Are Employers Required To Offer Domestic Partner Benefits?

Employers should understand the key legal and tax differences between spousal and domestic partner benefits to ensure compliance. This article covers your obligations under federal vs. state law, what to consider when offering these benefits voluntarily, and the key tax implications for your business.  

Federal Law: No General Mandate for Domestic Partner Benefits

In general, federal law doesn’t require employers to offer domestic partner benefits. Laws like the Employee Retirement Income Security Act of 1974 (ERISA) and the Family and Medical Leave Act (FMLA) don’t require employers to extend benefits to unmarried domestic partners. Under federal definitions, FMLA leave is guaranteed only to spouses, not domestic partners. This means that for many employers, especially those with self-funded ERISA plans exempt from most state insurance mandates, offering domestic partner benefits is a voluntary decision.

State and Local Laws: Where Obligations May Exist

While federal law sets a baseline, some state and local laws require particular rights or coverage in limited settings, including public employment or for fully insured plans. Requirements depend on the jurisdiction and the benefit plan.

Typical benefits that states may mandate include:

• Participating in health, dental, and vision insurance group health plans
• Granting family and medical leave
• Giving time off for bereavement
• Participating in life insurance plans
• Allowing retirement plan beneficiary designations
• Granting relocation benefits

Historically, domestic partnerships arose as a way for same-sex partners to receive some of the same spousal benefits as married heterosexual couples. In 2015, the U.S. Supreme Court’s decision in Obergefell v. Hodges legalized same-sex marriage nationwide. Since then, domestic partnerships have become less common, and many companies have scaled back these benefits.

A few states still recognize these civil unions and have laws for domestic partnerships. For example:

• California gives registered domestic partners specified state-law spousal rights
• Washington generally limits new registered domestic partnerships to couples in which at least one partner is 62 or older
• Oregon limits domestic partnerships to same-sex couples
• Colorado, Illinois, and New Jersey still recognize civil unions

Because laws vary, check state and local laws wherever you have employees.

Offering Domestic Partner Benefits Voluntarily

Even when not required, employers may offer medical coverage or other benefits to employees’ partners as an incentive. Whether you choose to offer benefits or must do so by law, setting clear eligibility rules and criteria for who qualifies as a domestic partner can help avoid issues.

In legal terms, a domestic partnership refers to two unrelated, unmarried adults in a committed relationship. A common approach is for an employer to ask employees for a domestic partnership affidavit. In the domestic partner affidavit, the employee and partner will affirm that:

• They are at least 18 years old and not blood relatives
• They meet the company’s definition of a domestic partnership (e.g., share a common home, are financially interdependent)
• They are in a committed relationship
• They are not married to someone else
• They agree to notify the company within a specific timeframe (e.g., 30 days) if the partnership ends

The insurance agency may require an affidavit.

Tax Implications for Employers and Employees

Federal tax law treats a domestic partner as unmarried, but state tax treatment varies. For employer-provided health insurance, the value of coverage for a domestic partner is generally considered taxable income unless the partner qualifies as the employee’s tax dependent under IRS rules. This is known as “imputed income.”

In general, employees can’t use pre-tax dollars from a Section 125 cafeteria plan to pay for coverage for a non-dependent domestic partner. Contributions must usually be made on an after-tax basis. Other benefits have their own tax rules, so review federal and state guidance.

Summary: Federal vs. State Requirements

The table below summarizes the main topics discussed here. See FindLaw’s Wages and Benefits section for more employer-focused articles.

Get Legal Help With Domestic Partner Benefits

Benefit, tax, and employment law rules vary by location and change frequently. Denying benefits to eligible dependents and domestic partners can become a nightmare. To ensure your company stays compliant and to choose the best options for your business, consult an experienced employment law attorney before creating or modifying your benefits policies.