Be Careful What You Wish For…. Collateral Damage from Marriage Equality?

One of the fears of those observing the campaign for marriage equality is that if same-sex marriage becomes available, progress on getting recognition for alternative arrangements that some might prefer could be lost.  After same-sex marriage became available in Massachusetts in 2004, some employers that had been providing domestic partnership benefits for same-sex partners of their employees dropped the program, announcing that those who wanted to keep getting the benefits could get married.  Not all employers did this, and those who had made partner benefits available generally, not just to same-sex partners, tended to keep the plans in place.

The Wall Street Journal, always looking at the business angle of any new development, got to work after the NY Marriage Equality Act was signed, calling around to major corporate employers with domestic benefits policies to find out what they were planning for New York.  They found two large employers, Raytheon and IBM, which announced that gay employees who wanted to keep partner benefits would have to marry their partners.  But most of the employers questioned had not made a decision yet or said they weren't planning to change.

From the legal perspective, private sector employers can pretty much do what they want on this, unless they have entered into collective bargaining agreements or individual employment contracts that specifically provide for partner benefits, in which case negotiations would be necessary before any change under labor relations law or contract law.  But most private sector employers are not dealing with unions and don't have individual binding contracts concerning their benefit plans.  Under the federal Employee Retirement Income Security Act, employers can modify employee benefit plans so long as they follow any steps laid out in their plan.  And ERISA preempts state law affecting employee benefits, so New York employee benefits law is pretty much irrelevant to this question.

That means the issue is whether employers decide as a matter of company policy that it makes sense to maintain existing domestic partner plans, or whether a change is in order.  For those employers who extended the benefits solely to remedy a pay equity issue — i.e., to make sure that their gay employees were receiving equal compensation to their non-gay employees — the availability of same-sex marriage beginning July 25 suggests that equal treatment means gays have to marry their partners.  But I think employers need to step back and consider the big picture here.  Why do employers provide employee benefits at all, when they are not mandated by law?  Presumably because such benefits serve a useful function in their business.  Having good benefits makes an employer competitive in the labor market, builds employee loyalty and thus promotes retention of good workers, and also helps employee morale.  Having a benefits plan that is inclusive of non-traditional familes, whether they involve same-sex couples or all varieties of family life, sends a signal of acceptance of family diversity that is especially attractive to younger workers who are growing up with newer, flexible notions of what constitutes a family.

Census data tell the story.  Over time, the various forms of family units in our society have been evolving and the "traditional" mom + pop + 2.5 kids is a minority of family units today.  Many different-sex couples live together quite happily without being married, sharing a household, caring for each other, varying in how they set up their financial arrangements.  Exhibits A and B – Governor Cuomo and Mayor Bloomberg.  An employer whose benefits policy hinges on marital status is way behind the times, since it is likely that a significant portion of their workforce includes people living in non-marital relationships.  While many gay employees with long-term partners may decide to marry, some will not, but will still need these benefits for the well-being of their household, and that relates back quite directly to many of the reasons why employers provide benefits in the first place.

So I would urge that employers think this through carefully.  For those who have provided benefits only for same-sex partners, now may be the time to restructure so that all employees who can meet reasonable criteria concerning unmarried partners can obtain equal benefits treatment with married employees.  The tax burdens associated with this, in light of the restrictive federal policies on family structure under the Tax Code, may deter some eligible employees – and some companies have decided to counter that by picking up the extra tax costs — but the main point here is that people should have the option.

Amidst the celebrations of Friday night and the ensuing weekend, one hopes that the enactment of this landmark law does not mean that some people are forced to marry against their will to retain benefits and others who are not interested in a legal marriage for their relationship suddenly find themselves without affordable insurance coverage.

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