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President's Support of Same-Sex Marriage Puts Benefits Managers on Notice

Employers may need to revise or revisit their domestic-partner benefits frequently to make sure they are in line with state-mandated same-sex marriage laws.

May 14, 2012
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Employers face a growing jumble of laws on same-sex unions and domestic-partner benefits, a trend that could accelerate with President Barack Obama's recent support for gay marriage, experts said.

The president's words won't cause any immediate legal changes, and many large companies are already covering domestic partners above and beyond state laws, said Joan Smyth, a partner at global benefits consulting firm Mercer.

"The president's pronouncement isn't a law; it didn't place any requirements on employers to do anything," Smyth said, adding, "I could see a CEO saying, 'I've always wanted to do this, so let's do it.' "

Obama said in an interview last week with ABC, "I think same-sex couples should be able to get married."

In 2011, 46 percent of large employers (those with more than 500 workers) offered same-sex domestic-partner benefits, up from 39 percent in 2010, shows Mercer's national survey of employer-sponsored health plans. Employers in Western states were most likely to offer these benefits, with 79 percent offering them last year. Employers in the South were least likely to offer the benefits, with 28 percent offering them in 2011, Mercer says.

Obama's comments "might accelerate the trend a little bit but the trend is accelerating already," Smyth said.

Gay rights groups said the president's backing brings the issue to the forefront.

"The unprecedented news of having a sitting president support marriage equality has opened up the conversation," said Deena Fidas, spokeswoman for the Human Rights Campaign.

Today, 17 jurisdictions either recognize same-sex marriage or allow unmarried couples to join in state-sanctioned unions. Eight states and the District of Columbia allow same-sex marriage and treat all spouses identically for state law purposes, including insurance, employment and taxation.

Five states have legalized civil unions and, in four states, domestic partners enjoy the same rights under law as opposite-sex marriages. Another six states offer limited rights to all unmarried couples, according to a recent Mercer report.

And on May 14, Rhode Island Gov. Lincoln Chafee declared that the state will recognize same-sex marriages performed elsewhere, giving gay couples the same rights as heterosexual ones when it comes to health insurance and a slew of other benefits.

The private sector is ahead of the public sector, Fidas said. "What's interesting is that despite the confusion and contradictions in the states on the issue, corporate America continues to surge ahead," she said.

There's a lot for benefit managers to consider when it comes to extending coverage to same-sex partners, Smyth said.

Employers must take into account disability benefits, life insurance policies, retirement plans, medical coverage and family-leave laws in the states they operate.

Companies with self-funded health and welfare policies are governed by the Employee Retirement Income Security Act, or ERISA, which pre-empts state laws on benefits.

"In general, employers with self-insured ERISA health and welfare plans may choose whether and to what extent they will provide benefits to life partners, irrespective of state law," Mercer said in a recent report.

State nondiscrimination laws can come into play, however. Some employers offer family discounts or memberships for products or services, or bereavement leave, and those benefits must extend to opposite-sex spouses and life partners where state law prohibits discrimination, according to Mercer.

Twenty-one states and the District of Columbia have workplace nondiscrimination laws, according to the Human Rights Campaign.

Complicating matters further, some federal and state laws on same-sex marriage are being contested in the courts or are in flux because of pending legislation or ballot initiatives.

"Employers would be well-advised to monitor developments in the courts, legislatures and voter referendums," Mercer said in a recent report. California's Proposition 8 prohibiting same-sex marriage is winding its way through the courts, and in Washington state, opponents of same-sex marriage have vowed to block a new law legalizing the unions starting in June.

Meanwhile, a day before Obama announced his support of gay marriage, North Carolina voters approved Amendment One, defining marriage as only between a man and a woman. The constitutional amendment passed by a 61-39 percent margin.

Employers may need to revise or revisit their domestic partner benefits frequently to make sure they are in line with state-mandated same-sex marriage laws, advises Mercer.

In the past 10 years, more employers have seen that offering equal benefits to same-sex couples is smart business, said Smyth, and the cost has proven to be minimal.

"It attracts and retains good employees and keeps employers competitive," she said of the benefits.

Fidas agreed. Among Fortune 500 companies, 60 percent offer domestic-partner benefits, the Human Rights Campaign says. "There's a sense that workplace equality has permeated the society," she said.

Rebecca Vesely is a writer based in San Francisco. To comment, email editors@workforce.com.

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