(GayWebSource.com – West Palm Beach, Florida) — On Monday night, the West Palm Beach City Commission unanimously voted to provide a reimbusrement to eligible municipal employees whose domestic partners are covered by the city’s health insurance plans. The purpose of the reimbursement is to offset the unequal tax burden imposed by federal law.
Under current IRS regulations, gay and lesbian employees are taxed on the value of the health insurance benefits provided to their domestic partners. Opposite-sex married couples are not subject to such taxes.
With this new domestic partner benefit, the city will reimburse employees for these additional taxes by “grossing up” their salaries to account for the taxes owed on the value of the health insurance provided to their domestic partners. (“Grossing up” is the practice by which employers make employees whole for additional taxed owed, thereby ensuring that employees receive the true dollar amount promised to them as compensation.)
“Its not a gay issue,” said Rand Hoch, President and Founder of the Palm Beach County Human Rights Council. “It’s a pay issue.”
“Tonight’s unanimous vote demonstrates that the pro-family policies of the City of West Palm Beach extend to all, including the families of lesbian and gay employees,” said Hoch. “This places the City of West Palm Beach at the forefront of public and private employers offering tax equalization.”
The Palm Beach County Human Rights Council is a non-profit organization, which for the last 25 years has been dedicated to ending discrimination based on sexual orientation, gender identity and gender expression.
Across the nation, only two cities, Cambridge, Massachusetts, and Hallandale Beach, Florida, increase employees salaries to help offset the additional federal tax burden. Three other public employers in the country – the Palm Beach County Property Appraiser and the Constitutional Tax Collectors in Palm Beach County and Orange County (Florida) – provide $500 annual stipends to help offset the federal tax inequity.
As the result of this action, more local measures recognizing gay and lesbian families have been implemented by the City of West Palm Beach than by any other municipality in America, according to Hoch.
Since 1992, the Palm Beach County Human Rights Council has been the prime mover for domestic partnership benefits in Palm Beach County. That year, the Council persuaded the West Palm Beach City Commission to become the first public employer in Florida to extend the same sick leave and bereavement leave benefits to the city’s partnered gay and lesbian employees as had been long enjoyed by married employees.
Over the years, West Palm Beach expanded the city’s equal benefits program to provide employees with domestic partners the full range of health insurance benefits, a Consolidated Omnibus Budget Reconciliation Act (COBRA) equivalent and a Family and Medical Leave Act (FMLA) equivalent. In addition, the city has extended lifetime health insurance benefits to the surviving domestic partner of any city employee killed in the line of duty.
“Aside from municipalities in states which have enacted statewide laws recognizing gay and lesbian relationships, no city in America has taken as many steps as West Palm Beach to ensure equal rights and benefits to its partnered gay and lesbian employees,” said Hoch.
“Having checked with the Human Rights Campaign and Lambda Legal, the two leading national LGBT organizations addressing LGBT workplace issues, I was unable to find any other public employer in America that both grosses up employees’ salaries to offset the tax inequity on domestic partner health insurance and offers an in-line-of-duty survivorship benefit to domestic partners,” said Hoch.
Hoch credits Mayor Jeri Muoio for taking the steps necessary to address the inequities partnered gay and lesbian employees face in the workplace.
“By the time I entered public service as a city commissioner in 2006, West Palm Beach had already implemented the standard domestic partnership benefits such as health insurance, sick leave and bereavement leave,” said Muoio. “When the Palm Beach County Human Rights Council informed me that federal law was prohibiting our lesbian and gay employees from being treated equally, I was determined to find a solution.”
The federal Defense of Marriage Act (DOMA), enacted in 1996, prohibits the federal government from recognizing same-sex relationships for all federal purposes. Therefore, domestic partners and same-sex spouses are not considered “spouses” and are not included in the protections and benefits provided by various other federal benefits laws such as COBRA and FMLA.
COBRA provides temporary continuation of health insurance coverage to former employees and their eligible family members.
The FMLA entitles employees to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave.
Since the federal government’s definition of “family” excludes same-sex partners, West Palm Beach municipal employees with domestic partners were not receiving the same family benefits as opposite-sex married employees.
In 2006, at the request of the Palm Beach County Human Rights Council, Muoio convinced her colleagues on the city commission to have the city implement a policy to offer the domestic partners of city employees identical benefits offered to spouses under COBRA.
Muoio was elected Mayor in 2011.
Presiding over her first meeting as West Palm Beach mayor, Muoio‘s proposal to revise the city’s family medical leave policy to provide the same benefits to families based on domestic partnerships as were being provided to families based on legally recognized marriages was adopted unanimously by the city commission.
Once the action taking this evening is ratified by the City Commission on May 13, the City of West Palm Beach will be increasing the salaries of eligible employees to reimburse them for the additional federal taxes they pay for insuring their domestic partners on the city’s health insurance plans.
Eligible employees will receive a tax reimbursement based on a formula developed by the finance director and will be paid to the employee as part of their compensation throughout the year.
Since West Palm Beach currently insures the domestic partners of 16 employees, staff has estimated the annual cost for the program based on current insurance rates to be $17,691.92.
“Put simply, it comes down to a matter of equal pay for equal work,” said Muoio.
Hoch approached city leaders last fall to address the tax inequity, both Mayor Muoio and City Commissioner Kimberly Mitchell conceded that something needed to be done.
Mayor Muoio called on City Attorney Claudia McKenna, Finance Director Jeff Green and Benefits Manager Patricia Brosamer to study the issue in a comprehensive manner and draft the ordinance.
Since 2009, only approximately fifty private employers nationwide have implemented tax equity programs. These include American Express, Apple, Bank of America Corp., Cisco Systems, Corning, Facebook, Goldman Sachs, Google, Kimpton Hotels, Microsoft, Morgan Stanley and Yahoo!
“Once again, the city of West Palm Breach is on the cutting edge of domestic partnership issues,” said Muoio. “By grossing up the salaries of employees insuring their domestic partners, we are putting their families on even footing with those of married employees insuring their opposite-sex spouses.”
Federal legislation to amend the Internal Revenue Code to end the taxation of health insurance benefits provided to domestic partners was first introduced by then-U.S. Sen. Bob Graham (D-Fla.) in 2003.
“It makes no sense for some of our employees to pay higher taxes than others for the same health insurance coverage,” said Mitchell. “Since Congress has yet to eliminate this inequity, the City of West Palm Beach is considering taking steps to see if we can equalize the tax burden on our employees.”
For several years, city Broadcast Coordinator Robert Telford has included his partner, Jim Schramm, on the city’s health insurance plan. The main reason Telford applied for the position in West Palm Beach was the city’s progressive policies concerning domestic partnership benefits.
Like other gay men and lesbians insuring their domestic partners, Telford personally pays taxes on the same health insurance benefits that other employees receive tax-free.
When Telford learned that Palm Beach County Property Appraiser Gary Nikolits was grossing up the salaries of his employees who were insuring their domestic partners, he asked Muoio to look into it.
“I told him, ‘That just isn’t fair,'” said Muoio, “So I assured him I would have staff address the problem.”
For 2012, the city imputed $8,478 to Telford relating to the value of Schramm’s insurance coverage. Since Telford is in the 25% tax bracket, he paid an additional $2,119.50 in federal taxes this year.
“Once again, Mayor Muoio has taken a huge step forward for workplace equality,” said Telford. “City employees have not had a raise since 2008; we had furlough days until last year, so this stipend to alleviate the unfair tax burden on my family is greatly appreciated.”
Schramm believes the city commission’s actions is not just about the money they will save on taxes.
“Tonight the West Palm Beach City Commission has again validated the long-term relationship Robert and I have shared for 17 years,” said Schramm. “Our city repeatedly affirms our relationship, while the federal government does not.”
Earlier this month, U.S. Sens. Charles Schumer (D-N.Y.) and Susan Collins (R-Maine) introduced the Tax Parity for Health Plan Beneficiaries Act to end the unfair taxation of employer-provided health insurance for domestic partners. However, no companion bill has yet been introduced in the U.S. House of Representatives.
Last week, the City of Miami Beach Finance Committee sent a unanimous recommendation to the city commission urging them to enact a comprehensive tax equity program for their employees with domestic partners. The Miami Beach city commission is expected to consider the matter later this spring.
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