(Bloomberg) -- Wal-Mart Stores Inc.’s decision to extend health care benefits to workers’ same-sex partners removes one of the biggest holdouts and adds pressure on other resistant companies to follow suit.
“You can go to your board, and all of a sudden you’re not swimming against the stream as much as you were yesterday,” says Wallace Hopp, associate dean of faculty and research at the University of Michigan’s Stephen M. Ross School of Business. “You can say, ‘Jeez, Wal-Mart does it.’”
Wal-Mart, the largest U.S. private employer and a frequent target of labor-rights groups, described the change Monday mainly as a path to a consistent policy as some states alter the definition of marriage. Even so, the switch after years of opposition may help tip the balance at companies such as trucker YRC Worldwide Inc., which is considering partner benefits for 2014, or Exxon Mobil Corp., one of the biggest firms left without such coverage.
“They’re so big that everything they do sets an example,” Hopp says of Bentonville, Ark.-based Wal-Mart. The retailer, founded by the late Sam Walton in 1962 and known for policies such as banning explicit lyrics in CDs it sells, serves about two-thirds of Americans monthly.
Overland Park, Kan.-based YRC is “always re-evaluating its benefits based on the needs and changing demographics of our employees,” says Kelly Walls, its senior vice president of human resources.
The number of Fortune 500 companies offering health care benefits to same-sex partners has surged in a decade, to about 62% last year from 34% in 2002, according to the Washington-based Human Rights Campaign.
Exxon, with about 76,900 employees, received the lowest score among the 20 largest companies on the campaign’s 2013 Corporate Equality Index examining policies for lesbian, gay, bisexual and transgender workers.
On its website, Exxon says it offers coverage for “legally recognized spousal relationships” in countries where it operates. In the U.S., “We follow the federal definition of spousal relationships,” says Alan Jeffers, an Exxon spokesman.
Full-time workers’ spouses and domestic partners will be eligible for coverage in medical, dental, vision, life, critical illness and accident plans, Wal-Mart says in a postcard provided to Bloomberg and being mailed to employees this week.
“We thought it was important to develop a single definition for all Wal-Mart associates in the U.S. to give them consistency in the various markets we operate in across the country,” says Randy Hargrove, a spokesman for the retailer.
1.3 million employees
Wal-Mart may have held out for so long in part because the size of its employee base makes it costly to expand benefits, says Molly Iacovoni, a senior vice president who works on employee benefits issues at Aon Hewitt, a human resources consulting group.
The retailer has 1.3 million full- and part-time U.S. employees, Hargrove says. More than half participate in health-care plans. A total of 1.1 million employees and family members are covered by the plans.
“This may have been a cost issue for them,” says Iacovoni, who is based in Lincolnshire, Ill. “It may be that they are going to see a little bit of a cost rise, especially since they’re offering both same and opposite sex.”
Just last week, United Parcel Service Inc. says it would drop health insurance coverage for about 15,000 working spouses of white-collar employees to curtail rising costs.
In an e-mailed statement, Chad Griffin, president of the Human Rights Campaign, calls Wal-Mart’s decision, “a cultural signal that equality for LGBT people is the simplest of mainstream values.” Griffin says he worked at Wal-Mart as a teenager and was “moved” by the decision.
Lucas Handy, 22, an openly gay former employee of a Wal-Mart in Fort Dodge, Iowa, had mixed thoughts on the change.
“It’s wonderful, freaking awesome if the company keeps its promise on this issue,” says Handy, a member of the union-backed OUR Walmart group that is seeking to improve working conditions. “But the truth is a lot of associates who work at Wal-Mart don’t have health care because they can’t afford it.”
In June, the U.S. Supreme Court struck down the 1996 Defense of Marriage Act that denied federal benefits to same-sex couples legally married in states that allowed it. The court also reinstated a federal judge’s order allowing gay marriages in California. Thirteen states and the District of Columbia allow gay marriage.
Wal-Mart’s decision wasn’t universally well-received. The Tupelo, Miss.-based American Family Association “is naturally disappointed,” President Tom Wildmon says. “It validates a lifestyle which we think corporate America should discourage rather than promote.”
While the change at Wal-Mart might cause some “ruffled feathers” among conservative shoppers, it isn’t likely to cause a significant decline in traffic, says Brian Yarbrough, an analyst at Edward Jones & Co. in St. Louis.
Wal-Mart fell 0.2% to $72.73 this morning in New York. The shares rose 6.8% this year through Monday, compared with a 14% gain for the Standard & Poor’s 500 Index.
Hopp, the University of Michigan professor, calls the decision a “reflection of how the country is changing.”
“The viewpoint that tries to deny the existence of same-sex couples is becoming a minority view,” Hopp says. “Who’s to say what Sam Walton’s views would be today? It’s a different country now.”
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