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N.J. court OKs rights for same-sex couples

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N.J. court OKs rights for same-sex couples

TRENTON, N.J.—A New Jersey Supreme Court's ruling last week that committed same-sex couples must be given the same rights and benefits enjoyed by opposite-sex couples is unlikely to have a major impact on the benefit plans of large employers operating in the state.

Observers note that even if the New Jersey Legislature decides to take the ultimate step of recognizing same-sex marriage--which is considered unlikely--the law would not apply to self-insured employers' benefit plans. That is because a federal law--the Employee Retirement Income Security Act--pre-empts state laws and rules that relate to employee benefit plans. ERISA pre-emption, though does not apply to benefit plans employers purchase from insurers.

Furthermore, as in Massachusetts, where same-sex marriage became legal in 2004, employees would remain ineligible for benefits, like 401(k) plans, authorized under federal law.

New Jersey's Legislature approved a Domestic Partnership Act in 2004, but that law does not apply to self-insured employers and explicitly does not require employers to provide health dependent coverage to an employee's domestic partner.

The New Jersey Supreme Court said in its decision last week, "We have decided that our State Constitution guarantees that every statutory right and benefit conferred to heterosexual couples through civil marriage must be made available to committed same-sex couples."

The decision gives the Legislature 180 days to either amend the state's marriage statues or enact an "appropriate statutory structure."

The ruling says that "you don't have to call it 'marriage' if you don't want to, but you have to give gay couples the ability to enter into unions that, for all practical purposes, offer the same rights and privileges as marriage," said J.D. Piro, Norwalk, Conn.-based chair of Hewitt Associates Inc.'s health law consulting practice.

Currently, the only state that offers same-sex couples all of the state-level rights and benefits of marriage is Massachusetts, though such couples can enter into state-level civil unions in Vermont and Connecticut, according to the Washington-based Human Rights Commission.

Most of New Jersey's larger employers will likely see little impact.

Mid- to large-sized employers typically are self-insured, and any legislative action would apply to employers that are not self-insured and to state workers, said Andy R. Anderson, of counsel with Morgan, Lewis & Bockius L.L.P. in Chicago.

Ilse de Veer, a principal with Mercer Human Resource Consulting in Norwalk, Conn., said if New Jersey lawmakers do decide to legalize same-sex marriage, the impact "would be very similar to the impact in Massachusetts," where employers are basically stuck between the conflicts in state and federal law.

If the lawmakers decide to create a separate-but-equal category along the lines of civil union, it will have less impact, "simply because New Jersey already has a domestic partner registry," she said.

Under current New Jersey law, domestic partner benefits are tax-free, and that provision would remain in place if the Legislature decides to establish civil unions, said Ms. de Veer.

Paul Sullivan, Newburyport, Mass.-based assistant vp with Aon Consulting, said Vermont law requires insurers to offer civil union coverage, but employers are not mandated to provide it, and "New Jersey may do the same type of thing."

The ruling, though, will force employers that do not already do so to consider offering domestic partner benefits, said Mr. Anderson. "There are an awful lot of employers in New Jersey who don't," he said.

According to the Washington-based Human Rights Commission, as of March, nationally 49% of Fortune 500 companies--and 78% of the Fortune 100--offered health benefits to employees' domestic partners.

Meanwhile, employers that already offer domestic partner coverage may require their employees to comply with whatever statutory requirements are ultimately imposed by the Legislature in order to continue those benefits, Mr. Anderson said.

However, "it's a little premature for an employer to react to this decision until we see what the Legislature winds up doing," Mr. Anderson said.

In addition to its impact on benefit plans, under the ruling same sex couples would also be entitled to survivor benefits under workers comp law, said John Geaney, a workers comp attorney with Capehart & Scatchard in Mount Laurel, N.J.

Mark Lewis and Dennis Winslow et al. vs. Gwendolyn L. Harris et al., Supreme Court New Jersey, A-68-05