Google's decision to underwrite or "gross up" the tax costs of health-insurance benefits for same-sex domestic partners may lead other organizations to follow suit. Few observers are surprised Google is taking this step. The company is already well known for offering extraordinary employee benefits and perks.



By David Shadovitz

Google isn't the first company to compensate gay and lesbian couples for taxes paid on health benefits, but its decision to join the handful of others already doing so could spur other companies to follow suit -- in Silicon Valley and elsewhere.

The Mountain View, Calif.-based company recently announced that it will "gross up" health-insurance benefits for all same-sex domestic partners in the United States, retroactive to Jan. 1, 2010, following in the footsteps of companies such as Cisco and Kimpton Hotels.

In Google's case, the company will provide employees with a separate amount, instead of including it as a part of their regular pay. Heterosexual partners, who are entitled to domestic-partner benefits, would not receive the "gross ups," since they have the option of getting married.

A Google spokesman said the change came after "a 700-member group of gay and lesbian employees and their supporters called Gayglers ... approached management asking that the discrepancy be addressed," according to the San Jose Mercury News.

Google's management team agreed, according to the spokesman.

Google, which employs roughly 21,000 employees worldwide, also said that it would provide same-sex domestic partners with the equivalent of the Family and Medical Leave Act, as of July 1.

Helen Darling, president of the National Business Group on Health in Washington, notes that, while she's unaware of any NBGH members providing such a "gross up," she knows that some are examining the issue.

"Some employers are going to look at it much more carefully now," she says. "Any issue involving Google is going to get people's attention."

Callan Carter, a partner with Fisher & Phillips in San Francisco, agrees.

"The fact that Google, in financial times like these, is willing to take on this additional expense is significant," she says.

"What Google is, in effect, doing for its employees is what the federal government isn't doing, in regard to [recognizing] same-sex marriages," Carter says.

Given who it competes for talent with, notably Apple, Google is "clearly stepping up to the plate and making a statement here," she adds.

What the "gross ups" will financially cost Google is unclear. But experts note it's probably not insignificant.

A 2007 study by the Williams Institute for Sexual Orientation Law and Public Policy at the University of California/Los Angeles' School of Law estimates that domestic partners pay, on average, $1,069 more a year in taxes in healthcare coverage than married employees.

Though Google will now have to calculate the reimbursement amount, experts don't expect it to significantly increase Google's administrative headaches.

"It's a hassle that it needs to be done," says Darling, but the administrative burden was originally created when it wasn't possible for employers to treat employees the same.

Few are surprised that Google is taking this step. The company is already well known for offering extraordinary employee benefits and perks, including free food, on-site oil changes and car washes, dry cleaning and massage therapy.

In this instance, however, some point out it's more than just another benefit, since it's attached to a political message.

Experts note there wouldn't be a need to reimburse for the tax if provisions in the Defense of Marriage Act were modified, but no one interviewed by HREOnline ^TM expects that to happen anytime soon.

Daryl Herrschaft, director of the Workplace Project of the Human Rights Campaign Foundation in Washington, applauded Google's decision.

"It's significant because of the high profile Google brings to it," says Herrschaft, whose nonprofit organization promotes gay, lesbian, bisexual and transgender rights. "It puts front and center that businesses are disadvantaged under federal law [and] puts the private sector on record as ... wanting the government's policies changed."

While Herrschaft and others describe Google's decision as cutting-edge, some experts also warn that it's not without some legal perils.

Because Google currently provides benefits to both same-sex and heterosexual domestic partners, experts say, the company could be opening itself up to claims of reverse discrimination, since heterosexuals aren't entitled to the "gross ups."

The exposure is certainly there, Fisher & Phillip's Carter says, but Google probably has weighed that into its decision-making and determined it was safe to move forward.

Sure, she says, "someone incurring a tax consequence could claim that Google was discriminating against them." But considering the nature of its workforce, many of whom are based in Northern California and tend to be younger and more progressive in their thinking, "I would think finding a plaintiff who would come forward might be pretty hard."