Employers’ Brief for Same-Sex Marriage Cites Benefits Burden

Tax ‘gross ups’ among the added costs of unequal treatment for same-sex spouse benefits

By Stephen Miller, CEBS Mar 10, 2015

Apple, Coca-Cola and Johnson & Johnson were among 379 companies to sign an amicus brief asking the U.S. Supreme Court to hold that same-sex couples have a constitutional right to marry nationwide. Such a ruling would allow employers “to recruit and retain top talent, in part through equitable and competitive benefits packages,” the brief stated.

The Supreme Court is scheduled to hear arguments on April 28, 2015 in Obergefell v. Hodges, in which same-sex couples are seeking to overturn state bans against recognition of their marriages. A ruling is expected at the end of the court’s term in late June.

Brief of 379 Employers and Organizations Representing Employers highlighted the added cost and administrative burden of treating benefits for same-sex spouses or partners unequally in states that don’t allow or recognize same-sex marriage, stating:

To take one common example, workers in a nonrecognition state with a same-sex spouse or partner are typically taxed on the value of health-care benefits for their spouses/partners, whereas employees with different-sex spouses are not so taxed. Many employers will attempt to address such taxability differences by increasing (or ‘grossing up’) pay for workers with same-sex spouses/partners. While grossing up and other workarounds offer many employers a way to reduce the competitive disadvantage of doing business in states that ban same-sex marriage, they also increase costs on the employer beyond the direct cost of benefits.

  • It is estimated that grossing up for an employee who incurred between $1,200 and $1,500 in extra taxes costs the employer between $2,000 and $2,500.64 In other words, employers with a grossing up policy pay more to provide equivalent benefits.
  • In short, workarounds themselves cause administrative burden, sometimes requiring employers with grossing up policies to retain experts to craft policies and structure systems that will account for gross-up amounts, as well as to educate human resources, benefits, and payroll administrators.

“This historic filing reflects over a decade of leadership by America’s top businesses,” said Deena Fidas, director of workplace equality program at the HRC Foundation, an affiliate of the Human Rights Campaign, an advocacy group that supports same-sex marriage. “These employers have come together to convey to the Supreme Court that marriage equality isn’t just right, it’s good for business,” she added in a news statement.

The brief was signed by a range of companies, from the nation's largest banks and name-brand product giants to small businesses and business associations, and included sports teams such as the New England Patriots and San Francisco Giants.

Among the authorities cited in Brief of 379 Employers and Organizations Representing Employers is “Joanne Sammer & Stephen Miller, The Future of Domestic Partner Benefits: If same-sex couples can wed, should employers provide benefits to unmarried couples?, Society for Human Resource Management (Oct. 21, 2013).”

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.

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