San Francisco’s New Domestic Partners Benefits Rule: Some Frequently Asked Questions

The provision applies to all contracts, leases, or other agreements executed or amended on or after June 1, 1997. It also applies to some agreements made between January 3 and June 1 of this year: those that are for more than two years and result from competitive bids.

The ordinance applies to the entity that enters into the contract with the City, not to subcontractors that the contractor may hire. If the entity contracting with the City is a joint venture, all joint venture partners have to comply with the nondiscrimination rules. A "covered entity" cannot meet the requirements of the ordinance by providing domestic partner benefits only in its San Francisco or California offices. Rather, the ordinance applies to all locations in the United States where the entity does business. Separate corporate entities, such as parents and subsidiaries of the entity that contracts with the City, are not required to comply with the ordinance. However, the San Francisco Human Rights Commission has reserved the right to examine the corporate structure of an entity to determine whether it has been created to get around the ordinance. The following are among the factors the Commission will evaluate to determine if the contracting entity is truly separate from a related entity that discriminates: (1) the legal status of the entities; (2) the way in which and the location where benefits are administered; (3) the authority of the person signing the contract; and (4) any other factors deemed relevant by the Commission.

The law applies to all benefits offered to employees as part of the compensation package. This includes, but is not limited to, medical, dental and vision plans; retirement plans; leaves of absences (such as bereavement, parental and family medical leave); disability and life insurance plans; employee assistance plans; access to company facilities, services and events; travel and relocation expenses; incentive stock option and profit sharing plans; and other compensation programs.

The law defines a domestic partner as any person whose domestic partnership is currently registered with a governmental body pursuant to state or local law. The domestic partner does not have to be of the same sex as the employee — in many jurisdictions, opposite-sex partners can register as domestic partners.

Verification of the existence of a domestic partnership may be required only to the same degree and in the same manner as marriages are verified. If verification is required, employees could be asked to produce a copy of their marriage license or domestic partnership certificate, or the contractor could contact the government entity holding the records and ask for verification of the marriage or domestic partnership.

A company may implement and rely on its own internal mechanism for identifying domestic partnerships. For example, some companies require an affidavit from the employee. Even if the company has such a mechanism, however, it must recognize domestic partnerships registered with a governmental body.

If, despite all "reasonable measures," a contractor cannot find an insurance carrier to provide the same coverage for domestic partners as for spouses, or cannot provide other benefits on an equal basis, the contractor will still be in compliance with this law if it provides a cash equivalent to the employee for whom benefits are not available.

In determining whether a contractor has taken all "reasonable measures" to provide equal benefits, the Human Rights Commission will consider such factors as: (1) how many benefit providers the contractor identified and wrote to seeking benefits; (2) whether any other benefit providers would offer equal benefits to the contractor's employees with domestic partners; and (3) whether any federal or state laws preclude the contractor from ending discrimination in benefits.

The "cash equivalent" that the contractor must pay if it cannot provide equal benefits is the money the contractor pays for the benefits given a "similarly situated" married employee. For example, a contractor with locations in Dallas and Phoenix should compare the cash equivalent with the benefits given married employees in the same city; thus, the cost of benefits paid the Phoenix employees is not relevant to determining the cash equivalent owed Dallas employees. The cash equivalent payment must be made either on the same schedule the contractor uses for benefits given other employees, or if no schedule exists, at least once a month.

If the actual cost of providing a certain benefit to an employee with a domestic partner (or the domestic partner directly) is more than it would cost to provide the benefit to an employee with a spouse (or the spouse directly), the contractor may condition benefits on the employee's agreeing to pay the excess costs. The employee may be required to contribute only to the actual costs of the benefits — that is, neither administrative costs, nor other costs associated with providing the benefits may be passed on to the employee.

The Human Rights Commission may grant an exemption in two very limited circumstances: Where a contractor is a sole source provider of needed goods or services. Where an emergency endangers the public health or safety, and no contractor capable of meeting the emergency complies with the ordinance's requirements.

Even when the Human Rights Commission does not act, the San Francisco Board of Supervisors may also waive the ordinance's requirements where there are no qualified responsive bidders and the Board determines that the contract is for an essential City and County service or project.