Should You Eliminate Domestic-Partner Benefits?

July 16, 2015 4:06 pm

By Barbara Frankel

Photo by Shutterstock

Photo by Shutterstock

Now that the Supreme Court has ruled that same-gender partners have a constitutional right to marry, is there still a need for companies to offer domestic-partner benefits?

A few companies, including IBM and Verizon, are dropping the benefits for employees who live in states where same-gender marriage is legal. But most employers are still grappling with this decision and HR experts feel few will eliminate the benefits, since that could cause valued employees to go elsewhere in a tight labor market.

The Background

In the last decade, as efforts to give gay and lesbian couples equality in the workplace increased, an increasing number of companies began to offer same-gender domestic-partner benefits so partners could receive health benefits as well as other benefits, such as condolence leave and automatically being named a beneficiary for pensions and other financial documents. In 2007, DiversityInc made having same-gender domestic-partner benefits a requirement to be named a Top 50 Company for Diversity.

Some companies also decided to offer domestic-partner benefits to opposite-gender couples in an effort to be inclusive. According to the Human Rights Campaign, 66 percent of Fortune 500 companies now offer domestic-partner benefits to same-gender partners and of those, 62 percent offer the benefit to opposite-gender partners.

Pros and Cons

LGBT organizations such as the Human Rights Campaign and Lambda Legal are urging corporations to keep domestic-partner benefits, especially for same-gender couples.

Their rationale is that about 25 states do not have anti-discrimination laws based on sexual orientation.  That means that same-gender couples that marry to get their benefits are “outing” themselves and then could be discriminated against in other ways.

“If an LGBT employee is, in effect, ‘outed’ by being required to obtain a public marriage license in a state that doesn’t provide explicit nondiscrimination protections, it could place that employee and their family at risk of being denied credit, housing and public accommodation. These core elements of daily life could be compromised for LGBT families,” said Sarah Warbelow, Legal Director of the HRC.

HRC is seeking a federal LGBT non-discrimination that addresses bias in credit, education, employment, federal funding, housing, jury service, and public accommodations.

Lambda Legal noted that some couples – same-gender and opposite-gender – choose not to marry. “For example, some couples choose not to marry because marriage would affect their eligibility for need-based financial assistance, or perhaps their visa status for immigration purposes; still other couples decline to marry for personal, religious or philosophical reasons,” Camilla Taylor, Marriage Project Director, wrote in an article published in Variety.

According to Pew Research Center, more than 9 percent of Millennials (of all orientations) have domestic partners, nearly double the percentage of Gen Xers when they were the same age.

So why would companies eliminate domestic-partner benefits? In a brief filed by the Supreme Court in March signed by 379 companies supporting marriage equality, including 25 DiversityInc Top 50 companies,  companies said that inconsistent marriage laws cost U.S. businesses more than $1 billion per year. Actual costs of domestic-partner benefits, however, have been minimal – only about 1 percent of employee health costs, according to the HRC.

Companies that have decided to phase out the benefits are giving employees significant notice and time, according to the New York Times. The Times cited several national HR experts who did not expect most companies to drop the benefits, including Bruce Elliott, manager of compensation and benefits at the Society for Human Resource Management (SHRM), who said, “I would be kind of surprised if we see big trends in that area. Even in light of this ruling, I don’t think they want to shrink that talent pool.”