We tend to think of issues such as the Defense of Marriage Act (DOMA) and LGBT (lesbian, gay, bisexual, and transgender) rights as purely social ones, related solely to the realm of individuals and societal rule makers, and influenced by our personal values, ethics, and perhaps religions. But these issues often have financial ramifications as well.
Consider this: 70 big companies, law firms, and organizations have filed a friend-of-the-court brief opposing DOMA, which defines marriage as between a man and a woman. In it, they explain that it costs them more to treat their same-sex married employees differently, forces them to discriminate, and also opens them up to possible litigation, which can be costly.
Discrimination costs
In a nutshell, the organizations, which include Microsoft
This creates administrative complications and leads to what many view as unfairness. The companies explain that to attract and retain the best employees, they "must offer robust workplace benefits and a workplace ethos of transparent fairness." Yet while their workers in marriages between a man and a woman enjoy health-insurance coverage for both, same-sex-married employees have to count the cost of the spouse's coverage as taxable income. To combat this inequity, some companies have been paying these same-sex-married workers extra, to offset the cost. These are dollars that reduce the companies' profitability and its shareholders' assets.
As an International Business Times article explained, "Employers must also eat the cost of creating 401(k) retirement plans that allow an employee to take money out to pay for medical bills of a sick same-sex spouse. Heterosexual couples can do this from their 401(k) plans under federal law." It added that companies now have to essentially keep separate sets of books, treating workers in same-sex marriages as single under federal law but married under state law. Citing the brief, "The double entries ripple through human resources, payroll, and benefits administration."
Dollars detailed
The brief lists many specific ways in which American companies must treat their employees differently because of DOMA, and ways in which they and their same-sex-married employees suffer financially because of it. For example:
Because of DOMA, the typical paycheck and Form W-2 for a married employee with a same-sex spouse looks quite different from that of her colleague married to a different-sex spouse. The Form W-2 for the first will show higher taxable wages, due to the addition of the imputed value of the spouse's health care coverage, and reduced take-home pay, reflecting the increased withholding on that imputed income. One study shows that, on average, the Form W-2 of the employee married to a same-sex spouse will show $1,069 more in federal taxes paid than that of her colleague married to a different-sex spouse.
It's hard to not see that as some kind of discrimination, and the companies named in the brief don't like that they're the ones delivering this kind of morale-deflating treatment to their employees because of a piece of legislation that they don't agree with.
While the corporate signers of the brief are generally multimillion- or multibillion-dollar companies, they note that the burdens imposed can be especially onerous for small businesses. And they point out that for organizations large and small, there's also a litigation risk, as they may end up sued for discriminatory practices. Litigation, as we all know, can be quite costly.
Naming names
The list of companies submitting the brief is not ... brief. Along with Microsoft and Google, which are some of the highest-profile corporations in the world, it also includes other major entities in diverse industries such as technology (Akamai Technologies
These companies may disappoint some people in their support of a DOMA repeal, but overall, we investors should be pleased, as they're looking out for their bottom lines. It serves their shareholders well when they serve employees well, aiming to retain and attract many. It even serves those customers who care about companies' positions on social matters.
The companies mentioned here often receive praise for their social responsibility, which is also fiscal responsibility. Many companies are not so fiscally responsible. Do you own any of the worst companies?
