Mart Stores Inc. denied the plaintiff – a gay employee of the company – health insurance benefits for her spouse.
Wal-Mart has offered benefits to married gay couples since the Supreme Court struck down part of the Defense of Marriage Act in 2013, but company office manager Jackie Cote says the company repeatedly denied her requests to add her wife, Diana Smithson, to her insurance policy.
Smithson developed cancer in 2012 and the denial of insurance led to $150,000 in medical debt, Cote alleges.
When she brought her claims to the US Equal Employment Opportunity Commission, Wal-Mart said federal anti-discrimination laws did not apply to lesbian, gay, bisexual and transgender employees – thus freeing the company from offering benefits to spouses.
Despite the company’s recent change in policy, Cote alleges Wal-Mart could still pull spousal benefits from same-sex couples.
“Benefits provided by Wal-Mart as a matter of grace…are not secure and could potentially be withdrawn just when large healthcare costs are incurred,” the lawsuit said.
The suit was filed in US District Court in Boston and is seeking nationwide class-action status. It comes just weeks after the Supreme Court ruled that the US Constitution provides same-sex couples the right to marry.
Though the Wal-Mart lawsuit is not directly related to the marriage decision, the historic ruling gives heightened attention to the case and could increase scrutiny over employment practices and give rise to new lawsuits – class-action or otherwise.
As Camilla Taylor, an attorney with the gay rights advocacy group Lambda Legal, noted, marriage rights don’t preclude employment discrimination.
“They can get married, as is their legal right, and show up at work the next day and get fired,” Taylor told Bloomberg.
That will inevitably result in more litigation – particularly when such discrimination runs up against employers evincing religious freedom arguments, said insurance brokerage Lockton.
Federal law does not compel a church or other private employer to offer health insurance coverage to same-sex couples, and a church may claim protection from state and local nondiscrimination rules under religious freedom.
“We leave that issue for another day,” Lockton said.
For insurance agents working with such businesses, however, it is worth checking limits on liability policies, including employment practices and directors and officers liability, as the legal climate is about to get heated.
