Domestic Partner Benefits
Case Written by MBA student
11/15/2006
Domestic Partner Benefits
Introduction
Although the main focus of this case is the decision of whether or not to offer domestic partner benefits, it is so closely linked to the debate surrounding same-sex marriage that it would be impossible to discuss one without the other. Gay marriage has been one of the most highly debated political topics in recent years. In 1997 the Defense of Marriage Act was approved by Congress and signed into law by Bill Clinton. The purpose of this law was to define marriage, in the eyes of the federal government, as the legal union between one man and one woman. Recently, however, several state and local governments have made the decision to issue marriage certificates to homosexual couples. These events have done little more than add fuel to an already heated nationwide debate. An August, 2006 poll conducted by Pew Forum on Religion and Public life found that 56% of Americans were still opposed to recognizing homosexual marriage. This is in stark contrast to numerous other industrialized nations who have made strides towards rather than away from the legal recognition of homosexual marriage (most notably Scandinavia, the Netherlands, Belgium, France, Canada, Germany, and Hungary).
Despite the fact that the majority of Americans still appose same-sex marriage, there has been a trend in the corporate world to offer what has been termed domestic partner benefits. What this means is that the spouses of homosexual employees living under the same roof are given the same access to employee benefits as heterosexual married spouses are. As of November 12, 2006, 263 of the Fortune 500 companies were offering these types of benefits. Among these companies were several based here in Minnesota such as 3M, Best Buy, Ecolab, General Mills, Land O’Lakes, Medtronic, Northwest Airlines, St. Paul Travelers’ Companies, Supervalu, Target, and several others. These numbers are up significantly from just 25% of Fortune 500 companies offering domestic partner benefits in 2000. Much like same-sex marriage itself, offering these types of benefits is not without controversy.
Opponents of Domestic Partner Benefits
In an increasingly dichotomous nation it should come as no surprise that this debate is routed heavily in familiar partisan politics. The heaviest majority of those opposed to domestic partner benefits are highly religious, politically conservative, and from the Southern United States. The Catholic Church is believed to be one of the biggest players in the fight against recognition of homosexual couples and even the implementation of domestic partner benefits.
In order to understand more fully the rationale behind the opposition of same-sex marriage and likewise domestic partner benefits, the religious rationalization behind this philosophy will be examined further. The Catholic Church has defined marriage as requiring two components: “Complementarity” and “Procreative.” The Church claims that homosexuals do not possess full complementarity because of the complimentary psychological differences between men and women. In a marriage there are certain duties that each member specializes in because of their god-given ability to do so. They outline studies showing that the benefits observed in married couples, such as increased health, have not been observed in homosexual couples. Furthermore, they posit that homosexual couples are less committed to one another and more likely to commit infidelity, thus weakening the bond between them and making a meaningful relationship impossible.
In regards to the procreative aspect of marriage, many gay rights supporters have argued that if there is no basis for homosexual marriage because of the inability to procreate, then there is no basis for the elderly or otherwise infertile to marry either. The Church has responded by stating that it is not the act of procreation itself that defines procreativity, rather it is the original design of the complimentary procreative parts that defines this aspect of marriage. Considering that homosexual couples do not have complementary sex organs, the Church has stated that they do not have the same meaningful sexual experience and connection that heterosexual couples have. As a result of this, the Catholic Church as well as numerous other religious organizations have chosen not to recognize the union of two same-sex partners as marriage.
Furthermore, many Americans and religious organizations feel that by offering benefits to homosexual couples without marriage we are blurring the legal distinctions between married and unmarried couples and changing the definition of marriage altogether. Catholic Answers Inc. had this to say explaining their objection to a blurring of the definition of marriage:
Marriage is a conduit through which God's grace flows to the couple and their children.1 The Catholic Church understands marriage between a baptized man and woman to be a sacrament, a visible sign of the grace that God gives them to help them live their lives here and now so as to be able to join him in eternity.2 For Catholics, marriage is social as well as religious, but its religious aspects are very important. The Bible repeatedly compares the relationship between man and wife to that between God and Israel (cf. Hos. 9:1) or between Christ and his Church (cf. Eph. 5:21-32). For Catholics, marriage is a holy vocation.
They go on to say that “…marriage is basic to the health of society and therefore a public institution that must be defended against harm.” By blurring the definition of marriage in a legal sense many have perceived a threat to sacred institution of marriage and have been compelled to defend against these changes.
Despite how it often times appears on the surface, opponents of offering domestic partner benefits to employees do not base their logic solely on religious arguments. There is currently a heated debate regarding the financial impact of offering such benefits as well. Parties on both sides agree that due to the fact that these benefits are relatively new it is difficult to predict exactly how much they actually cost to implement.
A major argument against offering these types of benefits stems from the potential increase in healthcare costs. At a time when healthcare costs are already creating major headaches for U.S. businesses, the thought of adding to the already growing problem is one that most executives would rather not have to deal with. Weinberg (2002) found that the “loss-ratio” (healthcare costs as a percent of premiums paid) was 17.1% higher for same-sex couples than it was for heterosexual couples. This disparity is attributed to homosexual’s “high-risk” lifestyles. This is also believed by Weinberg to be a major reason why same-sex health insurance is offered only through employee-benefit programs and not through any insurance companies. However when I looked into the matter deeper I found an online article by Bobbie Sage with links to insurance companies who offer domestic partner health insurance in each state. Every state contained at least four different companies.
Considering that little is known about the increase in costs associated with offering such benefits opponents claim that companies are taking on a potentially large liability by making the benefits available often (95% of companies) at the same price as opposite-sex couples. Somewhat in contrast to the Catholic Church’s claims that homosexuals are less likely to stay together because of infidelity, Doughty (2002) found that one third cohabiting unions (regardless of sexual orientation) last less than one year and only one in ten lasts longer than five years. This is attributed to the fact that the relationship may begin and end at any time without legal consequence. This ability to change partners so easily creates major problems for an employer. Considering that 32% of employers who offer domestic partner benefits require no waiting period for replacing one domestic partner for another, there is a high potential for participants to knowingly abuse the system and drive up insurance prices. In light of the fact that homosexuals are far more likely to contract HIV and its treatment costs can range from $10,000 - $12,000 per year, there is a very real potential for significant increases in healthcare costs.
There are also tax implications to consider when determining whether or not to implement domestic partner benefits. For some homosexual couples it is possible to claim their partner as a dependent if they (1) have the same principle address as the employee/taxpayer for the year and are a member of the employee/taxpayers household; and (2) receive from the employee/taxpayer more than half of his or her individual support for the year. Many same-sex couples do not qualify under this tax code, however. As a result, the employer must report the fair market value of the health plan as taxable income. Doing this raises the employer’s payroll taxes and the amount of gross income the employee must pay taxes on.
One final argument against offering domestic partner benefits is that when employers institute a controversial policy it has consequences both on the pool of applicants an employer can potentially hire for open positions as well as on the consumers who consider a company’s social policies when making purchasing decisions.
This past year I worked for a local company that badly needed to fill a crucial position. My boss told me that it is extremely difficult to find employees who are both qualified for this position and willing to live in Duluth. After a long search, the HR manager was finally able to find someone to fill this position that appeared a great hire. However, after a short period the HR manager received a letter from the new employee. This letter was filled with bible quotes and claimed that homosexuality was an abomination. Not only that but it called the HR manager a sinner and claimed that he was going to hell. This left the HR manager in an extremely difficult position. He could not change the entire company policy but he knew that he would have an extremely difficult time finding a replacement for this highly qualified employee. Ultimately, after discussing the matter with the employee, the decision was made to terminate employment. Last I heard, that critical position in the company was still left unfilled.
Proponents of Domestic Partner Benefits
A major argument for offering domestic partner benefits comes from the fact that the United States constitution calls for the separation of church and state. The argument that same-sex marriage or even offering domestic partner benefits legally blurs the church’s definition of marriage should thus not be argued based on its religious merits. It is a legal matter that should be decided based on legal merits. However, the University of Florida’s Gator Gay-Straight Alliance has published a satirical look at the arguments made by religious institutions and individuals against same-sex marriage that deserves a look at:
1. Homosexuality is not natural, much like eyeglasses, polyester, and birth control are not natural.
2. Heterosexual marriages are valid because they produce children. Infertile couples and old people cannot get legally married because the world needs more children.
3. Obviously gay parents will raise gay children because straight parents only raise straight children.
4. Straight marriage will be less meaningful, since Britney Spears's 55-hour just-for-fun marriage was meaningful.
5. Heterosexual marriage has been around for a long time, and it hasn't changed at all: women are property, Blacks can't marry Whites, and divorce is illegal.
6. Gay marriage should be decided by the people, not the courts, because the majority-elected legislatures, not courts, have historically protected the rights of minorities.
7. Gay marriage is not supported by religion. In a theocracy like ours, the values of one religion are always imposed on the entire country. That's why we only have one religion in America.
8. Gay marriage will encourage people to be gay, in the same way that hanging around tall people makes you tall.
9. Legalizing gay marriage will open the door to all kinds of crazy behavior. People may even wish to marry their pets because a dog has legal standing and can sign a marriage license.
10. Children can never succeed without both male and female role models at home. That's why single parents are forbidden to raise children.
11. Gay marriage will change the foundation of society. Heterosexual marriage has been around for a long time, and we could never adapt to new social norms because we haven't adapted to cars or longer lifespans.
12. Civil unions, providing most of the same benefits as marriage with a different name are better, because a "separate but equal" institution is always constitutional. Separate schools for African-Americans worked just as well as separate marriages will for gays & lesbians.
Since the 1960’s there has been a human rights movement in this country. All people are increasingly being treated more and more equal in the workplace. Same-sex couples are just the latest group to want inclusion in this trend. San Francisco was among a handful of cities that recently passed a law requiring companies to offer the same benefits that it offers its other employees. Another major city of note to pass such legislation was New York, who with an override of Mayor Bloomberg’s veto, now requires any company working on municipal contracts to provide equal domestic partner benefits. These trends are expected to continue in the future as well.