Delivering Discrimination: FedEx Is among the Companies Refusing Benefits to Married Gay Employees in Massachusetts. the Firms Blame the Federal Government for Their Own Decision to Discriminate

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In May a small group of friends and family gathered in Cambridge, Mass., to watch John Richard and Tom Cerruto officially get married after being together for nine years. "It really was a simple thing," Richard says. "We all went out for Mexican food afterwards."

The ceremony may have been simple, but--like hundreds of stone-sex couples in Massachusetts--Richard is finding out that a legal marriage still doesn't guarantee gay and lesbian couples the same health benefits as their straight counterparts. Richard applied for spousal health benefits from his employer, NStar Corp., Massachusetts's second-largest electric utility. The company--where Richard has worked for 19 years and currently serves as a cost-accounting technician--had always offered health benefits to employees' spouses. But NStar is extending only domestic-partner benefits to married, nonunion gay and lesbian employees. Union employees don't even get that. Company officials argue that even DP benefits, which are not equivalent to those extended to straight married employees, must be won through collective bargaining.

"Frankly, it was a real slap in the face," says Richard, a member of Local 369 of the Utility Workers Union of America. "The thought had never crossed my mind that once we were legally married we wouldn't be treated equally."

The companies that are refusing to give equal benefits to all of their married employees are some of the largest employers in the United States. They include FedEx, the package and shipping company, and General Dynamics, the defense contractor. Adecco, the temporary employment agency, and Caritas Christi Health Care have also turned down their gay employees' request for the same spousal benefits other employees receive.

The Massachusetts supreme judicial court's November 2003 marriage ruling, which took effect May 17, suggested that all marriages should be treated equally, adding that the commonwealth may not deny the "protections, benefits, and obligations conferred by civil marriage to two individuals of the same sex who wish to marry." But FedEx and the other companies argue that the state court's ruling does not apply to the health benefits they offer their employees. Instead, they cite federal law as an excuse to allow them to discriminate.

The companies' arguments derive from the laws that regulate the kind of insurance they offer. Rather than paying a separate insurance provider to cover their employees--which would be regulated by state law--these films offer self-insured health plans, in which the company itself pays employee medical bills (typically supplemented by employee contributions, deductibles, and copayments). Those plans are subject to regulation under the federal Employee Retirement Income Security Act of 1974--not state law. Such plans are often used by larger companies with offices in several states to avoid the hassle of conflicting local insurance laws.

The companies argue that because the so-called Defense of Marriage Act in 1996 limited marriage to opposite-sex couples under federal law, they don't need to recognize Massachusetts's same-sex marriages in their federally regulated health plans.

Additionally, only 35% of companies in Massachusetts plan to give retirement benefits to employees' stone-sex spouses, according to a survey released in December conducted by the consulting firm Segal Co. and the New England Employee Benefits Council. Most retirement benefit plans--generally sponsored directly by companies--are also regulated by ERISA.

"ERISA trumps state law in tiffs case," says Kenneth Thorpe, the head of Emory University's Department of Health Policy and Management. "Even if state law considers all marriages the same, the company is not obligated to offer benefits to anyone."

While that is tree, experts say, the decision is still up to the companies themselves: Though not legally bound to offer health or pension benefits, if they wanted to include married gay employees' spouses, they could make them eligible as domestic partners without violating any federal laws. …


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