(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.)
By SUSAN E. SCHOENFELD, J.D.
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
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
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
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.