Today’s ruling that sweeps away bans on same-sex marriage — a victory for gays opting to wed — could pose big challenges for U.S. workers who’d rather live with an unmarried partner.
The landmark U.S. Supreme Court decision being cheered as a step toward equality is also poised to carry unintended consequences, including some that could make life harder for employees, gay and straight alike.
With marriage now legal for all workers, surveys suggest that more than one-fifth of large employers may drop health coverage for unmarried workers’ domestic partners of either sex. Gay employees posted in less-tolerant countries may also have a harder time obscuring their status. On the plus side, workers may see lower bills in states that tax their benefits.
“What they really don’t know yet are all the ways they will find to adapt their workforce, benefits and family policies to this new normal,” said Bob Witeck, a consultant on lesbian, gay, bisexual and transgender issues in the workplace whose clients include Wal-Mart Stores Inc. and previously included Citigroup Inc.
The Supreme Court’s 5-4 decision mandates that the 14 states that still ban gay weddings will have to begin issuing marriage licenses to same-sex couples. While a 2013 ruling extended same-sex benefits to federal employees and many large companies already offer coverage to same-sex couples, executives said they will welcome the clarity of a nationwide policy.
A ruling “would make it easier for everybody,” Dave Cote, chief executive officer of Honeywell International Inc., said in an interview before the decision. At his company, where 127,000 people worldwide make products from jet engines to thermostats, “the way we try to run our benefits plan is to say, ‘We’re not going to sweat it one way or the other.’”
While it may appear counterintuitive for companies to drop benefits for unmarried couples after a ruling that at its core is about inclusion and personal fulfillment, there’s evidence that might happen. A survey of large corporations released earlier this month showed that far fewer of them offer health coverage to unmarried heterosexual couples — 62 percent — than to same-sex domestic partners, at 93 percent.
That gap suggests less of a willingness to cover unmarried couples when legal marriage is an option. More powerfully, 22 percent of the companies said they plan to drop coverage of domestic partners as a response to a ruling that makes gay marriage a viable option nationwide.
The survey by the ERISA Industry Committee, which lobbies on employee benefit and compensation issues for large U.S. employers, showed that about 15 percent of survey respondents said they switched their programs to require couples to be married to get benefits after the 2013 Supreme Court ruling on domestic partners.
Companies that don’t compete nationwide for talent or whose owners hold deep religious beliefs may decide to drop spousal benefits altogether rather than extend them to same-sex married couples, said Bruce Elliott, manager of compensation and benefits for the Society for Human Resource Management.
“That is absolutely one of the unintended consequences of overturning the state bans,” Elliott said. “I wouldn’t be a bit surprised if a single-state employer comes out and says, ‘We’re just going to cover our direct employees.’”
A ruling in favor of gay marriage will spark more lawsuits and cause confusion for small-business owners, said Don Barefoot, chief executive officer of C12 Group, which organizes and advises Christian-owned businesses. He foresees more decisions that he says will hurt his ability to employ people who share his company’s religious-based values. One benefit of such a ruling, Elliott predicted, is that taxes levied on same-sex partner benefits by states that don’t recognize gay marriage, such as Louisiana, will disappear. Companies will also have an easier time recruiting employees to locate in such states, he said.
On the downside, workers in same-sex relationships who transfer outside the U.S. may have to think twice before marrying because it leaves a public record. There are 78 countries, including Singapore and Nigeria, where it is illegal to engage in homosexual acts, said Selim Ariturk, president of GLIFAA, an organization for lesbian, gay, bisexual and transgender employees of foreign affairs agencies.
One workaround some employers have used to ease overseas travel risks for a gay worker’s family members is to list them as “household staff,” said Ariturk. That would be harder with a marriage license on file, he said. Processing dependent claims through local hospitals is also a challenge.
Honeywell’s Cote and Eaton Corp. CEO Sandy Cutler say they want to hire the best workers available and make sure their companies’ policies and benefits programs allow that to happen.
“We’re very anxious to attract talent of very diverse background and experiences,” Cutler said in an interview. The maker of truck parts and commercial lighting is run from Cleveland and incorporated in Ireland, whose residents just voted to support legalized gay marriage.
But even with the historic nature of the gay-marriage decision, companies may face bigger changes if the courts eventually expand gay rights further by declaring that workers can’t be fired over sexual orientation. In 28 U.S. states it’s legal to fire someone for being gay, and more than 40 percent of LGBT employees still keep their orientation secret, said Todd Sears, founder of Out Leadership and a former Wall Street banker who worked at Credit Suisse Group AG. The group advocates on behalf of LGBT employees in business.
“Marriage is the beginning, not the end, of the changes needed,” Sears said.
–With assistance from Frederic Tomesco in Montreal.
— Check out Earning Credentials in LGBT Planning on ThinkAdvisor.