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Domestic partner benefits could change in wake of same-sex ruling

Posted On: Jun. 26, 2015 12:00 AM CST

The nationwide legalization of same-sex marriage could prompt some employers to drop health care and retirement benefits for their employees' domestic partners, experts say.

Following the U.S. Supreme Court's historic ruling Friday invalidating state laws that deny marriage rights to gay and lesbian couples — effectively granting them access to the same state-level benefits and protections afforded to married opposite-sex couples — benefits experts say employers currently offering spousal-equivalent benefits to same-sex domestic partners may choose to eliminate that coverage going forward in order to simplify administration of their plans.

• PHOTO GALLERY: THE SUPREME COURT RULES ON SAME-SEX MARRIAGE

READ THE RULING HERE

“With today's ruling, employers will need to consider how best to design their employee benefits plans to attract and retain the best talent,” J.D. Piro, senior vice president at Aon Hewitt, said in an advisory published Friday. “Some employers may move toward offering spousal benefits under one common umbrella. Others will continue to offer benefits coverage to both same-sex and opposite-sex domestic partnerships, while also recognizing the broader definition of marriage endorsed by the Supreme Court.”

Twenty-nine percent of employers polled in 2013 by the Washington-based ERISA Industry Committee said they planned to change their benefits coverage for gay and lesbian domestic partners as a result of the Supreme Court's striking down of Section 3 of the Defense of Marriage Act, which barred recognition of same-sex marriages at the federal level.

A key factor in many employers' decisions about whether they will continue to offer benefits to same-sex domestic partners could be the extent to which they already cover — or are willing to cover — opposite-sex domestic partners.

“If the employer also covers opposite-sex unmarried partners, it is unlikely to eliminate any coverage because it already covers a set of unmarried employees who have had the ability to marry,” said Todd Solomon, a Chicago-based partner at McDermott Will & Emery L.L.P. “On the other hand, if the employer covers only same-sex unmarried partners, it might deem it most fair to require those employees to marry in order to retain their benefits.”

While eliminating coverage for domestic partners might be sound strategy from a financial and administrative perspective, experts say employers should weigh the decision carefully, particularly given the lack of employment discrimination protections for gay and lesbian workers both at the federal level and in 28 states.

“This decision is not a simple one and cannot be made without taking into account the historical and political context,” Mr. Solomon said. “For example, a gay or lesbian employee can still legally be fired in many states. So it might not be desirable to 'force' an employee to take the public step of getting married.”

Earlier this month, the Washington-based Human Rights Campaign urged employers to continue covering domestic partners under their benefits plans regardless of the Supreme Court's decision on state-level marriage laws.

“Best-in-class employers will continue to offer domestic partner benefits to same-sex and opposite-sex couples, embracing family diversity and maintaining a competitive talent pool,” Deena Fidas, director of HRC's workplace equality program, said in a statement published on June 16. “In fact, the business sector trend line has pointed to employers viewing partner benefits as key to a fully inclusive workforce beyond the LGBT community.”