Recently, I was working with a client updating some of the plan documents and we ran into an interesting issue. 

The plan provides for eligibility for same-sex partners under a provision defining them as “domestic partners.” The plan sponsor asked “since all of our employees reside in a state that recognizes same-sex marriage, do we still need this?” 

Great question. 

Since they asked, I have been doing a fair bit of research and have come to the following conclusion: it depends on what you want to do, but make sure you know you are doing it. At the outset, this is not about whether or not same-sex marriage is a positive or a negative. I am only concerned with appropriate plan administration.  

And one considerable difficulty with plan administration is that some terms and provisions become “legacy” provisions that just continue to show up, restatement after restatement, without any clear understanding of why they are in there. So as a starting point, you should really be reviewing your plan documents with an eye toward making sure you know what eligibility and benefits provisions are included.  

Many a plan sponsor has been frustrated in finding “surprise participants” based on plan language that was just carried over year after year. Don’t let plan provisions stick around just because they are already in there. Make sure they are actually doing what you want them to do.

Domestic partner definition is tricky

That said, the definition of “domestic partner” can be part of the problem. Many plans started by defining domestic partners as same-sex couples who legally could not get married — 37 states now recognize same-sex marriage. So in many ways, the necessity for this type of eligibility may be falling away.  

Legally speaking, there is little rationale for treating opposite sex couples differently from same-sex couples if both can marry so the plan can certainly limit the definition of “spouse” to those legally married. 

Further, recall that the IRS recognizes same-sex marriages if they are performed in a jurisdiction that recognizes them, so even out-of-state marriages would create a “spouse” if your plan includes a provisions defining a spouse as being anyone legally married in a jurisdiction recognizing the marriage.

So there is certainly ample justification for considering limiting the definition of “spouse” to people legally married and doing away with domestic partners. However, there is also some support for keeping the definition in. 

Also see: DOL updates FMLA definition of ‘spouse’

Some plans want to provide coverage for domestic partners regardless of the gender of the employee. Yes, some plans offer benefits to opposite sex domestic partners, provided certain plan requirements are met. There might be tax issues to consider, but the point is you can include such a provision in your plan.

The point is that whether you decide to leave “domestic partners” in or decide to take them out, make sure you know how you have defined them, how you verify the status and how you apply the plan terms. If you decide to take them out, make sure you provide proper notice to plan participants and properly amend the plan documents, including any summaries that explain eligibility.  

And while you are at, give the other plan terms a once-over to see if there is anything else in there that might need to be updated to reflect current practices.

Keith R. McMurdy is a partner with Fox Rothschild focusing on labor and employment issues; he can be reached at kmcmurdy@foxrothschild.com or (212) 878-7919.

The information in this legal alert is for educational purposes only and should not be taken as specific legal advice.

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