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The retail giant agreed to pay $7.5 million to 1,000 individuals who said that Walmart management refused to add their same-sex spouses to their health insurance plans, beginning in 2013.

The plaintiffs, led by former Walmart employee Jacqueline Cote, claimed that management’s stance violated Title VII of the Civil Rights Act. Ms. Cote tried to add her wife to her group health insurance policy in 2004, only to be told that the addition was against company policy. Shortly after lawyers announced the settlement, both sides said they were satisfied with the outcome.

Title VII does not specifically include sexual orientation among its protected classes (gender, race, age, disability, and national origin), but the Equal Employment Opportunity Commission, and several federal district courts, have expanded the Civil Rights Act to include such protection.

Employment Discrimination and Sexual Orientation

Some legal observers believe the uncertain state of the law brought Walmart to the bargaining table, because the retailer did not want to risk a trial. Indeed, the full Seventh Circuit Court of Appeals recently heard oral arguments in Hively v. Ivy Tech Community College. Kimberly Hively started at the college as a part time instructor in 2000. She applied for a full-time position six times between 2009 and 2014 and was rejected every time, despite positive reviews from students. She later filed suit, claiming that management refused to promote her because she was a lesbian. The trial court threw out her lawsuit, and a panel affirmed that decision.

But in a rare move, the entire Seventh Circuit agreed to rehear the case. That probably means at least some judges believe both the trial court and the panel took too narrow a view of the seminal case in this area, 1989’s Price Waterhouse v. Hopkins. In that case, the United States Supreme Court held that employers could not base decisions on sex stereotypes, i.e. women should wear dresses and men should wear business suits. But all subsequent courts have held that the case applies only to heterosexual workers, reasoning that if Congress wanted to change Title VII, it would do so by amendment.

During oral arguments in Hively, several circuit judges appeared ready to expand Price Waterhouse, or at least they appeared open to the idea. Chief Judge Diane Wood opined that it is “the ultimate stereotype” to believe that all women should be attracted to men.

If the en banc Seventh Circuit sides with Ms. Hively, the school would almost certainly appeal to the Supreme Court. Although the Justices accept only a small percentage of appeals, the novel question of law may be too much to pass up. It would also be interesting to see how the Supreme Court rules, since President-elect Donald Trump has repeatedly said he would fill the vacant Supreme Court seat with a conservative jurist who believes that judges should interpret laws and not expand them.

The law on sexual orientation discrimination may be changing. For a free consultation with an experienced employment law attorney in San Jose, contact the Briski Law Firm. After hours and weekend appointments are available.