July 30, 2007: Under pressure from gay rights groups and New Jersey Governor Jon Corzine, UPS announced that it will offer spousal health and other benefits to union-represented workers in New Jersey who are in civil unions.

The policy change comes after UPS was criticized for excluding International Brotherhood of Teamsters-represented employees from receiving spousal health care benefits for their civil union partners. The Atlanta-based package delivery company initially had denied spousal benefits for these employees in same-sex civil unions because they allegedly were not "married" under New Jersey law.

UPS argued that the civil union law was not the same as a legal "marriage" and therefore it was not able to offer the benefits to IBT-represented employees because the benefits provided in the collective bargaining agreement were limited to "spouses."

Nationwide, nonunion UPS employees and managers and their same-sex partners are eligible for benefits because UPS offers domestic partner benefits, but domestic partner benefits are not included in the current collective bargaining agreement between UPS and IBT.

"Based on an initial legal review when New Jersey's law was enacted, it did not appear that a 'civil union' and 'marriage' were equivalent," Allen Hill, UPS's senior vice president for human resources, said in a July 30 statement. "Over the past week, however, we have received clear guidance that at least in New Jersey, the state truly views civil union partners as married. We've heard that loud and clear from state officials and we're happy to make this change."

In announcing the decision to provide benefits, UPS acknowledged pressure from New Jersey officials, including Corzine, who had pushed the company to change its policy. On July 20, Corzine sent a letter to UPS urging the company to reconsider its decision and explaining that under New Jersey law, same-sex couples who enter civil unions have the same status as married couples (142 DLR A-6, 7/25/07 ).

In his letter, Corzine said the civil union law's statutory language "makes plain that New Jersey law intends that civil union partners be viewed as spouses under all facets of New Jersey law and that a reference to 'spouse' in a legal context, including in a contract, embraces civil union partners."

When UPS initially denied health benefits to Teamsters-represented employees, the company told workers that New Jersey law did not preempt the Employee Retirement Income Security Act and therefore the definition of "legal spouse" under the collectively bargained plan could not be altered to include civil unions. The letter also stated that the company could not unilaterally change the benefits because it was bound by the collective bargaining agreement.

But Victor Palumbo, secretary-treasurer of IBT Local 177, told BNA July 23 that there was "nothing holding them back if they want to improve the package of benefits. The contract doesn't allow them to decrease the benefits without negotiation with us, but they can improve benefits anytime they want. They can improve them unilaterally."

Representatives of Local 177 were unavailable for comment July 30 and a spokeswoman for the international union deferred all questions to the local.

David Buckel, an attorney for two individual UPS employees who were challenging the company's decision to deny benefits, told BNA July 30 that other companies should follow UPS's example when it comes to interpreting employment policies when it comes to differing definitions of marriage under state laws.

"UPS demonstrates for the rest of the employment sector that federal law--like ERISA--does not require an employer to discriminate," said Buckel of the gay legal advocacy group Lambda Legal in New York. "UPS deserves credit for explaining that it was wrong in how it applied the New Jersey law."

Buckel said as more states provide legal domestic partnerships and civil unions instead of marriages to same-sex couples, employers would continue to grapple with how to define terms like "spouse" and "married" in all sorts of employment situations, including leave policies and other benefits.