This Is Not News

Anyone who paid any attention to the rise and fall of the stock market over the last ten years knows that the “new economy” in and of itself, is not reason enough to do anything – lest you end up a major shareholder in Pets.com. However the competitive environment that came out of that period did lead to some important changes in the way many of us work.

A tight market coupled with a relative abundance of capital made it much easier for workers to demand more from their employers – without fear of losing their jobs. Certain perks like onsite massages and weekly beer and pizza parties (a Silicon Valley software company, of course), are easy to write off as frivolous. However, employees might be less willing to give up perks like tele-commuting, tuition reimbursement, and, a phenomenon that gained tremendous momentum in the nineties – domestic partner benefits.

Recent surveys estimate that the number of U.S. employers extending health and other benefits to unmarried domestic partners (both heterosexual and homosexual) at between 18 and 22%, or roughly 2500 colleges, governments and private corporations. Nearly 90% of those that offer these benefits began doing so in the last five years. As a spokesperson for a Human Rights Campaign, a Washington, D.C.- based advocacy group for gays in the workplace, said in early 2000, “Domestic partner benefits are increasingly becoming a standard business practices in corporate America. Employers have discovered that these benefits help attract and keep the best workers, a critical consideration in the current tight job market.”

Offering a competitive benefits package to attract the best workers may have been priority number one in the late nineties but in late 2001, it is almost certainly not. In a time where economic and other factors led to 199,000 job cuts in September alone, many are wondering if the other merits of domestic partner benefits are enough to sustain them.

What Are Domestic Partner Benefits?

Before we can discuss their merits, perhaps it’s best to describe domestic partner benefits according to the definition found in most employer policies. Domestic partner benefits can include medical and dental insurance, disability and life insurance, pension benefits, family and bereavement leave, education and tuition assistance, credit union membership, relocation and travel expenses, and anything else that spouses and other family members may be entitled to under a company’s benefits policy. While definitions of “domestic partners” can differ from company to company, the basic definition, which is intended to approximate a legal marriage, is as follows:

• there must be an ongoing and committed spouse-like relationship intended to exist indefinitely, which has existed for at least six months;
• the partners are not related by blood to a degree of closeness that would prohibit legal marriage in the state in which they reside;
• neither of the partners can be the legal spouse or domestic partner of any other person;
• both have shared the same residence for at least six months, are responsible to each other for the direction and financial management of their household, and are jointly responsible for each other’s financial obligations.

Some companies require that the employee and their partner sign an affidavit or other official document attesting to the above or be registered with a local domestic partner registry (if one exists in the area; there is a list available). Some companies also limit DP benefits to homosexual partners using the argument that the law does not prevent heterosexual partners from marrying. For the most part, however, most DP policies apply to all domestic partners and their natural or adopted dependents.

In light of the current economic downtown (and the impact on the workforce), advocates of domestic partner benefits argue that while having a benefits package with a competitive edge was the easiest way to “sell” DP benefits to corporate America, it’s far from the only reason:

Reason 1 – Practice What You Preach

One good reason to offer DP benefits is to enforce a company’s own anti-discrimination policy. If a company has already taken its policy further than the federal and most local governments by also prohibiting discrimination based on sexual orientation, it is, some say, a natural extension to offer gay employees the opportunity to take advantage of all the benefits offered to married couples. This is particularly true since most states do not allow same sex marriages. Until the law recognizes these relationships, some companies may choose to do so in the only way they can. One Philadelphia-area company also attempts to extend this policy to companies it does business with by inquiring about the benefits polices of its clients, vendors, partners, etc.

Reason 2 – Equal Pay for Equal Work

As any employer with tell you, an employee’s take home pay is only a portion of his/her overall compensation. If that employee works full time and is entitled to benefits such as health care coverage, dental coverage, pension plans, etc., these can account for up to 40% of that employee’s total cost to the company. Therefore, someone who is in a committed relationship but not married to their partner cannot receive their full compensation without an inclusive DP policy. This is especially true of pension or life and disability plans, which normally pay benefits to a spouse in the event of the employee’s death.

Reason 3 – Reflecting America

Between the 1990 and 2000 Censuses, there was an over 300% increase in the number of same sex unmarried partner households. Conversely, the number of “traditional” households (comprised of heterosexual married couples and their children) has been declining in the past 30 years, from 40% of the total number of American households in 1970 to just under 25% in 2000. With that in mind, a policy that includes domestic partner benefits is an attempt to better meet the needs of a population that, for one reason or another, is relying less and less upon marriage as the basis of a family.

What About the Costs?

In this era of layoffs and corporate belt-tightening, it may seem unlikely that a company would agree to policy changes that would significantly increase its employee compensation spending. But, as studies among the companies already offering DP benefits, extending existing polices to include domestic partners doesn’t hurt the bottom line and the return on the investment is significant.

Separate studies conducted in from 1996 through 1998 by the International Society of Certified Employee Benefits Specialists and management consulting firms Towers Perrin and Hewitt Associates all show a “minimal” increase in medical claims. Moreover, the costs of covering a domestic partner were no higher than covering a spouse or other dependent. This last point in particular is important because one argument against DP policies has been the fear that costs from covering AIDS and HIV-related illnesses would lead to an increase in the company’s medical premiums. This has not proven to be the case. One reason, says one insurer that also offers DP benefits to its own employees, is that the costs of covering AIDS-related illnesses are not significantly higher than other illness such as cancer, major heart disease, etc. Moreover, in many cases, medical costs for same sex domestic partners is lower than those of heterosexual couples because there are fewer pre-natal, pregnancy, infant care costs to cover.

The overall costs of implementing a DP benefits program tend to stay low because very few eligible partners actually utilize the cost-bearing parts of the programs. Enrollment rates hover around one or two percent of eligible employees. The major reason for this is that a large percentage of same sex domestic partner relationships are dual-income, meaning that partners generally have access to their own health and dental care plans. This statistic, should not, says the HRC, be taken as evidence that DP benefits are unnecessary. Domestic partners who utilize these plans say that the acknowledgment of their commitment is just as important as any financial benefits. One partner said that the plan was worthwhile just because it allowed her to be acknowledged when her partner became seriously ill and was hospitalized. Hospital regulations usually limit visitors to family. Since she was an acknowledged by the company’s medical plan as a domestic partner, she had a convincing argument for hospital staff who would have otherwise barred her from the partner’s bedside.

Secondly, there have been, contrary to many concerns, virtually no instances of fraud in response to the availability of DP benefits. Some argue that an employee could allow “virtually anyone” to get “free or cheap health care” on the company’s tab. As mentioned above, the companies offering DP benefits require employees to meet specific requirements, including affidavits and other sworn statements before any benefits are paid. (Frankly, this is even stricter than what married couples are asked – when signing my husband up for my company’s medical insurance, the HR department took my word that he was my husband. I did not have to show a copy of our marriage certificate.) American Airlines, which only extends DP benefits to same sex partners, requires that the couple pledge to marry, if and when same sex marriage becomes legal, in order to get the benefits.

The bottom line: the economy may have made many workplace perks passé but, as many companies large and small (including these) have shown, domestic partner benefits do have a place in today’s working environment. Companies that are looking to offering them should prepare themselves for a backlash, but can be assured that there are practical, justifiable reasons to help the American workplace keep pace with America.