Currently, Minnesota law restricts the ability of certain public
employer’s to offer the same types of benefits that many of Minnesota’s
private sector employers offer. Courts have interpreted Chapter 471.61
to restrict the definition of dependents for the purpose of employee
benefits to a spouse or minor child of the employee—thus, preventing
home rule cities from extending employee benefits to foster children,
live-in elderly parents, registered domestic partners, or any other
family members.
A Matter Of Local Control
The issue with domestic partnership benefits for municipal employees
is local control of local affairs. According to the Honorable
Robert H. Schumacher in his dissenting opinion in Lilly v. City of
Minneapolis, Minnesota courts have "erode[d] the constitutionally
recognized principle of home rule: local governance of areas of local
concern." In explicitly recognizing the powers of home rule cities to
determine their own employee benefit packages, the Legislature would
restore true home rule to Minnesota.
Today’s Labor Market
Explicitly authorizing domestic partner benefits would restore a
basic principle of home rule and recognize the right of local units
of government, and locally elected public officials, to determine what
policies work best in their own areas of the state.
Over the decades, employee benefits have been adjusted to meet
current needs. In 1957 the legislature first added dependents—spouses
and minor children under the age of 19. In 1971, the Legislature added
student dependents under age 25.
As the market for quality employees becomes increasingly competitive,
and as the federal welfare system is reformed placing greater demands on
the state, counties and municipalities should have available all
the tools they think they need to best deal with these demands.
To date, the City of Minneapolis, the City of
Northfield, and Hennepin County have all sought the authority
to make their own decisions in this area. Today they face legal barriers
to their attempts to offer benefit packages to their employees that are
competitive with those of private sector employers in Minnesota.
What Are The Costs?
A common question regarding domestic partner benefits concerns the
cost of extending coverage; but the simple fact is that remaining
competitive in the employee marketplace is just good business-sense. The
experience of many companies and municipalities over many years has
demonstrated this. But whatever the case, this is an issue for the
employer, not the state to decide.
A Substantial Return At A Minimal Cost
The City of Seattle and HBO, Inc. actually found that covering a
domestic partner was less expensive than covering a spouse.
Both the Lotus Corporation and Levi Strauss & Co. found domestic
partner coverage the same or less expensive than equivalent spousal
coverage. Most other corporations have shown only approximately a 1%
increase in coverage costs upon extending domestic partner benefits.
International Foundation of Employee Benefit Plans,
"Domestic Partner Benefits: Employer Considerations," Practices
Fourth Quarter, 1994.
In a recent survey of private employers offering domestic partner
benefits, 33% reported no change whatsoever in costs in providing
employee benefits. Of employers offering domestic partner benefits, only
14% have reported an increase in costs to their benefit packages. Those
increases ranged from just 1 to 4%.
International Society of Certified Employee Benefit
Specialists, "Census of Certified Employee Benefit Specialists: Domestic
Partner Benefits," May 1995.
The Private Sector Leads
Public employers that do not have flexibility on this issue
actually lose money when they invest in the training of, and then
lose, highly skilled employees to private businesses—corporations that
years ago recognized the need to maintain a competitive stance in a
tight employee marketplace. A few of the Minnesota based corporations
and organizations that have incorporated domestic partner benefits
include: American Express; Allina Health System; Barnes and Nobel; Cray
Research; Dorsey & Whitney; IBM; ITT Hartford Insurance; HealthPartners,
Inc.; LifeUSA Insurance Co.; Minnesota Communications Group (MPR);
Northern States Power Company (NSP); Padilla, Speer, & Beardsley; Star
Tribune; The St. Paul Companies; YWCA – Minneapolis.
The Minnesota Experience
Recognizing the need to remain competitive in a tight employee
marketplace, as well as the need to maintain an equitable workplace
environment, employers such as the City of Northfield, the
City of Minneapolis, and Hennepin County have attempted to
offer domestic partner benefits.
The City of Minneapolis extended domestic partner benefits effective
1 July 1993 to 30 April 1995. The total cost of HMO premium
reimbursements from 1 October 1993 to 1 May 1995 for the City of
Minneapolis was only $8,990.80. This minor increase in actual costs was
due solely to the difference between single and family coverage
premiums. According to the City’s Benefits Manager, the "total monthly
premium for family coverage under City Dental and HMO contracts were not
increased as a result of [the] expanded covered dependent definition."
Until prohibited from extending health benefits to its employees by the
courts, the City of Minneapolis found its program imposed minimal costs
while offering substantial returns in the areas of employee satisfaction
and employee retention.
At its most basic level, the issue is local control of
local affairs. The principle of home rule means nothing if it does
not mean local units of government, and locally elected public
officials, can determine what policies work best in their own areas of
the state. The important thing to remember is that this is an issue
for local government, not the state to decide. |
