The New Hampshire Civil Unions Act was signed into law on May 31, 2007 and will take effect on January 1, 2008. The Act provides that same-gender couples who enter into legal civil unions “shall be entitled to all the rights and subject to all the obligations and responsibilities provided for in state law” that apply to married couples. While the Act will ostensibly reach every portion of New Hampshire law that concerns marriage status, the Act will not generally affect federally defined rights or obligations. This is because the federal Defense of Marriage Act explicitly defines marriage as between a man and a woman for purposes of federal law, such as the Internal Revenue Code. 

 

The distinction between New Hampshire and federal law on the issue of civil unions raises difficult issues that did not previously affect all New Hampshire employers. If an employer has not previously provided health care benefits to same gender domestic partners, then they should be particularly alert to certain tax issues. For example, a partner to a civil union, in many cases, will not qualify as a dependent for tax purposes. This means that the “fair market value” of health benefit coverage attributable to the partner would be additional taxable compensation to the employee, and the employer would be required to make applicable tax withholdings. Also, employers will have to administer carefully any tax-favored §125 cafeteria and flexible benefit plans to ensure that premium payments and benefits related to a civil union partner are not provided through the plan on an after tax basis. 

 

As for employers who currently offer domestic partner benefits to same gender couples, they will have to decide whether to continue to offer such benefits to couples who choose not to become legally united under the Act. In this regard, an employer must give careful consideration to New Hampshire’s prohibition against “sexual orientation” discrimination. There previously existed at least an argument that offering domestic partner coverage only to same gender couples and not to opposite gender couples was permissible because same gender couples had the option of marrying. Now, all couples will have equal footing under the law. Therefore, domestic partner coverage, if offered under a health plan, may need to be offered to both same or opposite gender couples. 

 

There are a multitude of other legal issues and administrative tasks that go along with the issues highlighted in this article, all of which may impact your business.