A Marriage By Any Other Name Is Challenging For HR

(Published February 08, 2007)

While a lot of the heat regarding same-sex marriage or civil unions has been focused on legal, political, philosophical, and religious issues, companies looking for a competitive edge have been quietly extending benefits to employees' same-sex domestic partners and adding same-sex non-discrimination policies to their employee handbooks. On February 19, employers in New Jersey become obligated to extend spousal benefits to employees' same-sex domestic partners. New Jersey joins California, Connecticut, the District of Columbia, Hawaii, Maine, Massachusetts, Vermont, and countless municipalities in mandating that employers provide same-sex domestic partners with some or all of the benefits spouses enjoy. Even if you haven't yet confronted this issue in your workplace, odds are you will in the future, so it's best to get up to speed now.

Laws And Benefits 

Employers in California, Massachusetts, New Jersey, and Vermont must extend spousal benefits to employees' same-sex partners. Employers in other states may do so voluntarily. Principal benefits covered: retirement, health, and family leave benefits. How far can a state go before it bumps up against federal laws, specifically, the Defense of Marriage Act (DOMA), which defines "spouses" as a heterosexual couple? That depends on the benefit.

• Retirement benefits. Together with DOMA, the federal Employee Retirement Income Security Act (ERISA) controls almost all aspects of retirement plan administration, including rules regarding notices to employees and beneficiaries, and the right of widows/widowers to take distributions and roll over employees' plan assets. No state mandate to provide spousal benefits, therefore, will impact employers' retirement packages.

• Health benefits. Regardless of state law, for employers with self-insured medical plans, ERISA supercedes state laws, so benefits for same-sex partners aren't mandatory. For employers that opt for insured medical plans, ERISA doesn't override state laws, which continue to apply. Health benefits, therefore, must be extended to employees' same-sex partners. Added wrinkle: Regardless of the plan's status (insured or self-insured), unless employees' same-sex partners are considered dependents under the federal Internal Revenue Code, the value of health benefits provided to employees' same-sex partners, less any amounts employees pay, is taxable to employees. Upshot: Employers can extend health benefits to employees' partners tax-free for state purposes only.

• Health care continuation under COBRA. COBRA doesn't define "spouse," so employers are free (or not) to offer health care continuation to employees' same-sex partners.

• Leave benefits. The federal Family and Medical Leave Act (FMLA) also doesn't define "spouse," so employers are free (or not) to extend federal family and medical leave rights to employees with same-sex partners. On the other hand, many states have family leave laws, which can cover more ground than the FMLA (e.g., bereavement leave, short-term leave). Those laws would apply in states that mandate that spousal benefits be provided to same-sex partners.

For Your To-Do List 

For companies that aren't located in states that mandate spousal benefits, determining the same-sex domestic partnerships that the company will recognize is your first step. Here, the company sets the parameters. Common decision points: the length of time a partnership must have existed (six months to one year is customary), and requiring employees to present documentary proof of their partnership (e.g., tax returns with the same address, wills, mortgage agreements, child custody arrangements). The next task is to decide the benefits the company will extend to same-sex partners. Finally, be sure to revise plan documents and enrollment forms accordingly, and notify the company's third-party benefits administrators of this change.

Related Topic(s): Benefits