Domestic Partner Benefits

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Human Resources Domestic Partner Benefits Make sure your personnel policies are up to date By Phillip M. Perry

With a growing number of states taking up the issues of same-sex marriage or equivalent domestic unions, employers face the challenge of rewriting personnel policies to adapt to new realities.

Recent events have raised the .ames under a long-simmering issue. In April of 2005, for example, Connecticut adopted a civil union law that extends to same-sex couples the rights enjoyed by individuals in traditional marriages. The action comes a year after Massachusetts became the first (and still only) state to explicitly recognize same-sex marriage. These states have joined Vermont in recognizing some form of same-sex union as equivalent to and sharing the same rights as traditional marriage.

Look for more developments to come. "Close to 15 states have addressed the issue of same-sex unions recently," says Sara Goldsmith Schwartz, founder and president of the law firm of Schwartz Hannum, Andover, Mass. "Before long I think we will see two or three more states becoming recognition states in whatever way they choose." ("Recognition states" is a term coined by Schwartz to refer to states that have recognized same-sex marriage, either explicitly or as some form of civil union with equivalent rights.)

Many states have recently extended to same-sex couples expanded rights, if not to the degree of complete marriage equivalency. Both California and New Jersey, for example, have adopted laws that allow all same-sex and heterosexual couples over the age of 62 to register for domestic partnership status with certain specified rights. Hawaii has a "reciprocal beneficiaries" law on the books and the District of Columbia has a domestic partnership law that affects only government employees.

TIME FOR DECISION

The changing legal landscape means employers need to update their policies to conform to all applicable laws. In states that recognize same-sex marriage or its equivalent, employers must extend benefits equally to all couples to avoid the risk of litigation. In states that offer varying levels of protection for domestic partnerships or civil unions, employers need to address the extension of benefits to meet new legal requirements that are often unclear.

While some employers would like to keep the issue on the back burner, a force for change is coming at the grass roots level. "Educated gay employees are starting to ask a lot of questions about benefits, and that is forcing employers who might otherwise do the 'ostrich routine' to start making the philosophical decisions about corporate rights and responsibilities to same-sex couples," says Schwartz.

When Schwartz says "philosophical decisions" she refers to several areas. First, should benefits be extended to same-sex couples whose protections under the new state marriage laws are preempted by federal laws? Second, should benefits provided to employees in same-sex unions in recognition states be extended to employees in other states where equivalent protections are not legally mandated. Third, should employers be proactive in extending benefits to same-sex couples even where no laws yet apply?

Let's take each in turn.

FEDERAL LAW DECISION

It's clear that many benefits mandated by state law in recognition states must be extended to same-sex couples. An example is the Small Necessities Leave Act in Massachusetts, which mandates leave for specific purposes.

The issue is less clear-cut for benefits mandated by federal law. Examples are workplace leave mandated by the federal Family and Medical Leave Act (FMLA), retirement benefits governed by the federal Employee Retirement Income Security Act (ERISA) and the extension of health insurance benefits under COBRA. While on first blush it would seem same-sex couples are entitled to these important benefits, all of them originate in federal law and thus are governed by the federal Defense of Marriage Act (DOMA), passed in 1996, which defines marriage as "a legal union between man and woman as husband and wife." Because this definition overrides any more expansive interpretation by states, DOMA in effect relieves employers of the responsibility of extending federally mandated benefits to same-sex couples. "An employer can choose to extend such benefits, but cannot be required to do so by law," says Schwartz.

Because of DOMA, employers may incur additional overhead when extending benefits to same sex couples. For example, in Massachusetts health insurance benefits for an employee's same-sex spouse are tax exempt for state purposes, but not on a federal basis.

MULTI-STATE DECISIONS

"Multi-state employers face a special challenge," says Schwartz, who represents such nationwide monoliths as IBM and The TJX Companies. "What do you do when you operate facilities in several states with different rules. This is what companies are struggling with."

There are two possible approaches. The first is a restrictive one that covers only individuals as mandated by law. That is the least expensive, but requires additional record keeping. It can be difficult to administer plans with differential treatments by state. More expensive still may be the possible strife created when employees are treated differently from one state to another.

The second, which Schwartz refers to as the "least common denominator" approach, extends the same rights to everyone in the company. "Certainly the least common denominator approach makes things easier," says Schwartz. "But some companies say they don't want to do any more than they have to."

GETTING PROACTIVE

Should employers be proactive in extending benefits to same-sex couples even where no law yet applies. Despite the increased expense, it seems more employers are taking that route to attract and retain betterquality employees. "There has been a noticeable increase in the number of employers extending benefits to same-sex couples," says David Namura, manager of governmental relations at the Society for Human Resource Management, Alexandria, Va. "In a 2003 survey we found that 35 percent of human-resources professionals offered domestic-partnership benefits to either same-sex or opposite-sex partners. Breaking that down, we found that 31 percent offered the benefits to opposite-sex partners and 23 percent to same-sex partners."

One year later, says Namura, those figures had risen to 39 percent, 34 percent and 27 percent respectively. Clearly the trend is toward greater inclusion. "These figures seem to reflect the fact that domestic-partnership benefits are great recruiting and retention tools for employers. Obviously, human resources is always looking for the most-qualified talent and you want to offer as many benefits as possible to fit the corporate climate that the human-resources professional operates in."

THE MOVING TARGET

All of these decisions are further complicated by legal challenges that threaten to overturn the new laws and send employers back to the drawing board. In many states same-sex marriage stimulates vocal opposition that often translates into political action. In Massachusetts, for example, there is a court challenge underway to overturn the recognition of same-sex marriage and even a proposed constitutional amendment to confine marriage to the union of one man and one woman. "Both sides of the issue are so emotionally charged that there is a constant battle in the courts," says Schwartz. "The issue is likely to be on the ballot in Massachusetts this year as a referendum."

Massachusetts is not the only place for conservative resistance. Indeed, the great majority of states prohibit same-sex marriage either by statute or constitutional amendment. On the federal level, Congress is considering legislation that would restrict marriage to individuals of opposite gender, and some legislators favor an equivalent constitutional amendment. Such a disconnect between the growing number of employers offering domestic-partnership benefits and the resistance to same-sex marriage by the public is symptomatic of the controversial nature of this topic.

THE ROAD AHEAD

In distilling the changing laws addressing same-sex marriage into productive personnel policies, human-resources professionals face a delicate juggling act. Consideration must be given to the requirements and emotions of employees, the need to attract and keep the best people, conflicts between state and federal law, possible backlash from customers and the public and the possibility that more-liberal state laws will be reversed or — conversely — more states will expand the concept of marriage to include individuals of the same gender. Finally, many expect that the federal DOMA law will be challenged in courts.

Despite this complex matrix of forces, employers need to make some hard decisions now to avoid problems down the road. "Employers who ignore this topic risk more than litigation," says Schwartz. "They also face a decline in employee morale. Companies will be unable to retain valuable employees if they do the 'ostrich routine' on this issue."

Get More Information

Labor and Employment Law Updates

Published periodically by the law firm of Schwartz Hannum, Andover, Mass., this e-newsletter describes recent developments in same-sex domestic partnership law and other employment law issues. To receive them, send an email to [email protected].

Benefit Programs for Domestic Partners and Same-Sex Spouses

Published by Hewitt Associates, an HR consulting firm based in Lincolnshire, Ill. This new survey found that 56 percent of responding organizations offer domestic-partner benefits to some or all employees. This reflects a 34 percent increase in the past five years. Contact the Hewitt information desk at 847/771-2500 or order online at hewitt.com.

Same-Sex Marriage Legal In Massachusetts — What Does This Mean For Employers In And Outside Of The Commonwealth Of Massachusetts?

Published by Littler Mendelson, the nation's largest employment law firm. Available at the firm's Web site, littler.com/nwsltr.

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