By Timothy Magaw, Crain News Service
WASHINGTON (July 9, 2015) — In the wake of the U.S. Supreme Court decision to legalize same-sex marriage, employers across the country are grappling with how the landmark decision will affect their benefits offerings, and it isn't exactly clear how it'll all shake out.
At the heart of the matter is the future of same-sex domestic partner benefits, which many companies — 77 percent, according to a survey by national benefits firm Aon P.L.C.'s Aon Hewitt unit — have offered over the last several years.
Before the court's ruling, as other states legalized same-sex marriage, some major employers, including Verizon and IBM, axed those offerings. And with last month's ruling, benefits experts expect that trend to accelerate.
However, some LGBT advocacy groups say that move could cause an issue, particularly in a state like Ohio that lacks statutes specifically prohibiting job discrimination in the private sector based on sexual orientation or gender identity.
By axing domestic partner benefits and forcing these individuals to secure marriage licenses, LGBT advocacy groups such as the Human Rights Campaign argue that they could be unfairly “outed” by their employer, potentially putting them at risk for discrimination in the workplace and other areas of their lives.
And given that many of the companies offering same-sex domestic partnership benefits also offer them to opposite-sex couples, they could potentially put some of their employees and their spouses at risk of being uninsured.
“I think any sort of knee-jerk reaction wouldn't make sense,” said Michelle Tomallo, president and co-founder of Cleveland-based FIT Technologies and board president for Plexus, a group that characterizes itself as the regional LGBT chamber of commerce.
“I think people need to have these conversations with their employees,” Ms. Tomallo said.
“From a best practices standpoint, retaining those policies are the most inclusive thing to do and the best way to embrace families of all types.”
Holding pattern
Employers offering domestic partner benefits that responded to inquiries from Crain's said it was simply too early to say what they planned to do.
Thompson Hine, a Cleveland-based law firm that has been recognized for its commitment to LGBT inclusivity, said in a statement that it hasn't “yet determined what, if any, impact the court's decision will have on our employee benefits.”
Cleveland-based KeyBank, too, hasn't made a decision. In a statement, the company said: “KeyBank prides itself on being an organization with a corporate culture that is one of diversity and inclusion. Given the rapidly changing landscape, no decisions have been made with respect to potential modifications in our benefit programs, including Key's decade-long history of offering domestic partner benefits.”
Kent State University, on the other hand, boasts provisions in its collective bargaining agreements with its various unions that include domestic partner benefits for same and opposite-sex partners.
Because those provisions are in those agreements, any change would have to be negotiated with the unions, according to a university spokesperson.
Of course, there are some benefits from switching from the domestic partner insurance rolls to those offered to married couples. From the employer perspective, domestic partner benefits programs can be complicated to administer, and it could be easier to handle all benefits under one umbrella, according to Paul Nachtwey, vice president of Todd Associates, an insurance brokerage in Beachwood, Ohio.
Also, workers are taxed on the value of those domestic partner benefits — unlike the benefits provided to opposite-sex married couples — and companies are required to calculate the amount.
Another wrinkle, for instance, appears to be unfolding at Cleveland's City Hall. In May, the city began extending its employees in same-sex relationships full health coverage and other benefits.
Prior, those couples had to be signed onto the city's domestic partners registry by March 2012. Under that law, opposite-sex domestic partners would not qualify for the benefits, with the idea that those individuals could get married.
But following the Supreme Court's same-sex marriage ruling, council is considering doing away with the provision.
“We are visiting it and looking at all the details,” said Cleveland City Councilman Joe Cimperman, a sponsor of the ordinance approved in May.
“We're trying to figure it out right now. Obviously, this was an effort to mitigate the fact that the state of Ohio would not let people get married.”
‘What ifs' abound
Meanwhile, some self-funded employers — particularly those with a religious bent — might consider not offering benefits to same-sex couples if they view such moves as being in direct conflict with their values.
However, benefits experts say further guidance is needed from the feds, but if a company is considering that move, be prepared to litigate.
“Some of the bigger areas where you're going to see litigation is on the religious side — church plans and things of that nature,” said Wade Clark, an employee benefits attorney and partner at Calfee, Halter & Griswold in Cleveland.
“It's certainly unclear. Even as indicated in the court's decision, there are First Amendment rights issues out there. How far that impacts benefits remains to be seen.”
If anything, employers need not make any sudden decisions, but rather wait for further guidance from the government, according to Greg Hubbell, senior vice president for Aon's health and benefits practice in Northeast Ohio.
“At this point, it's best for employers to be patient and not react or overreact just yet,” Mr. Hubbell said.
“It becomes a checkerboard of ‘what ifs.'”
This report appeared in Crain's Cleveland Business magazine, a sister publication of Tire Business.