1982, the Village Voice started the trend of offering domestic-partner
benefits, or benefits an employer voluntarily decides to offer to
an employee's unmarried partner of the same or opposite sex, to
its employees. The cities of Berkeley and West Hollywood, Calif.,
followed suit in 1985. And since then, about 3,500 employers - including
nearly one-fifth of Fortune 500 companies - have offered domestic-partner
benefits, according to Kim Mills, education director for the Human
Rights Campaign, a national gay and lesbian political organization.
trend] really took off in the IT sector in the 1990s. Since then,
we've seen a lot of communication firms, law firms, a growing number
of unions, and labor organizations. Recent trends are toward gas
and oil, and banking and financial services. There is not so much
in manufacturing and food services - industries where benefits in
general tend to be sparse," said Mills.
Kirchner, a principal with the Benefits Consulting Group at the
Boston-based law firm Ropes & Gray, said both large corporate
clients and smaller, 10-person companies are offering domestic partner
benefits. "Domestic partner benefits are one more way in which
corporate America has stayed ahead of the federal government,"
Kirchner said. "Despite the hurdles imposed by the tax code,
companies are saying, 'This is how we're going to do it.' "
is lower than expected
Domestic-partner benefits fall into two categories: same-sex and
opposite-sex partners - and it is up to employers to decide whether
to cover just same-sex partners or both. About 35 percent of the
plans that the Human Rights Campaign has followed offered benefits
only to same-sex partners. However, it is predominantly opposite-sex
domestic partners who take advantage of the other 65 percent of
plans that offer benefits to both types of partners. Sixty-seven
percent of individuals participating in domestic-partner coverage
are in opposite-sex relationships, according to a study conducted
by Hewitt Associates in 1994.
are trends that continue today. "Overwhelmingly, opposite-sex couples
are the ones who take advantage of it," said Ken McDonnell of the
Employee Benefit Research Institute (EBRI). In fact, he said, many
same-sex partners are not taking advantage of benefits when they
are offered. "Hewitt was anticipating in its planning stages about
10 percent [participation]. Usually, 2 to 3 percent of those eligible
take advantage of benefits," said McDonnell. Reports throughout
the 1990s consistently confirm that enrollment is low, typically
only between 0.5 and 2 percent of eligible employees.
benefits separate but equal?
Companies offer both soft and hard benefits to domestic partners.
Soft benefits include sick leave, access to company facilities,
employee assistance programs, and employee discounts. The higher-cost
hard benefits include medical insurance, dental insurance, dependent
life insurance, daycare, and tuition assistance.
to a domestic-partner benefits fact sheet compiled by the EBRI,
"Most employers that offer domestic partner benefits offer a range
of only low-cost benefits." However, McDonnell said that medical
coverage is the indicator in which people primarily are interested.
The Human Rights Campaign, for example, uses health insurance as
a minimum indicator when counting employers who offer domestic-partner
Nass, of the Chevron Chemical Company's Oronite Additives Division,
participates in the domestic-partner benefits program at his company.
He said that at Chevron, almost all of the spousal benefits are
extended to domestic partners, with slight exceptions in retirement
and COBRA benefits for federal tax reasons. "Anything that
said 'spouse' now says 'spouse/domestic partner.' The mechanisms
to implement it worked the same as if I had gotten married. It all
went pretty smoothly. I have identical coverage [to that of a married
employee]. There haven't been any problems. It has been working
all companies offering domestic-partner benefits require employees
to prove the existence of a relationship, something married employees
are usually not required to do. A survey by the Society for Human
Resource Management said that 42 percent of employers offering domestic-partner
benefits require employees to prove common residency through rental
agreements, mortgage documents, leases, and bills. Companies also
usually require a six-month to one-year waiting period between relationships
to verify the seriousness of the partnership. "In domestic-partner
situations, there is a presumption that relationships are less committed,"
said some Chevron employees found the affidavit an inconvenience,
but after the 10 minutes it took to complete the form and get it
notarized, it was done.
COBRA and more taxes for domestic partners
There are considerable legal differences between domestic partnership
and marriage, particularly in federal
tax law. The Consolidated Omnibus Budget Reconciliation Act of 1995
(COBRA) requires companies with 20 or more employees to continue
medical benefits to spouses and dependent children in the event
of death, divorce, reduction in hours, termination of employment,
Medicare entitlement, and change in dependent status. Same-sex partners
are not legally included in this entitlement. In response, some
companies provide domestic-partner benefits similar to COBRA.
more, the Internal Revenue Service considers domestic-partner benefits
taxable income, while spousal benefits remain tax-free. The benefits
are only considered nontaxable if the partner meets the Internal
Revenue Code Section 152 rule. Under this rule, the partner must
be a dependent "who, for the taxable year of the taxpayer, has as
his principal place of abode the home of the taxpayer and is a member
of the taxpayer's household." Some
employers are finding ways around this dilemma. Companies attempt
to make the benefits more accessible to employees by increasing
the benefits compensation package to offset the amount taxed.
couples aren't more expensive to insure - or retain
Perceived cost remains the primary disincentive for employers when
deciding to enlist partner benefits, as they believe adding more
enrollees to a plan will increase premiums and add further risks
- one concern being that male same-sex partners will be at a greater
risk for AIDS. However, this is offset by the reduced likeliness
of pregnancy. McDonnell said, "It costs nothing extra. Same-sex
couples tend to be cheaper."
have several incentives to offer domestic-partner benefits in a
market where strong compensation packages are needed to attract
and retain employees. In addition to helping companies remain competitive,
equal compensation for employees lifts morale and boosts loyalty,
and workers feel more secure knowing their families are being provided
for. And public image is often improved when a company promotes
equality in the workplace.
are four main reasons why employers decide to offer benefits, according
to Ilse de Veer, a principal in groups benefit practice with William
Mercer who consults with employers on implementing domestic-partner
benefit programs. "The primary reason is to keep pace with the competition,
because the labor market is tight," she said. The other reasons
she cited were employee requests, compliance with company nondiscrimination
policy, and compliance with government ordinances.
reason most companies fail to offer domestic-partner benefits is
that they either do not think they have any gay employees, or they
simply didn't think of it. In the end, though, it takes just a few
manageable steps for a company to implement a program.
Zachary Bromer, Salary.com contributor