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Record retention is complex and time consuming. However, in addition to complying with various federal and state laws, keeping good, well-organized records can be very helpful in documenting and supporting an organization’s employment actions.
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September 28, 2004
Benefits for Domestic Partners, Part I: The Basics

(Editor's Note: This article is Part I in a series of two articles covering the basics of domestic partnership benefits. In the next article, we'll explore the legal implications.)

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Legal Editor, Business & Legal Reports

Imagine your response if Donna, your Customer Service manager, returns from vacation with Beth, her long-time companion, and tells you that while on vacation, they decided to make their partnership official. Donna presents you with a certificate of partnership. Now, Donna wants Beth covered under her life insurance policy and wants to make sure that she will receive health benefits as well. What benefits should be extended to Donna and Beth? What coverage are they entitled to? What do you do?

If this scenario or the mere idea of a domestic partnership benefits plan sound far-fetched, they shouldn't. According to the Mellon Financial Institute, 35 percent of employers are now providing domestic partnership benefits compared with 6 percent in 1996.To date, five states have formally recognized same-sex unions. Those states are: Maine, Massachusetts, Vermont,

California, and New Jersey. Although Alaska, California, and Hawaii have a statute or constitutional amendments that restrict marriage to a heterosexual couple, two of these states-California and Hawaii-circumvent the restriction by legalizing the relationship as either a domestic partnership or as a reciprocal beneficiary relationship.

The Defense of Marriage Act (DOMA)

At the federal level, the 1996 Defense of Marriage Act (DOMA) restricts marriage to the legal union between one man and one woman as husband and wife, and according to DOMA, the word "spouse" refers only to a person of the opposite sex who is a husband or wife (1 U. S. Code §7). DOMA permits states to refuse to recognize or give effect to "any public act, record, or judicial proceeding of any other State & or a right or claim arising from such relationship" (28 U. S. Code §1738C). The result is that only a married couple qualifies for federal entitlements, such as veterans' or pension benefits. DOMA also allows states to refuse to recognize same-sex marriages that might be allowed in other states. To date, 38 states have passed a state version of the federal DOMA.

Domestic partner benefits: the definitions

What is a domestic partnership? A domestic partnership is a relationship between two individuals that is usually made up of a same-sex couple, but may also be made up of an opposite-sex couple. The relationship is usually one that cannot be (or is not) legalized by marriage. Different localities have different definitions.

What are domestic partnership benefits? Domestic partnership benefits are benefits that an employer may offer at its discretion, where not mandated by law, to an employee's unmarried partner that is either of the same or opposite sex. The definition of eligible dependents may vary depending on the benefit plan. For example, it is possible the definition could be broader under the health insurance policy than under the life insurance policy.

Why offer domestic partnership benefits? The most commonly cited reasons for offering domestic partnership benefits are fairness and the opportunity to enhance the attractiveness of the organization as a great place to work. Improving employee morale is also a suggested reason for offering domestic partnership benefits. There may also be a local law that prohibits discrimination on the basis of sexual orientation that could result in a finding of illegality based on your failure to provide benefits to domestic partners.

What are the arguments against offering domestic partnership benefits? There are a number of arguments made against offering domestic partnership benefits. The most common reasons cited are added costs and administrative burdens. Added costs are of primary concern to most employers. However, a study conducted in 2000 by Hewitt Associates shows that only 1.2 percent of employees in a domestic partnership will take advantage of a health benefit plan.

Who should be covered? Who should be offered domestic partnership benefits? The organization may have a local statute it must comply with or may want to extend coverage to those who are not covered by a domestic partnership law-for example, opposite-sex unmarried couples. Some organizations use the term "spousal equivalents," which can be defined as partners who are unable to legalize their relationship through marriage.

Which benefits to consider? Most domestic partners are seeking healthcare insurance and leave benefits. Leave includes bereavement, parental leave, and use of accumulated sick leave to care for a domestic partner. The federal Family and Medical Leave Act (FMLA) does not specifically mention domestic partners, but federal guidelines state that nothing in the FMLA prohibits employers from extending the provisions of the Act to domestic partners. Other benefits offered under a domestic partnership plan are relocation, access to employer facilities, and attendance at employer-sponsored functions.

Legal issues to consider

If you are considering domestic partnership benefits, what are the legal requirements? How does the Internal Revenue Service (IRS) treat the benefits to a domestic partner and what requirements does the employer have to meet? Is income subject to withholding for federal FICA (Federal Insurance Contributions Act) and FUTA (Federal Unemployment Tax Act)? What about health insurance and the Consolidated Omnibus Budget and Reconciliation Act (COBRA)? These and other legal issues will be discussed in the next article in this series.

KF 9-04

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