Domestic Partner Benefits in the Era of Marriage Equality

Business.com / Strategy / Last Modified: February 22, 2017

Now that same-sex marriage is legal in all 50 states, businesses need to look again at the benefits they are extending to domestic partners.

In the June 2015 landmark case Obergefell v Hodges, The Supreme Court ruled that same-sex couples have a constitutional right to marry.

How does this ruling affect domestic partner benefits that many companies extended to same-sex couples when marriage was not legally allowed?

You might think that legalizing same-sex marriage does away with the need for domestic partner benefits. But what if couples in long-term domestic relationships choose not to marry, for whatever reasons? Are companies legally required to extend benefits to those in common-law living arrangements whether same-sex or not?

Individual businesses may decide to continue the practice, but whether they will be legally required to do so is another question. Right now, it’s a little murky. 

The notion of domestic partnership stems from the gay rights movement in the 1980s. According to legal encyclopedia website Nolo, the Village Voice became the first private company to offer domestic benefits. Berkeley, California, was the first municipality, and Vermont the first state to offer domestic benefits to public employees.

As more states began to recognize domestic partnerships, businesses began to extend benefits to unmarried couples. Interestingly, as FindLaw points out, some companies plan limited domestic partner benefits to same-sex relationships only. What exactly constituted a domestic partnership, and what companies might be legally obligated to cover, varied by state.

Further muddying the waters are various federal laws that ensure the equitable provision of benefits enacted by Congress to common-law marriages and/or domestic partnerships. But these only apply in terms of how individual states define those relationships.

Related Article: What Is the Number One Trait That Makes For Employee Satisfaction?

Varying Definitions of Domestic Partner

The different definitions among the states about what exactly constitutes a domestic partnership is the underlying problem. The legalization of marriage doesn’t make those laws go away. But it could cause businesses to jettison domestic partnership benefits because of the administrative costs associated with keeping up with varying domestic partnership compliance standards.

According to The New York Times, many employers extended domestic benefits coverage to same-sex couples only because they were legally prohibited from wedding. The employers may now revert to providing spousal benefits only.

The argument is that legalization of same-sex marriage now entitles everyone to the legal status of a spouse. Because it is no longer discriminatory, employers can elect to offer spousal benefits only and drop domestic partner benefits. The fact that some couples choose not to marry legally may not put the legal burden on employers, but the choice of the individuals.

Indeed, in states where same-sex marriage was already legalized, companies such as Corning, IBM and Raytheon all required marriage to qualify for benefits. They did this even as they continued to provide domestic partner benefits in states where same-sex marriage was not legal.

The Costs of Domestic Partner Benefits

Why would a business not continue to extend domestic partner benefits? As Time points out, now that all people have equal access to marriage, business stands to save a substantial amount of money by streamlining their benefits plans. 

The Star Tribune notes that determining domestic partner status is an administrative headache. The Mayo Clinic, for example, has 60,000 employees working in 30 states. It has been phasing out same-sex domestic partnership benefits in those states where marriage was legalized. With federal recognition, the director of the health system notes, “This makes it much easier for us. Now we’re applying the same rules across the organization.” It has given employees a one-year grace period to get married to maintain their benefits.

In cases where companies offered domestic partner benefits to same-sex couples only, the point would now seem to be moot, as they can no longer be accused of discrimination based on sexual orientation where such laws are in effect. Now, ironically, if a company continues to offer domestic benefits to unmarried, same-sex couples, but not those of opposite-sex, unmarried couples, it could be vulnerable to discrimination suits.

Whether companies choose to defend themselves in court or extend the definition of domestic partnerships to include opposite-sex couples, this is added headache and cost. Drop domestic partnership benefits and the headaches and costs go away.

Related Article:Why the Best Employee Benefits Don’t Stop with HR

The Argument to Keep Domestic Partner Benefits

Yet another complication is that not all states explicitly prohibit workplace discrimination based on sexual orientation. Modern Healthcare notes the argument that “forcing” a gay person to marry in effect outs them. Employee benefits attorney Todd Solomon says, “So to require someone to get married and make an outward affirmative statement might put someone’s job at risk under state law.”

Gay rights organization Human Rights Campaign advocates retention of domestic partnership benefits “as a sign of sustained commitment to family diversity, inclusion and protection of LGBT employees whose rights outside the workplace are not guaranteed under law in many states.”

Companies that already extend domestic partner benefits to opposite-sex couples are likely to continue to do so. The thinking is that such a benefit maintains employee loyalty, enhances the company’s image as socially progressive and reflects the ethical values of ownership.

Moreover, the trend among millennials, a key labor demographic, is cohabitation outside of marriage, according to NPR. A company that offers domestic partnership benefits might have a competitive recruiting edge over those that do not.

What should your business do? It depends on how many states you operate in, the costs of your benefits, your particular social values and, to be realistic, what your accountant and lawyer are telling you. Perhaps the best advice to small businesses is to take a wait and see attitude if you aren’t entirely of one mind or the other. You might also open a discussion with your employees to see how they feel. For small companies, this may not be much of an issue. But is if it is an issue, you want to be aware that it is an issue and address it in a way that is fair both to you as a business owner and the interests of your employees.    

 

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