Recently, Delaware Governor Jack Markell signed the Civil Union and Equality Act of 2011 (the "Act") legalizing civil unions for same-sex couples in the state. The Act, which takes effect on January 1, 2012, gives same-sex couples the same rights, benefits, protections, responsibilities and duties as married persons under Delaware law.
Under the Act, employers will be required to provide spouses in a civil union with the same benefits, such as health insurance, life insurance and retirement benefits, that they provide to spouses in a marriage, pursuant to the same eligibility requirements. However, the Act is a state law, and as a result, it has limited impact on matters governed by federal law. The definition of "marriage" under federal law remains limited to marriages between a man and woman. Thus, Delaware private employers who provide health and retirement benefits that are subject to ERISA, a federal statute, may not be required to offer such benefits to the spouse of an employee in a civil union.
Employers with fewer than four employees are exempt from Delaware’s employment nondiscrimination laws and may not be required to provide spouses in a civil union with the benefits provided to spouses in a marriage. Regarding the tax treatment of benefits, unless a spouse in a civil union is a "dependent" of the employee (i.e., the partner receives more than 50 percent of his or her support from the employee and lives the entire year in the employee’s household), the value of spousal health benefits may be considered taxable income to the employee for federal tax purposes.
The Act makes Delaware the eighth state to enact laws offering civil unions or domestic partnerships with all or nearly all the rights of marriage afforded to same-sex couples. The other states are California, Nevada, New Jersey, Oregon and Washington; couples in Illinois may begin applying for civil union licenses on June 1, 2011, and Hawaii's law takes effect January 1, 2012. Notably, the Act requires that Delaware recognize legal relationships that are the substantial equivalent of Delaware civil unions that same-sex couples validly enter into in another jurisdiction, whether that is a civil union, a domestic partnership or a marriage, and will treat the relationship as a civil union in Delaware. The Act not does not allow same-sex couples to obtain marriage licenses.
As a result of the Act, employers with employees in Delaware should review their employee handbooks, workplace policies, benefit plans and compensation practices to ensure that these documents and practices anticipate and comply with the Act. Where benefits are provided to spouses, they will often need to be extended to civil union spouses effective January 1, 2012, except in circumstances in which federal law preempts state law. For example, employers' health and benefit plans as well as personal leave, bereavement leave, sick leave, adoption and company discount policies will likely need to be revised.