Big Firms Make Business Argument for Marriage Equality

As prominent employers show their support for furnishing same-sex married couples with the same rights afforded to heterosexual couples, HR leaders point to the positive effect such a stance may have in the war for talent.

By Kecia Bal

The U.S. Supreme Court is expected to hear arguments late this month challenging the constitutionality of two cases concerning same-sex marriage, the federal Defense of Marriage Act and a California law banning same-sex marriage. Amicus briefs encouraging the Court to uphold the challenges have been filed in both cases and signed by scores of powerful companies, including: Apple, Morgan Stanley, Johnson & Johnson,, Facebook, eBay, McGraw Hill and Xerox, just to name a few.

Ernst & Young LLP, a member firm of global Ernst & Young, is among the companies that joined the Supreme Court filing to challenge the federal measure.

The company views lesbian, gay, bisexual and transgender inclusiveness as imperative to attracting and retaining quality employees, according to Karyn Twaronite, the firm's Americas inclusiveness

"In the fierce competition for top talent, particularly within the professional services sector, Ernst & Young LLP recognizes our firm simply can't afford to lose LGBT talent," Twaronite says. "We are committed to fairness for all of our people."

That commitment prompted the firm to offer reimbursement to employees for additional federal and state taxes paid on same-sex domestic partners' health and welfare benefits, beginning in January 2012. In addition to the costs incurred in that tax gross-up policy, Twaronite says the company also bears significant expenses dealing with regulations that can differ from state to federal (such as maintaining separate human resource processes for opposite-sex and same-sex married couples).

Company leaders also are taking a public stand in support of immigration equality for LGBT people, she says.

"It doesn't just create challenges within global organizations like ours -- it's an issue of American competitiveness," Twaronite says. "The United States continues to lag behind other countries in this critical area of competitiveness, presenting a shared challenge for U.S. corporations striving to compete in a global economy."

Ernst & Young is part of a growing percentage of employers who have elected to offer benefits to employees in same-sex marriages, regardless of the legislative landscape.

According to a database of more than 1,300 employers maintained by Aon Hewitt, 71 percent offered same-sex-benefits coverage in 2012, compared to just 51 percent in 2007 and 40 percent in 2004.

J.D. Piro, New York-based leader of the global HR consulting firm's health and benefits legal practice, says this trend has been growing since the mid-1990s.

"In the competition for talent, companies design their programs to be competitive with other organizations in their industry," he says. "Domestic partner benefits play an important role for many companies."

With only some states recognizing same-sex marriages on some level, managing payroll taxes alone can create a strain, Piro says.

"Administering these benefits has always been a challenge for HR professionals," Piro says. "The different tax treatment under the income tax code between same-sex partners and married, opposite-sex couples has created additional administrative complexities, especially for multistate employers operating in different jurisdictions, where the federal and state income tax treatments will differ."

Rich Stover, a principal at HR consulting firm Buck Consultants, offers an example to illustrate how these differences can complicate administering benefits: An employer he works with had an insured medical plan, with the contract issued in New York State, which recognizes same-sex marriage regardless of the state of marriage. New York also requires that insurance contracts cover same-gender spouses. One of the company's employees married a same-sex partner out of state, and because the employee was covered under a contract in New York, the employer discovered he must cover the employee's spouse, including making required federal and state tax adjustments.

"The employer had to scramble to get everything into place," Stover says.

Overturning the federal act, he says, would require companies to invest a short-term effort toward ensuring compliance, but eventually would make administering coverage and handling tax requirements and enrollments simpler and more uniform.

Stover says employers no longer can ignore the legislative changes proposed, even if those employers do not want to cover same-sex spouses. Besides what happens with federal law, state-to-state definitions of marriage are developing as well.

"If your plan doesn't include a formal definition of spouse, the courts may define coverage more broadly than the employer intended," he says.

Other employers genuinely perceive the matter as an issue of equality, Stover says.

"Why should two employees who are each legally married have such differing tax implications?" he says.

Two of the big names to sign amicus briefs in support of same-sex marriage rights offered statements on their stance, indicating a like-minded position.

Becton Dickinson provided this comment: "BD signed on to the amicus brief because we believe that all married associates should be treated equally."

Alcoa's Human Resources Vice President Mike Barriere said in a statement that the company offers full benefits to domestic partners "because we believe a diverse workforce is critical to business success."

 "Since the tax implications of DOMA depreciate the value of domestic partner benefits, Alcoa supports the current legal challenge to DOMA," the statement says.

Even Hewlett-Packard CEO Meg Whitman, who once supported Proposition 8, California's ban on same-sex marriage, spoke out in support of equal rights of same-gender spouses. Whitman added her name to an amicus brief challenging the state law.

Calling her decision "solely (her) own," Whitman said in a LinkedIn post that "it makes no difference whether the marriage is between a man and woman or a woman and woman. Marriage makes society better.

"The core argument of the amicus brief is that there is no legitimate, fact-based reason for providing different legal treatment of committed relationships between same-sex couples."

Aside from administrative hassles and competition for high-performing employees, Twaronite says that welcoming a diverse base of employees, regardless of their spouses' genders, makes for a stronger company.

"Our LGBT professionals provide another diverse voice at the table -- an advantage for any business looking to innovate and succeed," she says. "Recognizing relationships as we do allows our people to bring their full selves to work. It's smart business." 


Mar 18, 2013
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