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Legislative Update January 2005

By Amy Doherty - Fisher & Phillips LLP

The Impact of the California Domestic Partners Rights and Responsibilities Act and the California Insurance Equality Act on California Employers

Effective January 1, 2005, two new laws go into effect in California that significantly impact how employers apply personnel policies and certain employee benefits to registered domestic partners: the California Domestic Partner Rights and Responsibilities Act of 2003 (“DPRRA”) and the California Insurance Equality Act (“IEA”).

Purpose of the Laws

The DPRRA is designed to grant registered domestic partners the same rights, benefits, duties and responsibilities that spouses have under California law. (See, CAL. FAM. CODE § 297.5(a).) For instance, community property laws that apply to married couples will also apply to registered domestic partners and domestic partners will be required to use the court system to obtain a divorce similar to married couples.

The employment aspects of this law require California employers which maintain personnel policies that benefit an employee’s spouse (with limited exceptions), to also extend them to an employee’s registered domestic partner. For instance, the California Family Rights Act (“CFRA”) currently allows qualified employees to take up to 12 weeks of unpaid leave to care for the serious health condition of a spouse, or for the birth of a child. Under the DPRRA, an employee will be entitled to take CFRA leave to care for the serious health condition of a registered domestic partner, or for the birth of a domestic partner’s child.

The IEA impacts California employers indirectly by requiring health care service plan providers (“HMOs”) and health insurers to provide equal coverage under all policies to spouses and registered domestic partners of covered employees.

The IEA will require HMOs and health insurers to provide (rather than simply offer) equal coverage to spouses and registered domestic partners. In effect, the IEA indirectly requires California employers to make such coverage available to employees under their HMO and insured health plans by limiting the HMO and health insurance products that are available for purchase in California. If a California employer wishes to purchase an HMO or insured health plan policy that covers employees’ spouses, such plan must cover employees’ registered domestic partners, as well. This requirement will apply to HMO and group health insurance plan policies that are issued, amended, delivered or renewed in California on or after January 2, 2005. Accordingly, if a California employer’s HMO or group health insurance plan policy renews on January 1, 2005, the new requirements will not apply until the January 1, 2006 renewal (unless the policy is amended prior to that time). Additionally, the requirements of the IEA will apply to other types of insurance (such as life and disability insurance) beginning on January 1, 2005. For example, any group life insurance policy that is issued, amended, delivered or renewed in California on or after January 1, 2005 and that defines an employee’s spouse as the default beneficiary will be deemed to provide that, in the absence of a spouse, the employee’s registered domestic partner is the default beneficiary.

Who Qualifies for the Laws’ Protections

California imposes specific standards for persons to qualify as registered domestic partners for purposes of the DPRRA and IEA. The DPRRA defines domestic partners as same sex couples, or couples in which one or both of the members qualify for coverage under specific provisions of the Social Security Act. Opposite sex couples cannot qualify to be registered domestic partners unless at least one member of the couple is over the age of 62. Only domestic partners who have legally registered with the State of California will qualify for the protections of the DPRRA and IEA. The DPRRA and IEA do not recognize same sex marriages to be valid domestic partner relationships. Nor do they recognize legal domestic partnerships formed in other states, unless that state’s form of domestic partnership is “substantially equivalent” to a California domestic partnership.

How the Laws Will Affect California Employers

The most immediate impact the laws will have on employers is likely to be in the area of leaves of absences and insurance benefits. The DPRRA will allow qualifying domestic partners to take protected family leave under CFRA, as well as any other types of leave involving spousal rights, such as bereavement leave. Employers that offer paid sick leave to their employees will have to allow employees to take up to half of that paid sick leave to care for a sick registered domestic partner or the child of a registered domestic partner and, if an employer is required to offer unpaid Family School Partnership Leave, then such benefits will extend to employees who are registered domestic partners as well.

The IEA affects California employers indirectly by limiting the HMO and health insurance products that are available for purchase in California. Because the IEA’s requirements do not apply directly to California employers, they will not affect coverage under self-insured health plans sponsored by California employers. Just like any other state-law insurance mandate, the IEA’s requirements may be avoided by sponsoring a self-insured health plan, rather than purchasing an HMO or insured health plan.

California employers may encounter potential problems with DPRRA compliance, most of which will arise from the potential conflicts between the DPRRA and other laws with which employers are required to comply. The only certainty regarding the impact of the DPRRA and IEA on California employers is that the law will continue to develop in the coming months.

Fisher & Phillips LLP is a national law firm representing employers exclusively in labor and employment matters. Amy Doherty works in the San Diego office of Fisher & Phillips LLP and can be reached at (858) 597-9600.

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