Wal-Mart Stores Inc. boasted a perfect score for the second year in a row on a list of companies that have embraced policies to protect LGBT workers, including those intended to prevent discrimination and to provide domestic partner benefits.

But Walmart's designation on this year's Human Rights Campaign Corporate Equality Index bears an asterisk and the company's rating has been suspended, thanks to two pending cases in which transgender workers lodged discrimination claims.

This disconnect highlights a clash among corporations, courts and even the Trump administration on whether and to what extent transgender and also gay workers are entitled to full workplace protections under federal civil rights laws.

“There is a lot of confusion on what the law requires that has been going on for a long time,” said Sam Schwartz-Fenwick, a partner at Seyfarth Shaw in Chicago. “More uncertainty is negatively perceived by many employers, who prefer to work in black and white, not shades of gray.”

The Corporate Equality Index cites a record number of companies that have created policies to protect LGBT workers. The Human Rights Campaign, in suspending Walmart's 100 percent score, cited two complaints by the U.S. Equal Employment Opportunity Commission where the agency found the corporation failed to address behavior that violates the company's policy and civil rights laws. The EEOC cases, one in North Carolina and another in Florida, came to light after the report was released, according to the Human Rights Campaign.

“These determinations pointed to significant enforcement gaps in Walmart's nondiscrimination policy, specifically with regards to sex and gender identity. Pending remedial steps by the company, the CEI rating is suspended,” the report said. It's not enough for companies to have policies in place that aren't enforced or adhered to, the Human Rights Campaign said.

Mark Konkel, a Kelley Drye & Warren partner in New York, described what he called “inherent tension and conflict in this issue” across the workforce.

“Obviously, there is a social drift toward greater acceptance for LGBTQ individuals, but there is still a confusion at the level of federal law,” he said.

A Walmart statement said the company is proud of its policies supporting LGBT workers. The company said it was disappointed in the decision to suspend its 100 percent score and that it looks “forward to further educating them on our policies.”

The Human Rights Campaign's report cited 609 companies that earned 100 points, up from 517 in the previous year's report. Gender identity is now part of nondiscrimination policies at 83 percent of Fortune 500 companies, up from 3 percent in 2002. In addition, 459 major employers have adopted supportive inclusion guidelines for transgender workers who are transitioning.

Yet, appeals courts are divided over the scope of protections for LGBT employees, and the U.S. Supreme Court has not weighed in on whether sexual orientation should be protected under Title VII of the Civil Rights Act of 1964.

U.S. Attorney General Jeff Sessions last month rescinded former President Barack Obama-era guidance that clarified transgender workers should be protected.

Sessions' position is at odds with the courts, as well as the EEOC, an agency that has championed Title VII protections for both gay and transgender workers. In a case over sexual orientation protections that's pending at the U.S. Court of Appeals for the Second Circuit, the Justice Department and the EEOC argued against each other.

Schwartz-Fenwick of Seyfarth Shaw said a best practice for employers is fostering a culture of diversity and inclusion.

“Until the Supreme Court weighs in on this hotly disputed issue, employers should consult with counsel to evaluate their internal policies, practices and procedures with an eye toward transgender claims,” Schwartz-Fenwick said.

The Justice Department applied its new litigation stance against transgender workers in a case in the U.S. District Court for the Western District of Oklahoma, Tudor v. Southeastern Oklahoma State University. Still, a trial judge there said Title VII does protect transgender workers from discrimination, suggesting the courts may be willing to extend the scope of the protections despite the DOJ's stance.

Konkel said it's unusual for corporations to be in front of equal opportunity law.

Major companies have not only passed their own policies, but have advocated in federal and state court to ask for federal civil rights protection for its gay and transgender workers. Dozens of major companies, from banks to tech giants and sports franchises, have filed friend-of-the-court briefs in the pending cases before the Second Circuit and Supreme Court, respectively.

“Typically EEO policies take shape from legal requirements, but businesses are digging in on protections for LGBT,” Konkel said. “Social pressure or social sentiment has pushed this forward rather than the law itself. Corporate social responsibility has a definite commercial value”

There will always be exceptions, as companies either do not voluntarily or willingly adopt protective policies when the law doesn't require them to do so, said Jay Holland, a civil rights and employment specialist at Joseph Greenwald & Laake.

Holland said plaintiffs momentum in the courts could change, as well, with federal judges appointed under the Republican regime. “For now, the zeitgeist is such that corporations see it as good business,” Holland said.

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