'Grossing Up': Equity or Bias?

January 29, 2010

Syracuse University may be on the cutting edge of promoting equity for its gay and lesbian employees. Some of the university's straight employees, however, say Syracuse needs to focus its limited funds on benefits for everyone -- and recognize that it can't be held responsible for the inequity of marriage laws in the United States.

The battle is over "grossing up" -- a human resources term for paying someone on top of salary levels so that the employee takes home the full salary amount. So if someone would owe $10,000 on a $50,000 salary, grossing up would mean paying that person $60,000 (plus whatever tax is needed on the extra $10,000 and so forth) so that $50,000 becomes take-home pay.

Syracuse plans to pay $1,000 each to its gay and lesbian employees who use the university's domestic partner program to provide health insurance for their partners. While health insurance benefits for employees and their spouses and children are not taxable under federal law, health insurance that an employee receives for a partner who is not a spouse recognized under state law is taxable. So even though Syracuse has tried to be equitable by offering partner benefits, the university's gay employees have pointed out that they were not really being treated the same way as married opposite-sex couples.

Syracuse isn't even fully grossing up, because $1,000 will probably not cover the extra tax that some employees pay. But the proposed benefit -- even though the money involved is likely equivalent to a rounding error in the university's $113 million benefits budget -- has become controversial as Syracuse considers a range of changes in the benefits packages that it offers employees. The "sustainable benefits" campaign is designed, Syracuse says, to save money while providing more choices and becoming more equitable. Over all, the changes -- such as reducing the match to retirement accounts -- are expected to save about $7 million annually, but more than half of those savings will be used to provide new or improved benefits. The money for gay employees has been the subject of much discussion among faculty members and at a forum on the planned changes.

If Syracuse goes ahead with its plans, it may be the first college to offer such a benefit. The College and University Professional Association for Human Resources could not identify any colleges with this benefit. The Human Rights Campaign, a gay rights organization that encourages grossing up policies for partner benefits, has identified only three businesses and one family foundation with such policies. An HRC official said that he has talked with several colleges interested in starting such policies, but that he did not know of any that have done so. Nancy Cantor, the chancellor at Syracuse, has spoken repeatedly about her commitment to providing equitable benefits and to having the university be seen as a leader in promoting diversity.

Pat Cihon, an associate professor of law and public policy and president of the Syracuse chapter of the American Association of University Professors, has spoken out against the new benefit. Cihon said that he applauds the chancellor's commitment to inclusiveness and agrees that current marriage and tax law discriminate against gay people. He also said that he supports offering domestic partner benefits and believes that most of his colleagues share that belief. But he said that the problem that needs addressing is the law, not the university's benefits. "We really ought to be lobbying to change the tax laws," he said.

What troubles him, he said, is that the planned $1,000 payments are effectively only available to one class of people -- gay employees with partners on benefits -- and could never be available to employees married to or in domestic partnerships with people of the opposite sex.

"I appreciate and understand the rationale and intent, but now the employer is treating different people differently, and they are giving additional compensation to some groups because of sexual orientation," said Cihon. He added that he believes the provision may violate New York State's human rights statute, which bars sexual orientation discrimination in employment. "This would clearly be discrimination," he said.

Cihon said that while he and others would have philosophical issues with the proposal regardless of its overall context, it was relevant that it is part of a plan that, in total, will result in many people seeing a reduction in benefits. "They are taking money out of my retirement," he said.

Brenda J. Wrigley, associate professor of public relations at Syracuse, doesn't buy the discrimination argument. Wrigley's partner works in a part-time job for which she does not receive health insurance, so she is on Wrigley's plan as a domestic partner -- and Wrigley is taxed as a result. She said that the extra tax easily exceeds $1,000 a year.

"What's happening right now is discriminatory" in that her straight married colleagues cover their spouses without paying tax and she must pay, Wrigley said. "Nobody has squawked about that for years," she said. "The discrimination has been taking place for years."

Wrigley said that she would be pleased if federal and state laws changed to allow for marriage equity for gay people, but she said that the idea that Syracuse's lobbying could significantly accelerate that process was far-fetched. "That's a huge hill to climb," she said.

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