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by Anthony Hall & Tamara Jankovic
Over the past decade, whether through court decisions or statutory changes, many states have gradually provided greater protections for domestic partners. Recognizing this growing national trend, the number of companies that offer benefits to domestic partners consistently increases each year. Nevada has now joined a number of states that formally recognize domestic partnerships as a binding social contract between two persons and an alternative to marriage. But how does the newly enacted Domestic Partnership Act affect employers and employees? If you elect to provide benefits to your employees’ domestic partners or have already been doing so for a number of years, now is a good time to review your handbooks and policies to ensure that treatment of your employees and their domestic partners complies with Nevada’s new Domestic Partnership Act.
Key Provisions of the Act
At the end of its regular session this year, the Legislature enacted the Nevada Domestic Partnership Act. The new law, which passed despite a veto by Governor Jim Gibbons, will go into effect as of October 1, 2009. The law gives domestic partners, gay or straight, largely the same rights as those already available to married couples. Domestic partners who register their relationship with the Secretary of State will be entitled to receive benefits such as hospital visitation, funeral planning and community rights.
Despite the assumption that many employers may have that they are now required to provide benefits to domestic partners, the new law may give employers a choice. It states that the Act does “not require a public or private employer in this State to provide health care benefits to or for the domestic partner of an officer or employee.” The Act goes on to state that it “does not prohibit any public or private employer from voluntarily providing health care benefits to or for the domestic partner of an officer or employee upon such terms and conditions as the affected parties may deem appropriate.” It appears that the Act was drafted in this manner so as to emphasize that an employer is under no duty to provide benefits to employees or their dependants in the first place. However, it appears that the overall intent of the Act was to afford domestic partners all of the same rights and protections as those afforded to married spouses and to eliminate, as much as possible, any discrimination or unequal treatment on that basis. Accordingly, under the language of the Act, there is an argument to be made that if your company provides health benefits to your employees and their spouses, you are under the obligation to expand that coverage to include domestic partners as well. While this is a possible argument, courts usually interpret statutes according to their plain meaning and will give effect to the apparent intent of the law from the words used by the Legislature. As a result, while there is some ambiguity in the language, it appears that the Act does not require an employer to provide health coverage to domestic partners, even where that employer provides such coverage for the spouse of employees.
Another question left open by the Act is whether domestic partners are considered the legal equivalent of a married spouse, a question that is important with respect to the application of many federal laws. On the one hand, the Act clarifies that a “domestic partnership is not a marriage” for purposes of the Nevada Constitution (an effort by the Legislature to comply with a voter’s referendum on the question from 2008), while simultaneously stating that “domestic partners have the same rights, protections and benefits…, whether derived from statutes, administrative regulations, court rules, government policies, common law or any other provisions or sources of law, as are granted to and imposed upon spouses.” The important determination of a Domestic Partner’s status as a “spouse” under federal employment laws can be observed in, for example, the Family Medical Leave Act (“FMLA”). The FMLA permits an employee to take leave to care for a “spouse”, as that term is defined by State law for purposes of marriage. Again, it is unclear whether Nevada’s Domestic Partnership Act intends to distinguish, in any substantive manner, a domestic partner from a married spouse. Until courts have an opportunity to interpret the application of these somewhat contradictory clauses, the safe approach would be to treat validly registered domestic partners of your employees as the legal equivalent of a spouse through marriage.
Whether to Implement Domestic Partner Benefits In Your Company
Roughly one-third of U.S. employers already offer domestic partner benefits to their employees, whether for opposite-sex partners, same-sex partners or both. Many employers offer domestic partner benefits because they view the benefits as necessary to remain competitive in recruiting and retaining valuable employees. Moreover, offering domestic partner benefits may improve or harm public relations, depending on many factors, including an employer's industry and customer base. With respect to costs associated with expanding benefits to include domestic partners, some studies found that offering same-sex domestic partner health benefits increased an employer's health plan costs by about one-half of one percent, largely because of low domestic partner enrollment. If you elect to change your company policies to voluntarily provide coverage to domestic partners pursuant to the Act, you should conduct a thorough review of (and make necessary changes to) your benefit plan documents.
Regardless of the ultimate decision your company makes with respect to coverage of domestic partners, employers should bear in mind that under federal law, neither same-sex spouses nor domestic partners are generally recognized as spouses for whom favorable tax benefits apply. This would usually mean that certain tax-favored benefits (like pretax cafeteria plan or flexible spending account benefits) cannot be provided to employees who add domestic partners to group health plan coverage. Also, certain benefits for spouses mandated by federal law, such as COBRA continuation health coverage and Family and Medical Leave Act leave, may not be available to domestic partners.
- COBRA: Currently, domestic partners and same-sex spouses are not entitled to continuation coverage under COBRA. Only qualified beneficiaries are entitled to continuation coverage, and under federal law, a qualified beneficiary can only be either an opposite-sex spouse or a dependent child. COBRA’s definition of “spouse” does not include a domestic partner because through the federal Defense of Marriage Act, Congress has defined the term “marriage” to mean “only a legal union between one man and one woman as husband and wife, and the word ‘spouse’ refers only to a person of the opposite sex who is a husband or a wife.” Therefore, if an employee’s domestic partner loses coverage due to what would otherwise be a qualifying event, such as a termination of the domestic partnership as outlined by the Act, you do not have an obligation to offer COBRA coverage. Nevertheless, a private employer may still voluntarily offer the equivalent of COBRA coverage along with other domestic partnership benefits. However, you should carefully consider the pros and cons of providing “COBRA-equivalent” coverage .
- Flexible Spending Accounts: In most cases, an employee’s flexible spending account (FSA) money may not be used to reimburse health care for a same-sex domestic partner, even if you do provide other domestic partner health benefits. This is because the IRS has ruled that employer-sponsored health benefits are exempt from taxable income only if domestic partners (same or opposite sex) are legally considered spouses or dependents under state law. As already discussed above, Nevada’s Domestic Partnership Act has left some ambiguity regarding this issue by clearly distinguishing domestic partnerships from marriage, yet affording all of the same rights and protections to domestic partners already applicable to spouses. However, it appears that the overall intention of the Act was to be over-inclusive and broad, and that courts would interpret the Act to treat domestic partners as spouses under state law.
- HIPAA: HIPAA protects the portability of employee health coverage. But whether domestic partner benefits are portable if an employee changes jobs all depends on whether the new employer offers such coverage, and on state insurance laws. Nevertheless, because your company’s health plan is likely covered under HIPAA, the act’s non-discrimination rules apply to domestic partners to the same extent that a spouse or dependent covered under your plan would be.
- FMLA: Under the FMLA, an employee may only take family leave to care for a spouse, child or parent with a serious health condition. The regulations define spouse as “a husband or wife as defined or recognized under State law for purposes of marriage in the State where the employee resides, including common law marriage in States where it is recognized.” In other words, an employee’s right to take family leave for a domestic partner depends on whether the relationship is considered the legal equivalent of a marriage or common-law marriage. Because it appears that domestic partners will be treated as the legal equivalent of spouses under Nevada’s new law, you should re-visit your FMLA policy to ensure that an employee would be permitted to take leave to care for his or her domestic partner.
Other Policies May Need Updating
Many of your other policies may need updating. In general, wherever you may reference an employee’s spouse anywhere in your handbook or policies now should be revised to refer to “spouse and/or domestic partner.” For example, if your company has a nepotism policy that sets forth expectations on hiring an employee’s family members, the language should be expanded to include domestic partners. Other examples include domestic violence or workplace violence policies that reference family members or spouses. These policies should be revised to include domestic partners.
Another policy/practice that you should review concerns what evidence you require from an employee in order for the employee to receive benefits that relate to their spouse. For example, if an employee needs to take time off under your sick/PTO policy for a sick spouse, do you require certification of their marriage? Do you require certification for a similarly situated domestic partner? As discussed above, since the FMLA adopts the state law definition of a spouse, will you require a domestic partner to show their secretary of state registration in order to utilize FMLA for their domestic partner’s serious health condition? Do you require the equivalent certification for married employees? These practices should be evaluated and decisions made to ensure consistent treatment between traditional spouses and domestic partners.
Bottom line
Under Nevada’s Domestic Partnership Act, employers who offer benefits to their employees and spouses will need to carefully evaluate each benefit and determine if they are required, or if they elect, to include domestic partners. Employers should also update their handbooks and other company policies to reflect the additional category of domestic partner wherever a policy may impact an employee’s spouse. Although distinct from marriage under Nevada’s Constitution, domestic partners should, in most cases, be treated as the legal equivalent of spouses in any applicable situation. |
