Same-Sex Marriage: Survey on Policies

The start of same-sex marriages in California on June 16 made headlines across the country. However, it was not such a big deal for many U.S. companies. These businesses already give their gay and lesbian employees many of the same benefits that they provide to their married straight workers, such as health insurance for a spouse or spousal equivalent. Still, there is a limit to what even the most progressive companies can do. Numerous benefits are governed by federal law, which does not recognize same-sex marriages performed anywhere.

Annual Survey

The Human Rights Campaign, a Washington, DC-based gay rights group, conducts an annual survey of Fortune 500 employers to determine which ones offer domestic partner (DP) benefits for their gay and lesbian employees. According to HRC's most recent survey, released in December 2007, DP benefits were provided at 56%, or 278 companies.

Pacific Gas and Electric Company, the San Francisco-based utility, was ahead of the curve. Employment litigation and labor director Stacy Campos says that PG&E created its own internal registry for domestic partners in 1997, when it began offering leave of absence and pension benefits for employees in a same-sex relationship. Medical and other health benefits were extended the following year.

Campos does not think that PG&E will have to make any significant changes to its benefits policies, despite the advent of same-sex marriage in California, but she adds that the company is reviewing its policies nonetheless.

Policy Review

The chair of the State Bar of California's labor and employment law section, Phil Horowitz, thinks it is a good idea for companies to review their policies. Horowitz, a San Francisco-based attorney, urges lawyers at companies that do business in California to go over their employee handbooks and benefits plans. The point of the review: to make sure that they “do not use antiquated language, [such as] assuming that spouses are always opposite genders.” Horowitz adds that human resources personnel may need some sensitivity training to make sure that all employees are treated equally.

In addition, California companies that have not previously offered domestic partner benefits may want to rethink their policy, says Jon Davidson, the legal director at Lambda Legal, a New York-based gay rights organization. “Some employers previously denied health insurance to domestic partners, saying that they only cover married employees' spouses,” Davidson explains. “It will be harder for them to say that they only cover heterosexual employees' legal spouses, since that so clearly is treating [gay and lesbian] employees differently based on their sexual orientation.”

California was not the first state to legalize same-sex marriage; Massachusetts did so four years ago. (Six countries, including Canada, also allow gay and lesbian couples to marry.) However, ever since Congress passed the Defense of Marriage Act (DOMA) in 1996, only opposite-sex marriages are recognized under U.S. federal law.

As a result, companies have to follow two sets of rules, says Maureen O'Neill, an employment law partner at Paul, Hastings, Janofsky & Walker. “For example, a same-sex spouse may be entitled to health insurance coverage under the company's insurance plan if the policy is governed by California law, but the provision of such benefits will be taxable for purposes of federal income tax,” says O'Neill.

Same-sex spouses also cannot file a joint federal income tax return, are not eligible to receive each other's Social Security death benefits, and cannot roll over a 401(k) plan to the other spouse without income tax consequences. As PG&E's Campos notes, “Employers have no choice but to treat same-sex couples differently in terms of taxation.”

The federal/state split may not last. Sen. Barack Obama has endorsed a repeal of the DOMA provision that bars federal recognition of same-sex marriages. Even if that happens, however, companies would still have to deal with a sharp disagreement among the states. A total of 44 states have a constitutional amendment or law limiting marriage to opposite sex couples.

Complicating matters further, California will grant marriage licenses to same-sex couples from any other state. (Massachusetts will only grant licenses to couples from states that do not prohibit same-sex marriage.) Suppose that a company with no operations in California has a gay employee who marries his partner in California. Does the company then have to extend benefits to the employee's new spouse? That is one of several questions that may have to be decided in court.

Still, experts say that businesses should not just stick to the letter of the law. Many Massachusetts businesses give the same benefits to all employees in a same-sex relationship, whether it is a Massachusetts marriage or an out-of-state domestic partnership. They do so in an effort to retain employees and encourage diversity.

Campos thinks that is a smart policy to adopt. “Employers would be foolish to refrain from extending benefits to the same-sex spouses of their employees,” she says. “There is simply no legitimate business reason to differentiate.”

Gay Marriage at Glance

Two states (California and Massachusetts) allow same-sex couples to marry.

One state (New York) recognizes same-sex marriages from other jurisdictions, but does not itself allow same-sex marriage.

Five states (Connecticut, New Hampshire, New Jersey, Oregon, and Vermont) offer spousal rights to same-sex couples through civil unions or domestic partnerships.

Three states (Hawaii, Maine, and Washington, plus the District of Columbia) offer some spousal rights to same-sex couples through domestic partnerships.

Forty-four states (All but California, Massachusetts, New Jersey New Mexico, New York, and Rhode Island) have a constitutional amendment or law that limits marriage to one man and one woman.

Source: Human Rights Campaign

Sherry Karabin is a regular contributor to Corporate Counsel magazine, a sister publication of this newsletter.

The start of same-sex marriages in California on June 16 made headlines across the country. However, it was not such a big deal for many U.S. companies. These businesses already give their gay and lesbian employees many of the same benefits that they provide to their married straight workers, such as health insurance for a spouse or spousal equivalent. Still, there is a limit to what even the most progressive companies can do. Numerous benefits are governed by federal law, which does not recognize same-sex marriages performed anywhere.

Annual Survey

The Human Rights Campaign, a Washington, DC-based gay rights group, conducts an annual survey of Fortune 500 employers to determine which ones offer domestic partner (DP) benefits for their gay and lesbian employees. According to HRC's most recent survey, released in December 2007, DP benefits were provided at 56%, or 278 companies.

Pacific Gas and Electric Company, the San Francisco-based utility, was ahead of the curve. Employment litigation and labor director Stacy Campos says that PG&E created its own internal registry for domestic partners in 1997, when it began offering leave of absence and pension benefits for employees in a same-sex relationship. Medical and other health benefits were extended the following year.

Campos does not think that PG&E will have to make any significant changes to its benefits policies, despite the advent of same-sex marriage in California, but she adds that the company is reviewing its policies nonetheless.

Policy Review

The chair of the State Bar of California's labor and employment law section, Phil Horowitz, thinks it is a good idea for companies to review their policies. Horowitz, a San Francisco-based attorney, urges lawyers at companies that do business in California to go over their employee handbooks and benefits plans. The point of the review: to make sure that they “do not use antiquated language, [such as] assuming that spouses are always opposite genders.” Horowitz adds that human resources personnel may need some sensitivity training to make sure that all employees are treated equally.

In addition, California companies that have not previously offered domestic partner benefits may want to rethink their policy, says Jon Davidson, the legal director at Lambda Legal, a New York-based gay rights organization. “Some employers previously denied health insurance to domestic partners, saying that they only cover married employees' spouses,” Davidson explains. “It will be harder for them to say that they only cover heterosexual employees' legal spouses, since that so clearly is treating [gay and lesbian] employees differently based on their sexual orientation.”

California was not the first state to legalize same-sex marriage; Massachusetts did so four years ago. (Six countries, including Canada, also allow gay and lesbian couples to marry.) However, ever since Congress passed the Defense of Marriage Act (DOMA) in 1996, only opposite-sex marriages are recognized under U.S. federal law.

As a result, companies have to follow two sets of rules, says Maureen O'Neill, an employment law partner at Paul, Hastings, Janofsky & Walker. “For example, a same-sex spouse may be entitled to health insurance coverage under the company's insurance plan if the policy is governed by California law, but the provision of such benefits will be taxable for purposes of federal income tax,” says O'Neill.

Same-sex spouses also cannot file a joint federal income tax return, are not eligible to receive each other's Social Security death benefits, and cannot roll over a 401(k) plan to the other spouse without income tax consequences. As PG&E's Campos notes, “Employers have no choice but to treat same-sex couples differently in terms of taxation.”

The federal/state split may not last. Sen. Barack Obama has endorsed a repeal of the DOMA provision that bars federal recognition of same-sex marriages. Even if that happens, however, companies would still have to deal with a sharp disagreement among the states. A total of 44 states have a constitutional amendment or law limiting marriage to opposite sex couples.

Complicating matters further, California will grant marriage licenses to same-sex couples from any other state. (Massachusetts will only grant licenses to couples from states that do not prohibit same-sex marriage.) Suppose that a company with no operations in California has a gay employee who marries his partner in California. Does the company then have to extend benefits to the employee's new spouse? That is one of several questions that may have to be decided in court.

Still, experts say that businesses should not just stick to the letter of the law. Many Massachusetts businesses give the same benefits to all employees in a same-sex relationship, whether it is a Massachusetts marriage or an out-of-state domestic partnership. They do so in an effort to retain employees and encourage diversity.

Campos thinks that is a smart policy to adopt. “Employers would be foolish to refrain from extending benefits to the same-sex spouses of their employees,” she says. “There is simply no legitimate business reason to differentiate.”

Gay Marriage at Glance

Two states (California and Massachusetts) allow same-sex couples to marry.

One state (New York) recognizes same-sex marriages from other jurisdictions, but does not itself allow same-sex marriage.

Five states (Connecticut, New Hampshire, New Jersey, Oregon, and Vermont) offer spousal rights to same-sex couples through civil unions or domestic partnerships.

Three states (Hawaii, Maine, and Washington, plus the District of Columbia) offer some spousal rights to same-sex couples through domestic partnerships.

Forty-four states (All but California, Massachusetts, New Jersey New Mexico, New York, and Rhode Island) have a constitutional amendment or law that limits marriage to one man and one woman.

Source: Human Rights Campaign

Sherry Karabin is a regular contributor to Corporate Counsel magazine, a sister publication of this newsletter.