Nearly one year ago, the California Legislature passed AB 205. That bill, known as the California Domestic Partner Rights and Responsibilities Act of 2003, takes effect January 1, 2005. It is the most extensive change to domestic partner laws in the state since the passage of AB 25 in 2001. The new law extends most of the same rights, protections, and benefits, to domestic partners that are currently granted to spouses. Some of the most significant impacts the law will have in the realm of benefits are described below.

Who is a Domestic Partner Under the Law?
Only domestic partners who have registered with the State of California qualify under the new law. Pursuant to Family Code §§ 297 and 298, a domestic partnership may be established by filing a notarized Declaration of Domestic Partnership with the Secretary of State. At the time of the filing, all of the following requirements must be met:

1. Both persons have a common residence;
2. Neither person is currently married to someone else or is a member of another domestic partnership;
3. The two persons are not related by blood in a way that would prevent them from being married to each other in California;
4. Both persons are at least 18 years of age;
5. Both persons are capable of consenting to the domestic partnership; and
6. One of the following:
   A.  Both persons are members of the same sex; or
   B.  Both persons are members of the opposite sex and one or both of them is over the age of 62.

Although many municipalities in California provide for domestic partnership registration, a local domestic partnership registration alone is not sufficient to trigger the rights provided under state law. In addition, California law does not recognize domestic partnership registrations from outside of the state.

Should Domestic Partners be Treated Like Spouses for Purposes of Health Benefits?
The new law does not explicitly require employers to extend health benefits to domestic partners. Since AB 25 took effect January 1, 2002, providers of health insurance have been required to offer domestic partner coverage to employers who wish to include it in their benefit plans. The law did not mandate, however, that employers provide health benefits to their employees’ domestic partners.

In all likelihood, AB 205 will be held to mandate that if an employer extends health benefits to spouses of employees, it must also allow coverage for domestic partners. The reason is twofold. First, the law clearly states that registered domestic partners are entitled to the same benefits that are granted to spouses whether those benefits derive from "statutes, administrative regulations, court rules, government policies, common law, or any other provisions or sources of law." Though there is no law requiring employers to extend health benefits to spouses, public employers that provide health benefits to employees invariably act under the auspices of a local ordinance, rule or regulation. These documents almost certainly qualify as "any other provisions or sources of law."

Second, the new law provides that domestic partners have the same nondiscrimination rights as spouses. (Family Code § 297.5 (a) and (f)). Under the Fair Employment and Housing Act (FEHA), an employer may not discriminate on the basis of marital status. Therefore, if an employer were to extend health benefits to spouses but not domestic partners, arguably the employer would be making a distinction based on marital status. Given AB 205's broad protection of domestic partners, an employer’s decision to extend coverage to spouses but not domestic partners may violate the law for this reason as well.

In any case, under SB 2, which takes effect January 1, 2006, employers with more than 200 employees will be required to provide health coverage to their employees and the domestic partners of those employees. The following year, employers with between 20 and 199 employees will be obligated to meet the same conditions. (Please note that Proposition 72, which will appear on the November 2004 ballot, seeks to repeal SB 2). In addition, beginning January 1, 2007 all businesses with state contracts worth more than $10,000 will generally be required to provide domestic partner benefits for employees in same-sex relationships if the employer offers spousal and dependent coverage under their group health plans. (Public Contract Code § 10295.3).

However, the new law is not without exceptions. For example, it does not modify eligibility for long-term care under the Public Employees’ Long Term Care Act.

How Does the New Law Interact with an Employer’s COBRA Responsibilities?
AB 205 expressly states that it "does not amend or modify federal laws or the benefits, protections, and responsibilities provided by those laws." (Family Code § 297.5(k)). When the Legislature passed AB 25, it explicitly stated that it did not expand an employer’s obligation to provide COBRA health coverage to domestic partners. Under the new law, however, there is some ambiguity.

Clearly, domestic partners will not be eligible for COBRA coverage under federal law unless he or she also qualifies as a dependent under Internal Revenue Code § 152. In that respect, there is no change to the status quo. Whether the domestic partner is entitled to Cal-COBRA benefits, however, is another matter.

An employee and his or her dependents may be entitled to Cal-COBRA coverage if he or she has exhausted federal COBRA coverage. Conceivably, this coverage could extend to domestic partners even if they do not meet the federal definition of "qualified beneficiaries," which is limited to the employee and his or her spouse or child. (26 CFR § 54.4980B-3). Under Family Code § 297.5(e), to the extent that California law relies on federal law in a way that results in domestic partners being treated differently than spouses, registered domestic partners are to be treated by California law as if federal law recognized domestic partners in the same manner as California law.

Therefore, when determining whether a domestic partner is eligible for Cal-COBRA coverage, federal COBRA must be read as if domestic partners were also qualified beneficiaries. Thus, while domestic partners would not be eligible for benefits under federal COBRA, they would be eligible for any extension of benefits under Cal-COBRA. Nonetheless, we suggest that employers discuss this issue with their carriers to ensure compliance under the terms of their individual policies.

Do Employers Have any New Payroll Obligations?
When an employee receives employer-provided health benefits for his or her domestic partner, the employee must pay taxes on the amount of those benefits unless the domestic partner qualifies as a "dependent" under the federal Tax Code. In contrast, benefits received for a spouse are tax-exempt. AB 25 amended California law to provide that a domestic partner is a "dependent" so that benefits received for a domestic partner are exempt from state taxation. As a result, the cost of employer-provided domestic partner coverage may not be included in the employee’s California taxable income. AB 205 does not change either the federal or state law in this respect.