March 2005Client Alert

Employers May Have to Provide Domestic Partner Benefits

Law Firm Alliance Newsletter

Domestic partner benefits were basically unheard of until 1982, when Village Voice, a New York City Weekly, became the first employer to offer them to its employees. Ten years later, in 1992, Lotus Development Corp. became the first publicly-traded company to offer such benefits. Since then, there have been many challenges to both private and public employers' refusals to provide domestic partner benefits to same sex and/or opposite sex domestic partners. In the private realm, most of these challenges have been fruitless. This is mainly because the Employee Retirement Income Security Act ("ERISA") preempts state and local prohibitions against discrimination that "relate to" any employee benefit plan. Because neither ERISA nor any federal civil rights statute, mainly Title VII of the Civil Rights Act of 1964, prohibit discrimination in employment on the basis of sexual orientation or marital status, federal district courts in New York and Maine have ruled that a private company's failure to offer domestic partner benefits does not violate the federal discrimination statutes. In contrast, because ERISA does not apply to state and local government employers, state courts in Alaska and Oregon have found that a government employer violated a local ordinance and/or state human rights statute by failing to extend benefits to domestic partners.

Do private employers have any legal responsibility to offer any type of domestic partner benefits? The answer depends upon (1) whether the employer is covered by a local or state ordinance or state constitution that prohibits discrimination in employment on the basis of sexual orientation or marital status, (2) whether and what type of non ERISA benefits the employer provides to its employees, and (3) whether the court with jurisdiction over the employer believes such a distinction is discriminatory.

If a state or local law prohibits discrimination based marital status or sexual orientation and the employer offers benefits that are not preempted by ERISA, such as moving expenses, memberships, membership discounts and travel benefits, the employer may need to provide those same benefits to its employees who have domestic partners or risk a claim of discrimination. For example, an employer may have a policy allowing an employee three days bereavement leave for the death of a spouse. Because bereavement leave is not likely to "relate to" ERISA, the offering of that benefit would be subject to any local or state ordinance that prohibits discrimination in employment based on marital status and/or sexual orientation. Therefore, the private employer may need to provide a parallel leave allowance for unmarried persons with domestic partners.

Although other state courts have recognized the viability of a discrimination claim based on marital status and/or sexual orientation where ERISA did not preempt the claim (i.e., the claim involved a government employer or a non ERISA benefit) and a state or local statute prohibited marital status and/or sexual orientation discrimination, the only Wisconsin court addressing this issue decided that the employer did not engage in prohibited discrimination. In Phillips v. Wisconsin Personnel Commission, 167 Wis. 2d 205, 213, 482 N.W.2d 121 (Ct. App. 1992), Phillips requested that her employer, the Department of Employee Trust Funds, extend health insurance coverage to her same sex partner. When the Department denied her request, she filed a sexual orientation, marital status and gender discrimination claim. The court rejected Phillip's marital status discrimination argument, stating that "the legislature did not intend this kind of differentiation on the basis of marital status to be in violation of the WFEA [Wisconsin Fair Employment Act]." With respect to sexual orientation, the Court found that the Department's policy did not distinguish on the basis of sexual orientation, only marital status. Finally, with respect to her gender discrimination claim, the court found that she was not treated any differently than similarly situated males, i.e. homosexual males.

Despite the fact that the Wisconsin Fair Employment Act proscribes discrimination in employment based on marital status or sexual orientation, the 1992 Phillips case still seems to be the law in Wisconsin. However, the practice of refusing benefits to domestic partners is ripe for challenge, especially given conflicting cases in other states. (The City of Madison's Equal Opportunities Ordinance also prohibits discrimination on the basis of sexual orientation and marital status. However, that ordinance was not at issue in Phillips.)

Illinois courts have rejected similar challenges, although the Illinois cases have only dealt with an employer's differential treatment of same sex verses opposite sex domestic partners, not with the underlying claim of a complete failure to offer any domestic partner benefits. This may be due, in part, to the fact that Illinois only recently passed legislation prohibiting discrimination on the basis of sexual orientation. In 2001, the Seventh Circuit Court of Appeals rejected a constitutional equal protection claim and upheld a Chicago Board of Education policy extending domestic partner benefits to same sex domestic partners only because the Board of Education had a rational basis for its policy. Likewise, in 1999 another City of Chicago employee challenged the city's Domestic Partner Benefits Eligibility Ordinance which provided that unmarried employees of the same sex who cohabit and register with the City as domestic partners are entitled to certain benefits, one of those being bereavement leave for family members. The employee had taken leave for the death of his fiancée's stepfather and was terminated. The employee filed a sex discrimination suit against the city under Title VII. The court rejected the claim, categorizing it as a marital status claim not a sex discrimination claim and reasoning that Title VII does not afford protection from discrimination on the basis of marital status. Given that the Illinois Human Rights Act now prohibits discrimination in employment on the basis of both marital status and sexual orientation, this issue is ripe for challenge in Illinois. Employers with facilities in various states should be cognizant of whether the laws of those states cover a claim of sexual orientation discrimination or marital status discrimination.

The need or desire to extend at least some benefits to domestic partners begs the question: how does an employer define "domestic partner"? While some states have domestic partner registries, Wisconsin and Illinois do not. However, most employers use a variation of the following criteria: (1) the partners are at least 18 years of age and are competent to contract; (2) the partners are not of blood relations; (3) neither partner is married; (4) the partners are each other's sole domestic partner (some employers require the couple to have been partners for a specified amount of time before they qualify for benefits); (5) the partners share the same residence; and (6) the partners are financially and emotionally interdependent. Many employers will require that the partners sign an affidavit including this information and that they also provide documentation demonstrating their financial interdependence. For example, the employer might require evidence of at least two of the following: joint ownership of property, such as a vehicle, bank account, or real property; designation of the domestic partner as a beneficiary for the employer's life insurance or retirement benefits; designation of the domestic partner as holding the power of attorney for health care; shared banking account; or a shared investments.

If you would like more information about domestic partner benefit policies, please contact Farrah N.W. Rifelj at or 608.283.0110.

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