W ith the recent enactment of the To enter into a domestic - - PDF document

Employment Law Alert

February 2004

The Domestic Partnership Act

By Andrew E. Graw, Esq. and Stefanie P . Tavaglione, Esq.

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ith the recent enactment of the Domestic Partnership Act, which will become effective on July 11, 2004, New Jersey has taken a significant step in extending rights of married individuals to those in non- traditional relationships. The Act provides qualifying same-sex couples and qualifying

• pposite-sex, unmarried couples over the age of 62,

many of the same rights as legally married couples, including visitation and decision-making rights in a health care setting, certain tax-related benefits, and, in some cases, health and pension benefits.

“Domestic Partners”-- Definition and Requirements

To qualify as “domestic partners” under the Act, couples must meet certain requirements. For example, the couples must be at least 18 years of age, must share a residence, and must have some level of joint finances. Additionally, the Act applies to two specific groups of individuals: (1) same sex couples, premised on the fact that such couples are not permitted to enter into legal marriages; and (2) opposite sex couples where both individuals are 62 years of age or older, because many such couples decide not to marry so that they may continue to receive important benefits like Social Security and Medicare. To enter into a “domestic partnership,” an eligible couple must file an Affidavit of Domestic Partnership with their local registrar. The couple then receives filed copies of their Affidavit, as well as a Certificate of Domestic Partnership. Under certain circumstances, a member of a qualifying domestic partnership may enjoy some of the rights of a “certified” domestic partner without formally filing an Affidavit

• f

Domestic

• Partnership. For example, in an emergency

medical situation, domestic partners will be permitted to accompany or visit each other, even if they have not filed an Affidavit, as long as the

• ther requirements of the Act have been met.

Additionally, any third party, including an employer, may consider a person as a member of a domestic partnership, even in the absence of an Affidavit or Certificate.

Rights and Benefits Under the Act

The Act extends to domestic partners many, but not all, of the rights enjoyed by legally married

• couples. Several of the most significant rights and

benefits are outlined below. Health Care Matters: There are several important rights created for domestic partners with respect to health care. Domestic partners will be permitted to legally act as each other’s medical representative, meaning that one partner may make health care decisions for the other when the

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latter is incapacitated. In addition, health care facilities will be required to extend visitation rights to a patient’s domestic partner and certain family members of the domestic partner. Health and Retirement Benefits: In general, the Act will require that same sex domestic partners (but not opposite sex, unmarried couples over the age of 62) be treated like married couples for purposes of health and retirement plans sponsored by the State of New Jersey. Non-State public employers (such as counties, municipalities, and boards of education) that participate in State- sponsored health and retirement plans may, but are not required to, treat domestic partners of their employees as spouses or dependents for such purposes. The Act also will require that all individual and group health and dental insurance policies delivered or issued in New Jersey offer dependent coverage for same sex domestic partners if dependent coverage is otherwise available under the policy. In contrast, employers that provide health coverage through self-insurance need not extend dependent coverage to same sex domestic partners of employees. Tax Benefits: Domestic partners will gain several New Jersey State tax benefits under the Act. For example, the transfer of property from one domestic partner to another will be taxed at the same rate as a property transfer between spouses. Also, the payment of a pension, annuity, retirement allowance, or return of contributions under a tax- qualified retirement plan to a surviving domestic partner is exempt from New Jersey State tax if paid as a result of the participating partner’s death (just as a death benefit would be exempt from tax if paid to a the surviving spouse of a participant). In addition, for tax purposes, the definition of “dependent” has been amended under New Jersey State tax law to include a domestic partner, thereby allowing a taxpayer a personal exemption for his or her domestic partner who does not file separately. Discrimination: A very significant aspect of the Act is that it amends the New Jersey Law Against Discrimination (“NJLAD”) to include “domestic partnership” as a status that is protected from

• discrimination. NJLAD is amended to provide that

“It shall be an unlawful employment practice, or, as the case may be, an unlawful discrimination: a) For an employer, because of the race, creed, color, national origin, ancestry, age, marital status, domestic partnership status, affectional or sexual

• rientation, genetic information, sex, disability …

to refuse to hire or employ or to bar or to discharge

• r require to retire…from employment such

individual or to discriminate against such individual in compensation or in terms, conditions

• r privileges of employment…”. Domestic partners

therefore will have protection from discrimination in the workplace on the basis of their status as a domestic partner.

Effect of the Act on Private Employers

NJLAD: Employers should review and update their employee handbooks and non-discrimination policies to address the new protected status afforded domestic partnerships. Employees also should be advised of this important change during employee non-discrimination and anti-harassment training sessions. Health Insurance and Other Employee Benefits: As discussed above, while employers that provide health coverage through insurance will not, on and after July 11, 2004, be able to purchase policies without domestic coverage, self-insured employers

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need not cover domestic partners. However, there are many reasons why employers may choose to cover domestic partners even if not required to do so by the Act: to create equity among married and unmarried employees, to be more competitive with respect to recruitment, to be viewed as a socially responsible employer, and to improve morale and employee relations. Naturally, employers deciding whether to extend health coverage to domestic partners should consider the costs of offering such benefits and administrative needs. For example, a self-insured employer who desires to extend health coverage to domestic partners should amend it’s health plan, establish a written policy for determining who is a domestic partner (which may be different than the requirements of the Act) and when a domestic partnership ends or is deemed to have ended. Employers should require a copy of the Certificate of Domestic Partnership from any employee who wishes to cover a domestic partner

• r other evidence of the domestic partnership

(such as joint bank accounts, residences, or other evidence of co-dependency and co-habitation). It is important to note that certain tax consequences normally taken for granted with respect to employee benefits do not necessarily apply to a domestic partner, unless he or she can be declared as a “dependent” of the employee for Federal income tax purposes. For example, health coverage may result in taxable income to the employee if his or her domestic partner does not qualify as the employee’s “dependent.” Similarly, expenses of a domestic partner are not reimbursable under a flexible spending or “cafeteria” plan unless the domestic partner is a “dependent” of the covered employee. Family Leave: The Act did not amend New Jersey’s Family Leave Act to allow a domestic partner to take a leave of absence from work to care for his or her domestic partner, although such leaves of absence are required for married

• employees. However, an employer may, of course,

permit leaves of absence to domestic partner employees on the same or similar terms. Withholding: As discussed above, the Act allows domestic partners to claim a personal exemption for New Jersey State income tax purposes for his or her domestic partner. Therefore, employers may wish to afford affected employees an opportunity to change their personal exemptions for withholding purposes. If you have any further questions regarding the Domestic Partnership Act, in general, or specific questions as to how it impacts your workplace, or any

• ther employment practices or compliance issues, please

do not hesitate to call Martha L. Lester, Chair of the Employment Law Practice Group, Andrew E. Graw, Chair of the Employee Benefits and Executive Compensation Practice Group, or Stefanie P . T avaglione, an associate of the Employment Law Practice Group, at (973) 597-2500.

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New Edition Coming Soon

The new edition of “The Practical Guide to Federal and New Jersey Employment Law: The Employers’ Resource” includes:

• Federal Law Updates
• Easy-to-Follow Index
• New In-Depth Chapters

This Guide, published in connection with the New Jersey Business and Industry Association, is the resource for New Jersey employers seeking to comply with New Jersey laws, regulations and procedures in the employment-related area. It provides management with information concerning existing laws, emerging trends, most frequently asked questions, and practical tips on managing the workforce and workplace. You may also wish to obtain a copy of our currently published edition, “A Practical Guide to New Jersey Employment Law: The Employer’s Resource.” To obtain a copy, please contact Karen Cerreto at 973.422.6466 or email kcerreto@lowenstein.com.

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