Greater recognition of work force diversity, competitive pressures and basic concerns about fairness are all factors encouraging more employers to extend benefits to employees' same-sex domestic partners.

Many employers also are discovering that adding domestic partner benefits, which offer medical coverage and other benefits to unmarried domestic partners, can be done at little added cost, benefit experts say.

The recent U.S. Supreme Court decision that declared Texas' anti-sodomy law unconstitutional is expected to provide added encouragement to employers to introduce the benefit to same-sex couples.

"I believe that it has been good for Shell that we did this, for two reasons," said Ed Kahn, director of human resources strategy and integration at Houston-based Shell Oil Co., which offers domestic partner benefits to its employees.

"One is, it has expressed to all our employees that we have great respect and value their contribution to the company and that their private lives are essentially their private lives.

"Second of all, I think it makes Shell a more attractive employer. It's the kind of thing that says to people, `We value diversity; we value differences,"' Mr. Kahn said.

The Village Voice, the New York weekly, was the first employer in the United States to offer domestic partner benefits to its lesbian and gay employees in 1982, according to Washington-based Human Rights Campaign Foundation. Cambridge, Mass.-based Lotus Development Corp. became the first publicly traded company to introduce the benefit in 1992.

Today, more than 5,800 employers offer domestic partner health benefits, according to HRC. They include 198 of the Fortune 500 companies; 5,247 other private companies, nonprofits and unions; 187 colleges and universities; 162 local governments; and 10 state governments. Several cities, including San Francisco, require companies with which they have contracts to offer the same benefits to domestic partners as they do to married spouses.

Ilse de Veer, Norwalk, Conn.-based principal with Mercer Human Resource Consulting, said, "The trend over the last 10 years has sort of been industry by industry, so that one company in a particular industry begins to offer it, and then others of their competitors decide to do it for competitive reasons."

Columbus, Ohio-based Nationwide Insurance Co., which introduced its domestic partner benefits program in 2000, "recognized that the history of who's eligible for benefits coverage came from old insurance laws and regulations, and America's familiar households, if you will, have changed significantly from when most of those laws and regulations were passed," said Jack Towarnicky, associate vp of benefits planning.

"The major impetus was equal pay for equal work," said Stan Kimer, Research Triangle Park, N.C.-based program manager for gay, lesbian, bisexual and transgender initiatives at IBM Corp., which introduced its domestic partners program in 1997.

Because gay and lesbian couples were unable to get benefits, it meant they were receiving a lower compensation package than heterosexual couples, Mr. Kimer said. IBM's program also helps "to attract and retain the best employees."

Virginia LaFrance, benefits manager at New York-based American Express Co., which introduced its program in 1997, said, "We wanted to be able to attract and retain employees from all different parts of the population, all different, diverse groups, and we want to offer a competitive benefits package."

About two-thirds of employers offer domestic partner benefits to opposite-gender as well as same-gender couples, say observers. Some do it "just because if you're going to set it up administratively, you might as well do it for both," said Dean Hatfield, regional practice leader for Buck Consultants in New York. "But some employers feel it really should only apply to those of the same sex, because those of the opposite sex have the choice to get married."

Shell offers domestic partner benefits to both same-gender and opposite-gender couples. "I think the impetus for introducing benefits to same-sex partners was based on a premise of wanting to show our respect to all of our employees, that they're all valued, and fundamental fairness, and so in that same spirit we decided it didn't make sense to offer it to some kinds of domestic partners and not to others," said Mr. Kahn.

IBM offers it only to same-gender couples because opposite-gender couples can get married, said Mr. Kimer. "We've also stated that if there is a time when same-gender marriage is accepted in the U.S., then we would no longer offer the benefit because then same-gender couples and opposite-gender couples would be on an equal footing."

Observers say many employers with domestic partner benefit programs offer a full package of health benefits packages to their employees, including medical, dental and vision benefits as well as life insurance. The philosophy is, "if you're going to do it, you might as well offer the entire package," said Mr. Hatfield. Some employers also permit domestic partners to receive survivor benefits from employees' pension plans and may offer other benefits as well, such as bereavement leave.

To qualify for domestic partner benefits, employees may be asked to sign a statement or submit an affidavit asserting they live with a domestic partner and are financially interdependent. "Generally, it's going to be someone you have a live-in relationship with for at least 12 months, so that there's not a revolving door," said Karen Roberts, senior vp for Aon Consulting in San Francisco.

"We ask the people to execute a affidavit of domestic partner benefits, but we do not request that they send it in," IBM's Mr. Kimer said. "We just say IBM has the right to ask for it at any time and for the employees to keep it for safekeeping."

Only about 1% to 2% of employees sign up for these benefits, say observers. This may be because many partners may have coverage through their own workplace. Furthermore, for many there are no tax advantages to obtaining the coverage. The Internal Revenue Service has held that domestic partners cannot be considered spouses for tax purposes, which means employees must pay federal income taxes on the value of the medical insurance that companies provide to cover their domestic partners.

Domestic partner benefits can be considered nontaxable only if the partner meets the IRS definition of a dependent, which is someone who lives in the employee's household and receives at least half of his or her support from the employee.

"Most partners are both employees, so unless one partner has very poor benefits from their current employer, they don't want to pay the extra tax, and so the only people who are choosing the domestic partner benefits are those who don't have the coverage" and have no other option, said Mr. Hatfield.

This situation creates some added administrative cost for the employer, said Ms. Roberts. "That is definitely a slight complication for now because payroll has to have this additional bucket" for the additional tax involved, said Ms. Roberts.

"It's pretty administratively cumbersome," concurred Nationwide's Mr. Towarnicky. "We'd like to be able to essentially administer it the same way" as, for example, the company does for married couples.

Overall, though, domestic partner benefits add little to employers' cost, observers say.

"The total cost of the benefit programs enrollment in these programs remains low, typically less than 1%" of total costs, said Ms. de Veer.

IBM's Mr. Kimer agreed. "In terms of the overall expense to IBM, it is a fraction of a percent addition to our benefits cost," he said.

Despite some initial fears, AIDS is not a material factor in offering domestic partner benefits, say observers, who note that today other claims, including premature births, are considerably more expensive. "This concern that there were people in need of health insurance waiting in the wings to enroll as domestic partners in employer health plans has never happened," said Andrew Sherman, senior vp with The Segal Co. in Boston.

"It's certainly a philosophical issue and not a financial issue," said Aon's Ms. Roberts. "Any employer who has based their reason for not offering it on cost really has not done their homework."

Many observers believe more employers will offer domestic partner benefits in the future, although perhaps at a slower rate than in the past because many of those most likely to introduce the benefit have already done so.

"The numbers show that every year there has been an increase in Fortune 500 companies offering domestic partner benefits, and I think that's going to continue to increase," Mr. Kimer said. "Companies are going to get more and more competitive in terms of offering competitive packages to employees," and the number offering it will continue to grow, he said.

"I think that we are seeing an increasing number of smaller companies and companies (that are) not on one of the two coasts also including domestic partner benefits in their plans," Mr. Sherman said. "A lot of smaller companies are able to do so now because there's insurance coverage available that there hadn't been in the past." Initially, only large, self-employed companies were able to introduce it, he said.

However, Randall Abbott, Philadelphia-based senior consultant with Watson Wyatt Worldwide, disagreed. Although about 40% of the Fortune 500 companies have already adopted domestic partner benefits, it may not be a benefit that smaller, closely held companies would feel comfortable adopting, he said.

Mr. Abbott said domestic partner benefits has been "pretty much a dormant issue since the recession began."

"I don't feel that we're going to see a sea change in practices, because even though the cost of implementing domestic partner benefits is nominal, it's still an additional cost at a time when health care costs are rising," said Mr. Abbott.

Some observers believe that the U.S. Supreme Court's recent decision in Lawrence vs. Texas is spurring renewed interest in domestic partner benefits. The high court ruled that a Texas law prohibiting sexual conduct between same-sex persons violates the 14th Amendment's due process clause. Some employers who may have hesitated to offer domestic partner benefits before, because they feared that lent their imprimatur to an illegal act, may now introduce it, say some observers.

The Supreme Court decision, as well as approval of same-sex marriage in Canada and an expected ruling on the issue by Massachusetts' highest court, has created a greater awareness of domestic partner benefits in the last three or four months "than there's been in at least a couple of years," said Mr. Sherman. "Our sense is that this is certainly leading to more companies considering including domestic partner benefits."

However Daryl Herrschaft, deputy director for WorkNet, an HRC Foundation project, said, "I think a lot of companies are going to be offering the benefit in the coming years, but I don't think that's a function of the sodomy ruling.

"I believe it is a realization that in order to remain competitive in the labor market, in order to be an employer of choice, in order to hang onto or, rather, retain valued employees, these benefits are increasingly becoming standard business practice."