After same-sex marriage ruling, employers weigh domestic partner programs

The Supreme Court's landmark ruling allowing same-sex marriage has raised a question for employers: Should they maintain domestic partner benefits?

Two of Minnesota's largest employers, Mayo Clinic and the University of Minnesota, have already phased out those benefits since the state legalized same-sex marriage in 2013.

Nationwide, firms such as Delta Air Lines, Verizon and IBM have begun dropping them in some states. Now that same-sex marriage is a nationwide law, more companies are expected to follow suit.

The decision isn't automatic, however. And some companies are likely to take some time before they act.

"It's just too early to say," said Molly Snyder, spokeswoman for Minneapolis-based Target Corp., which has offered domestic partner benefits since 1999.

Many of the nation's largest employers began rolling out domestic partner benefits to workers in same-sex relationships during the late '90s, when same-sex marriage wasn't an option. In some cases, companies offered similar benefits to workers in opposite-sex relationships who chose not to marry.

Following the recent Supreme Court ruling, companies that only offer domestic partner benefits to same-sex couples became the likeliest to end them. They could be subject to reverse discrimination claims if they don't, said Jen Cornell, a Minneapolis employment attorney with Nilan Johnson Lewis.

"The legal justification for that difference doesn't really exist anymore," Cornell said. "A company with that sort of plan needs to pick what side of the fence it wants to be on, either offer the [domestic] benefits to everyone or eliminate the partnership benefits altogether."

Cornell added that many companies will likely choose to rescind those benefits, especially since there could be higher costs to run both programs.

"People look at the bottom line," Cornell said. "In this era of health care offerings, people are contracting rather than expanding benefits."

The University of Minnesota considered extending its domestic partner benefits to opposite-sex couples after Minnesota began allowing same-sex marriage in 2013, but decided it would be too costly, said Ken Horstman, the U's director of employee benefits. At the start of this year, the U dropped its domestic partner benefits, a program it had offered since 2002. It notified couples months earlier of the impending change so they had time to marry if they preferred.

"Given that all our employees are in the state of Minnesota and the fact that to marry your partner is now open to all, we felt this gave everyone an equal opportunity at the benefits we provide," Horstman said.

He added that only about 77 of the university's 19,000 employees still had domestic partner benefits last year.

Some companies that cover both same-sex and opposite-sex couples with domestic benefits are keeping them. It's a recognition, in part, that some couples prefer not to get married.

"The primary reason I see companies offering that is talent retention," Cornell said. "Younger people are delaying marriage more and more, but they are still in committed relationships. Many cohabitate."

Representatives at Minneapolis-based U.S. Bancorp and Richfield-based Best Buy Co. said the companies will continue offering domestic partner benefits to all couples.

"We want all of our employees and customers to have an equal opportunity to build a secure financial future," said Teri Charest, a spokeswoman for U.S. Bank. The nation's fifth-largest bank has offered domestic partner benefits since 2000.

St. Paul-based Ecolab hasn't made a decision yet about whether it will change its domestic partner benefits, which are open to all workers.

The Supreme Court ruling was a relief to administrators at the Mayo Clinic, which has been phasing out its same-sex domestic partner benefits in the states where it operates that had legalized same-sex marriage. With nearly 60,000 employees spread across 30 states, rolling out those changes has created a lot of extra work and headaches.

"This makes it much easier for us," said Dr. Sharonne N. Hayes, medical director of the Rochester-based health system's office of diversity and inclusion. "Now we're applying the same rules across the organization."

The Mayo Clinic has been giving gay employees a grace period of a year to get married if their partners want to stay on the Mayo health plan.

She said it's hard to pinpoint how many employees married in order to keep partners' benefits intact.

"But my sense is that most chose to get married," Hayes said.

Kavita Kumar • 612-673-4113