Dropping (or Keeping) Domestic-Partner Benefits Has Ramifications

Now that same-sex couples can marry across the land, some employers are dropping benefits coverage for domestic partners. Employers should give notice if they decide to drop the benefits and must avoid discrimination claims either way, attorneys say.

Emerging Trend?

Verizon, Delta, IBM and Corning have either stopped, or announced they will stop, offering domestic-partner benefits, according to The New York Times.

Nevertheless, noted Bruce Elliott, SHRM-SCP, the Society for Human Resource Management’s manager of compensation and benefits, “I don’t see elimination of partner benefits as part of a larger trend.”

Summer Conley, an attorney with Drinker Biddle in Los Angeles, agreed, saying her clients are not dropping domestic-partner benefits.

However, others see employers dropping coverage as a likely outcome.

Joni Andrioff, an attorney with Steptoe & Johnson in Chicago, said it seems likely to her “that eventually employers will want to treat all married and unmarried participants alike, regardless of sex, and will do away with domestic-partner benefits.”

Notice

Andrioff said employers getting rid of domestic-partner benefits should “give couples enough notice so that they can arrange other coverage. Although a domestic partner may not be eligible for COBRA, coverage is available on the Affordable Care Act marketplaces.”

With same-sex marriage legal in all 50 states, it is likely that more employers will require that same-sex couples be married to be eligible for benefits coverage, predicted Todd Solomon, an attorney with McDermott Will & Emery in Chicago.

“Most employers that change to requiring marriage will allow a grace period—e.g., they will give employees six to 12 months to get married before they lose their benefits,” he added.

Discrimination Claims

“Apply the same proof-of-marriage procedures, if any, to verify married same-sex and opposite-sex spouses,” Andrioff recommended.

Employers that also offer benefits to unmarried opposite-sex couples “are less likely to drop benefits for unmarried same-sex partners because they are already accustomed to offering benefits to unmarried partners who have a legal right to marry,” Solomon remarked.

“One important aspect to keep in mind is possible discrimination claims,” he cautioned. “For example, an employer that offers benefits to unmarried opposite-sex partners probably cannot leave those benefits in place while dropping benefits for unmarried same-sex partners without facing a significant risk of a sex discrimination claim under Title VII” of the Civil Rights Act.

Solomon noted that, on the flip side, employers that retain unmarried same-sex partner benefits but don’t have opposite-sex partner benefits could face a legitimate threat of reverse discrimination. “Historically, these types of claims were not very strong because same-sex couples and opposite-sex couples were not similarly situated—i.e., one set of couples could marry freely while the other could not,” he remarked. But that distinction has been eliminated.

“In any event, employers will be wise to consider history when they make these difficult decisions,” Solomon said. “For example, requiring a same-sex couple to marry when that couple has been together for 30 years and has an estate plan and property ownership that contemplates never getting married will likely not be perceived well by employees with same-sex partners. In addition, any change to a benefits package that takes away certain benefits that previously were offered may be perceived negatively by all employees.”

Some state laws require that domestic-partner benefits be the same as those for married individuals, noted Garrett Fenton, an attorney with Miller & Chevalier in Washington, D.C. However, the Employee Retirement Income Security Act (ERISA) may pre-empt these laws, he remarked. (ERISA pre-empts state laws in more circumstances than do equal employment opportunity and leave laws, which typically let state laws with provisions that are more favorable to employees apply.)

Roberta Chevlowe, an attorney with Proskauer in New York City, added, “Some insurers have an impact here, by refusing to issue policies that offer only same-sex—and not opposite sex—domestic-partner coverage.” She said, “If an employer is not willing to expand the eligible group to include opposite-sex partners, then it may have no choice but to eliminate the benefits.”

With same-sex marriage legal in all states, “We most certainly will see further changes in employer policy on this subject,” Chevlowe predicted. “It is possible that many businesses will decide that domestic-partner benefits are no longer necessary for their workforce.”

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.

Related Article:
Poll: Many Will Now Drop Domestic Partner Benefits, SHRM Online Benefits, July 2015