Illinois Civil Union and Domestic Partnership Laws

A domestic partnership is an interpersonal relationship between two adults (of the same sex or opposite sex) who live together and share a domestic life but are not married to each other. At the federal level, there are no laws that provide legal rights to unmarried couples in domestic partnerships. Although a domestic partnership is similar to marriage in many respects, federal law does not give domestic partners the same rights and responsibilities that are provided to married couples.


However, a handful of states have enacted domestic partnership or civil union laws that provide legal rights to couples in these relationships. This Employment Law Summary provides an overview of Illinois’ civil union law.

CIVIL UNION ACT
Effective June 1, 2011, the Illinois Religious Freedom Protection and Civil Union Act (Civil Union Act) legalized civil unions for same-sex and opposite-sex partners.
Under the Civil Union Act, civil union partners are entitled to the same legal obligations, responsibilities, protections and benefits as spouses under Illinois law. The Civil Union Act also provides that civil unions and substantially similar relationships, entered into in another state, are recognized as civil unions under Illinois law. The recognition of civil unions under state law does not extend to benefits and protections provided to married couples under federal laws (for example, the federal Family and Medical Leave Act, or FMLA).

The requirements for entry into a civil union are similar to those for marriage in the state of Illinois. Same-sex or different-sex couples may enter into a civil union if:
•Both members of the couple are at least 18 years old;
•Neither is currently in a marriage or civil union or substantially similar legal relationship; and
•The members of the couple are not closely related to each other by blood or adoption.

EMPLOYEE BENEFITS

CIVIL UNION ACT
Because of the Civil Union Act, unmarried couples that enter into a civil union are treated as spouses under Illinois law, including laws relating to employee benefits.

Employee benefits affected by the Civil Union Act include the following:

•Health Insurance Coverage. Fully-insured, employer-sponsored health plans that provide coverage for spouses must offer identical coverage to civil union partners. Likewise, fully-insured health plans that provide coverage for children must offer identical family coverage to civil union partners. Rates for two-person (spousal) coverage or family coverage cannot differ based on whether the family consists of married spouses or civil union partners.
Federal law requires that Illinois employers impute the value of the partner’s coverage to the employee for federal tax purposes, unless the partner qualifies as the employee’s tax dependent. This same tax treatment applies to coverage for the civil union partner’s children. However, employer-provided benefits for a civil union partner are exempt from Illinois state income tax.

•Continuation Coverage. Although civil union partners do not qualify as spouses eligible for continuation coverage under federal COBRA, civil union partners must be treated as spouses under Illinois’ continuation coverage laws. Thus, civil union partners may be eligible to continue health coverage after a termination of employment, death or dissolution of a civil union.

•Employee Leave. Civil union partners must be treated as spouses for purposes of Illinois’ employee leave laws, including family military leave.

FEDERAL TAX ISSUES
 Federal recognition of same-sex couples applies only to same-sex marriages that are valid under state law. It does not affect same-sex couples in civil unions or domestic partnerships. These couples generally remain ineligible for the federal benefits and protections provided to spouses.

At the federal level, domestic partner benefits are non-taxable only if the domestic partner qualifies as a dependent under the Internal Revenue Code’s definition of “qualifying relative.” To qualify as a dependent under this definition, the domestic partner must generally:

•Have the same primary address as the employee/taxpayer for the year;
•Be a member of the employee/taxpayer’s household;
•Receive more than half of his or her support for the year from the employee/taxpayer;
•Not be anyone’s “qualifying child” for tax purposes; and
•Be a citizen or national of the United States, or a resident of the United States or a country contiguous to the United States.

If a domestic partner does not qualify as a tax dependent of the employee, employers are required to report and withhold taxes on the value of employer-provided health coverage for the domestic partner. It is common for employers to “gross up” an employee’s salary to offset the tax consequences of domestic partner benefits (that is, reimburse employees for the extra taxes they are required to pay on the value of domestic partner benefits).

ACTION STEPS
Illinois employers should periodically review their obligations and choices with respect to civil union and domestic partner benefits. This review may include the following:
•Review employee benefit policies that are based on state law, such as family leave policies, to make sure that the same rights, benefits and protections that apply to spouses also apply to civil union partners;
•Consult with tax advisors and payroll vendors regarding the tax implications of providing benefits to domestic partners; and
•Communicate benefit changes to employees on a periodic basis, including changes for domestic partners and tax implications.

Employers should also review policies regarding employment discrimination to make sure they prohibit discrimination based on sexual orientation, and should periodically train managers and supervisors regarding the employment discrimination policies.