Labor & Employment Law Daily Denied health benefits for same-sex spouse, union member advances claims
Wednesday, October 14, 2020

Denied health benefits for same-sex spouse, union member advances claims

By Wayne D. Garris Jr., J.D.

The fund originally refused to cover the union member’s spouse, and by the time the fund had changed its policy, the spouse had been diagnosed with cancer.

A federal district court in Illinois denied a union and benefit fund’s motions to dismiss the claims of a union member who alleged that the fund refused to provide health benefits to her same-sex spouse in violation of Title VII. The court found that although the union did not administer benefits, it had notice of the fund’s discriminatory policy and failed to make changes, thus the employee could pursue her claim against the union. While the fund did not have an employment relationship with the employee, it exercised control over her health benefits, to which she was entitled based on her union membership, and could be liable under Title VII as an agent of the union (Jimenez v. Laborer’s Welfare Fund of the Health and Welfare Department of the Construction and General Laborers’ District Council of Chicago and Vicinity, October 8, 2020, Tharp, Jr., J.).

The plaintiff, a union member, was entitled to health insurance through the fund. After getting married, she applied for health insurance for herself and her spouse. The fund sent the employee a letter informing her that same-sex partners were not eligible dependents. The employee called the fund and spoke with an individual who told her that the fund was a “private company that will not recognize same-sex marriages.” The employee then sent a letter to the fund arguing that its policy was illegal. The fund responded by reiterating its policy and warning the employee that she may have to pay the fund’s attorneys’ fees if she sued them and lost.

Policy change. Several months later, the fund changed its policy to extend coverage to same-sex spouses and the employee obtained coverage for her spouse. When the spouse used her new benefits, she learned that she had cancer and it had advanced to a stage that required a hysterectomy. The employee alleged that her spouse could have avoided a hysterectomy if she had been able to see a physician earlier.

Lawsuit. The employee filed suit against the union and the fund alleging that she was subjected to discrimination in violation of Title VII. Both defendants moved to dismiss.

The union. The union argued that since it was not an agent or fiduciary of the fund, it could not be held liable for the fund’s discriminatory policy. The court explained that the dispositive issue was the union’s duties to its members, not its powers with respect to a third party. Thus, if the union was aware of a discriminatory practice it could be liable under Title VII for its failure to fulfill its duty to its members if the union either bargained for a discriminatory health plan or the union had notice that the health plan was discriminatory and failed to take action to change it.

Sufficient notice. The court found that the employee pleaded sufficient facts to show the union was on notice of the discrimination. The employee alleged that the fund denied health coverage because of the spouse’s sex and the union was aware that the plan was discriminatory; however, its members only had access to that plan. Based on the allegations, the court inferred that the union either formed a discriminatory CBA with the employee’s employer or that it ignored its members’ concerns about discriminatory health benefits. Thus, the employee could pursue her claim against the union.

The fund. The fund argued that it since it did not have an employment relationship with the employee, it could not be liable for a Title VII violation. However, in City of Los Angeles, Dept. of Water and Power v. Manhart, the Supreme Court held that that an agent of an employer can be held liable for violations of Title VII. The Seventh Circuit has extended agency liability in situations in which a third party “exercises significant control over an aspect of the plaintiff’s employment, where the agent significantly affects access of any individual to employment opportunities, or where an employer delegates sufficient control of some traditional rights over employees to a third party.”

Here, the employee alleged that the fund exercised control over her benefits by denying her spousal coverage. Further, when she contacted the fund, it explained that the denial was within the fund’s discretion, as a private company, and did not recognize same-sex marriages. The court found that the employee pled sufficient facts to show that the fund violated Title VII as an “agent-as-employer.”

Timeliness. Lastly, the fund argued that the member failed to exhaust administrative remedies. While the employee asserted that she exhausted the EEOC process, the court declined to consider the exhaustion issue. At the motion to dismiss stage, there is no requirement that the employee establish she has timely exhausted her administrative remedies.

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