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Many Employers' Domestic Partner Benefits Policies May Become Unlawful Due to Minnesota's New Same-Sex Marriage Act

June 2013

By: James B. Sherman, Esq.

Just last month Wessels Sherman informed employers that Minnesota's new same-sex marriage law is likely to have profound implications for employers when it goes into effect on August 1, 2013. In that article we counseled that "[w]hile a number of employers already voluntarily provide [insurance] benefits to same-sex or other non-legally recognized partners, once same-sex marriages carry the same legal status as opposite-sex couples have long enjoyed, such spouses will likely be covered automatically under the language of most fringe benefit plans. In other cases plan language and terminology created under Minnesota's old law, may not apply or may create confusion or inconsistencies with the new law." [ ARTICLE LINK]

A recent court case, dated May 31, 2013, confirms that our earlier guidance was accurate and timely in the context of sexual orientation and martial status discrimination under the Minnesota Human Rights Act (MHRA).

In Hanson v. Mental Health Resources, Inc., an unmarried female employee asked her employer if it offered domestic partnership benefits. The employer said yes and gave the employee a domestic partnership affidavit that clearly stated in order for applicants to qualify he/she must be in a same-sex relationship. The employee completed the paperwork and identified her boyfriend as a dependent for health insurance, dental insurance and life/disability insurance. About one year later, after the employer discovered the employee had applied for a boyfriend of the opposite sex, it terminated the employee for submitting fraudulent benefit enrollment forms. The employee sued for, among other things, sexual orientation and marital status discrimination under the MHRA, alleging the employer's benefit policy was discriminatory because it did not provide coverage for opposite-sex domestic partnerships but it did so for same-sex domestic partnerships.

The court found in the employer's favor and ruled it was not a violation of the MHRA to offer health care benefits only to same-sex domestic partners because at the time of the lawsuit same-sex domestic partners could not obtain benefits by becoming lawfully married in Minnesota. In other words, the impediment to marrying in Minnesota was a legitimate nondiscriminatory business reason for offering same-sex domestic partners benefits not offered to those of the opposite sex. Absent this legitimate basis for distinguishing between partners of the same versus opposite sex it is likely the practice would constitute unlawful discrimination on the basis of both sexual orientation and marital status.

Although the court ruled in favor of the employer in this case its decision clearly implies the result would have been different if persons of the same sex had the same legal right to marry as persons of the opposite sex. Accordingly, when Minnesota's same-sex marriage law goes into effect, policies that provide benefits to unmarried domestic partners only when they are of the same sex will likely become illegal in Minnesota.

Minnesota's new same sex marriage act definitely requires that employers review their employee handbooks, policies and benefit practices prior to August 1, 2013 when the new law takes effect. Maintaining policies created under laws no longer in effect is always risky business. While it was a common practice for Minnesota employers to expand health and other employee benefits coverage to domestic partners, many limited the practice to partners of the same sex because opposite sex partners qualified for coverage by marrying. Now that couples of any sex may lawfully marry to obtain coverage for employee benefits there simply is no legitimate reason to differentiate between the genders of couples.

An obvious starting point for employers to address the new law before it goes into effect on August 1 st is to decide whether to extend domestic partner coverage to partners of the opposite as well as the same sex, or to require that all partners must be married to obtain coverage through an employee. However there are many issues that go beyond this and which require considerable review and care to avoid legal problems in a new legal landscape.

As always it is important to get ahead of these issues before the law goes into effect by consulting with experienced legal counsel who are well versed in employment law and the issues surrounding same-sex marriage. For help with reviewing existing policies and benefit terms for compliance with the new law, contact attorneys James Sherman at (952) 746-1700, or email jukruse@wesselssherman.com.