Okay For Health Plan To Cover Same Sex But Not Opposite Sex Domestic Partners

I have always been interested in the intersection of employment law and benefits law. Among those intersections is the extent to which employment law discrimination rules may apply to benefit plans. A recent Minnesota federal District Court decision addressed that issue in the context of an employee who added an opposite sex domestic partner to her employer-provided health plan although the employer only allowed same sex domestic partners to be covered. The employee completed an enrollment form that identified her partner as her spouse and a domestic partner affidavit that identified her and her partner as same sex adults. The employer fired the employee for dishonesty. Complicating the termination was the fact that the employee was pregnant at the time and had requested Family and Medical Leave Act (FMLA) leave. The employee argued that the employer terminated her employment to interfere with her FMLA leave or to retaliate against her for taking it.

The court determined that the employee was not fired because of the FMLA leave but instead was fired for the dishonesty.

The employee also challenged the employer’s domestic partner policy as discriminatory under the Minnesota Human Rights Act on the basis of sexual orientation and marital status because the policy provided coverage only for same sex and not for opposite sex domestic partners. The employer argued that such a claim had to fail because ERISA, the federal law governing benefit plans generally, would preempt the Minnesota state law with regard to discrimination based on sexual orientation and marital status.

Instead of ruling on the preemption matter, the federal district court instead ruled that the state human rights act did not prohibit the employer’s policy of providing health coverage only for opposite sex domestic partners. The court concluded that eligibility for domestic partner health care benefits did not turn on marital status. Both the same sex and opposite sex domestic partners were unmarried so there was no difference in marital status with respect to eligibility for domestic partner benefits. With regard to the sexual orientation discrimination, the court concluded that same sex and opposite sex domestic partners were not similarly situated because the same sex domestic partners could not lawfully marry in Minnesota. The employer had based its decision to offer benefits to same sex couples because of their inability to marry in the state. The court concluded that that reason was a legitimate nondiscriminatory basis to offer the benefit only to same sex domestic partners so the employee was unable to recover on a claim that the policy was discriminatory.

The court’s decision leaves unanswered several questions for employers. One unanswered question is whether ERISA would preempt the state law. If ERISA preempts the state law, then employers do not need to be concerned about the effect of the Minnesota Human Rights Act on the design of their benefit plans.

Another unanswered question is the impact of the decision after August 1, 2013, when same sex couples will be able to marry in Minnesota. If Minnesota law is not preempted, a court could find that an employer that allows only same sex domestic partners to receive benefits has discriminated based on sexual orientation because there is no legitimate nondiscriminatory reason (an ability to marry) that would support a difference in treatment between same sex and opposite sex couples. That would suggest that employers could no longer allow only same sex domestic partners to receive health benefits. However, employers offering the benefit may be reluctant to eliminate it effective August 1, 2013, the date same sex couples may marry in Minnesota. Although marriage is permitted effective August 1, 2013, same sex domestic partners may not be able nor may they want to plan a wedding for August 1. Although opposite sex couples are permitted to marry in every state, same sex couples are not. An employee may move to Minnesota from a state where same sex marriage is not allowed and so may also be unable to comply immediately with a requirement that couples be married in order to obtain medical coverage. If the Minnesota state law is not preempted, employers who provide only same sex domestic partner coverage and not opposite sex domestic partner coverage may need to reconsider their plan design.

Employers may find it less risky legally either to extend domestic partner benefits to both same sex and opposite sex couples or to eliminate domestic partner benefits for all couples on the theory that all couples can now marry. Although the legalities are not clear, employers may wish to provide a transition period for any new policy that is more restrictive to give same sex couples time either to marry or to find alternative medical coverage.

This is another developing area of the law that employers may need to monitor in light of the ability of same sex couples to marry in Minnesota. Employers with an interest in this topic can also review our earlier Alert on the impact of same sex marriage on employers and employees, linked here.