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The Defense Department has reached a sweeping settlement with tens of thousands of people who were dismissed from military service because of their sexual identity, potentially paving the way for veterans to upgrade their discharge status and receive a range of benefits they had been denied. The settlement, which the Pentagon agreed to late last week and was filed on Monday in Federal District Court in Northern California, must still be approved by a judge. It applies to a group of more than 30,000 veterans who received less-than-honorable discharges or whose discharge status lists their sexuality.

Advocacy groups had filed a class-action civil rights lawsuit in 2023 alleging that the Pentagon had failed to remedy “ongoing discrimination” after the repeal of the military’s “don’t ask, don’t tell” policy more than a decade earlier. Those who leave the military with less-than-honorable discharges usually do not receive all of the benefits they would have been eligible for through the Veterans Affairs Department, including health care from the V.A.’s hospitals and clinics, educational benefits and access to job networks. While the Defense Department has taken steps under the Biden administration to upgrade discharges and restore benefits for L.G.B.T.Q.

veterans, the settlement is expected to make the process much easier. It would also help former service members remove references to their sexuality from their discharge paperwork. If a federal judge approves the settlement, it will be binding by law.

When reached for comment, the Pentagon referred to the Justice Department, which declined to comment. The settlement was reported earlier on Monday by CBS News. Sherrill Farrell, 63, a Navy veteran who is the lead plaintiff in the lawsuit, said in an interview that news of the settlement was “overwhelming.” Ms.

Farrell, who is lesbian, enlisted in the Navy in 1985. She was outed by a bunkmate and kicked out of training after only 10 months as a fireman apprentice. Her

Justice Department