Following up on my earlier post, Should Law Schools ‘Gross Up’ Pay for Taxes on Benefits to Gay & Lesbian Faculty?: New York Times, Google to Add Pay to Cover a Tax for Same-Sex Benefits:
Working for a company as rich as Google comes with an incredible number of fringe benefits: the free food, the free laundry, the doctor on duty at company headquarters and the impressive five months of maternity leave with full pay and benefits, to mention a few.
So it is not entirely surprising that the company is about to introduce another set of benefits that pushes the envelope — this time, geared toward its gay and lesbian workers.
On Thursday, Google is going to begin covering a cost that gay and lesbian employees must pay when their partners receive domestic partner health benefits, largely to compensate them for an extra tax that heterosexual married couples do not pay. The increase will be retroactive to the beginning of the year. …
Under federal law, employer-provided health benefits for domestic partners are counted as taxable income, if the partner is not considered a dependent. The tax owed is based on the value of the partner’s coverage paid by the employer.
On average, employees with domestic partners will pay about $1,069 more a year in taxes than a married employee with the same coverage, according to a 2007 report by M. V. Lee Badgett, director of the Williams Institute, a research group that studies sexual orientation policy issues.
So Google is essentially going to cover those costs, putting same-sex couples on an even footing with heterosexual employees whose spouses and families receive health benefits. …
The extra compensation to cover the domestic partner tax will apply only to same-sex domestic partners, Mr. Bock said, because heterosexual couples can avoid the added tax by marrying. (Same-sex couples can make their unions official in several states, but their relationship will not be federally recognized.) …
Google isn’t the first company to “gross up” their employees’ pay, as raises to cover taxes are known. According to the Human Rights Campaign, a handful of other organizations, including Cisco, Kimpton Hotels and the Gates Foundation, do so as well. Benefits experts said a few other companies provided the extra compensation, though it still amounted to a relatively small number.
But given the competitive nature of the benefits culture in Silicon Valley, where companies often offer extra perks to attract top employees, Google’s decision could lead to policy reviews, experts said.
(Hat Tip: Kirk Stark.)
