Civil Unions: What the Employer should know
The Illinois Religious Freedom Protection and Civil Union Act goes into effect on June 1, 2011. The Act, among other things, grants same-sex couples who formalize their relationship the same rights afforded to married couples. This means employers must give partners of civil unions the same benefits employers give to spouses of married couples.
Sounds simple? Well the Federal Defense of Marriage Act (“DOMA”) complicates things. The DOMA prohibits the recognition of same-sex relationships under federal law. So where the Civil Union Act grants benefits to civil union partners, the federal law takes away the federal benefits.
The effect is largely felt by private employers. For example, retirement plans sponsored by private employers are governed by the Employee Retirement Income Security Act (“ERISA”), a federal statute. Because the term “spouse” under ERISA is restricted by the DOMA, Illinois employers may not be able to not extend benefits to civil union partners. This includes the pension benefit, “joint-and-survivor annuity”, which gives continuing benefits to surviving spouses after the employee dies.
How does this work with health insurance? If employers provide insurance for their employees and their family through an insurance company registered in Illinois, the employers must treat same-sex partners in the same manner as married spouses. But self-insured plans are governed under ERISA, so employers who self insurance may not be able to provide benefits to same-sex partners.
All of this boils down to a very large concern: if employers give opposite-sex spouses the right to enroll in federally governed programs but exclude same-sex civil union partners, are they opening themselves up to state discrimination suits? Even if they are simply complying with federal law?
This is a difficult area and this article is not intended to touch on all issues that are anticipated to arise. But employers need to make themselves aware of these issues and be prepared to act as soon as June 1, 2011 comes around.
If you have questions as to how the new law may affect employee benefits, contact Waltz, Palmer & Dawson, LLC at (847) 253-8800.