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Goldman Sachs to Microsoft’s Support for Gays Pressures States

June 27 (Bloomberg) -- Edith Hunt, chief diversity officer at Goldman Sachs Group Inc., talks about the firm's stance on diversity-related social issues, and its support for the U.S. Supreme Court's ruling on gay marriage. Hunt speaks with Scarlet Fu and Sara Eisen on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Support for gay marriage by companies as varied as Goldman Sachs Group Inc. (GS), Microsoft Corp. (MSFT) and Starbucks Corp. (SBUX) is gathering steam to change policies in states that bar same-sex couples from tying the knot.

Two U.S. Supreme Court decisions on June 26 heartened supporters of the cause while showing an increased willingness of business to back the effort. In one case, more than 200 companies signed a brief against a federal law that denied benefits to same-sex couples. Five years ago, only a handful had lobbied against California’s Proposition 8 ban on same-sex marriages, the target of the high court’s other decision.

State legislators stand to feel the heat as more businesses speak out against laws in states including Texas, Florida and Michigan that recognize only heterosexual marriage. While fewer than half the companies in the Standard & Poor’s 500 (SPX) are based in states that allow gays to wed, most already have policies that ban discrimination based on sexual orientation.

“Companies do have the choice where they locate, where they set up shop,” said Kellie McElhaney, founding faculty director of the Center for Responsible Business at the University of California Berkeley. Local policies on sexual orientation “will eventually become part of the choice process.”

Photographer: Robyn Beck/AFP via Getty Images

A same sex marriage ceremony on July 1, 2013 in West Hollywood, California. Close

A same sex marriage ceremony on July 1, 2013 in West Hollywood, California.

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Photographer: Robyn Beck/AFP via Getty Images

A same sex marriage ceremony on July 1, 2013 in West Hollywood, California.

Goldman Sachs and Expedia Inc. (EXPE) are among businesses gearing up to support a federal bill to prevent workforce discrimination based on sexual orientation. Of Fortune 500 companies, 88 percent include orientation in their nondiscrimination policies and more than 60 percent offer domestic partner health benefits, according to the Human Rights Campaign (014536D).

Embracing Diversity

“We thrive as an organization because we embrace that diversity -- diversity of opinion, of orientation, of race,” said Dara Khosrowshahi, Expedia’s chief executive officer, in an e-mail response to questions. The online travel-booking service is based in Bellevue, Washington.

Companies moved ahead on providing health benefits for same-sex couples and adopting nondiscrimination rules since the 1990s just as Congress went in the opposite direction to approve the federal government’s rejection of gay marriage in the 1996 Defense of Marriage Act. Now, corporate America is pushing for uniform laws that protect against workplace discrimination, said Edith Hunt, Goldman Sachs’s chief diversity officer.

“Now you can be fired in some places just for being gay or lesbian, and that seems totally unacceptable to us,” Hunt said in a Bloomberg Television interview last week. “The firm has long embraced a wide array of diversity activities and issues. There’s really a very strong business case around it.”

Photographer: Win McNamee/Getty Images

Companies moved ahead on providing health benefits for same-sex couples and adopting nondiscrimination rules since the 1990s just as Congress went in the opposite direction to approve the federal government’s rejection of gay marriage in the 1996 Defense of Marriage Act. Close

Companies moved ahead on providing health benefits for same-sex couples and adopting... Read More

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Photographer: Win McNamee/Getty Images

Companies moved ahead on providing health benefits for same-sex couples and adopting nondiscrimination rules since the 1990s just as Congress went in the opposite direction to approve the federal government’s rejection of gay marriage in the 1996 Defense of Marriage Act.

Austin Example

Kevin Johns, who heads the economic development office for the city of Austin, Texas, can attest to how a more liberal stance on social issues can help lure companies. Johns makes trips to California, New York and Chicago to tout Austin’s support of domestic-partner benefits and tolerant attitude toward sexual orientation, even though it’s the capital city of a state whose governor, Rick Perry, is an outspoken conservative. Austin has reeled in investment from Apple Inc. (AAPL), EBay Inc. (EBAY) and International Business Machines Corp.

“We’re trying to attract the most creative, smartest people regardless of their orientation, color, sex or anything,” Johns said. “It’s been very successful here.”

States that have authorized same-sex marriage have jumped to 13 from none at the beginning of 2004, and others, such as New Jersey, are debating legislation for approval. Of the states that bar gay unions, 29 have the prohibition written in their constitutions, including Texas and Michigan.

Microsoft, Starbucks

The federal law made it difficult to treat all employees equally, interfered with diversity efforts and caused “significant” costs and administrative burdens, said Brad Smith, Microsoft’s general counsel and executive vice president for legal and corporate affairs, in a statement.

Starbucks, which has offered domestic partner benefits for more than two decades, is pleased with the court’s decision, said Zack Hutson, a spokesman, in an interview.

“Equality and inclusion are core values of our company,” Hutson said.

The corporate support for same-sex couples, combined with the high acceptance among young people, could make it costly for states to buck the trend, said Richard Florida, author of the best-selling book “The Rise of the Creative Class.” Higher-paying jobs that require more education and creativity will gravitate toward those regions of the country that are more open and tolerant, he said.

‘Fractious Divide’

“I see this as a pretty fractious divide in our economy between the kind of places that get it and the places that don’t,” he said. “Pressure will mount in those communities, but people will also dig in their heels.”

The movement has picked up speed because people look back on those who opposed civil rights for blacks during the 1960s and now want to be on the right side of history on this issue, Florida said.

“I’ve always looked at this as the current-day equivalent to the civil-rights movement,” he said. “The gay and lesbian community is kind of the last frontier.”

Companies had a more practical motive for wanting to strike down the Defense of Marriage Act, known as DOMA, said Paul Fronstin, a director at the Employee Benefit Research Institute (0702926D). The ruling lowers the tax bill on federal benefits for married couples for both employees and the company, and will streamline some accounting rules.

“Employers are getting a tax break that they weren’t getting before,” he said. “Companies like simplicity.”

Creating Confusion

The decision has created confusion, he said. Companies aren’t clear how to treat a same-sex couple that’s legally married in one state and lives in another that doesn’t recognize the union. Many are looking to the Internal Revenue Service to provide guidance, Fronstin said.

Time Warner Cable Inc. (TWC) has had trouble answering employees’ questions on the decision’s impact, said Mark Imhoff, group vice president of human resources. Most types of benefits for workers won’t change because the company already offers dependent health coverage and life insurance for same-sex partners, he said.

“The frustrating part for us is that there’s still a lot of questions out there -- probably more questions than answers at this point,” Imhoff said.

It’s also unclear how DOMA’s demise may affect companies such as Exxon Mobil Corp. (XOM), which doesn’t extend benefits to same-sex unions based on how federal law defined marriage. “In the United States, we have adopted the definition of spouse used in federal law, which has the effect of limiting coverage to heterosexual couples only,” Exxon Mobil said in a May filing. Alan Jeffers, a company spokesman, declined to comment.

Lobbying Effort

On the heels of the Supreme Court’s decision, Deena Fidas, deputy director of the workplace project at the Human Rights Campaign, is focused on lobbying for the Employment Non-Discrimination Act, a bill to protect gay and transgender workers that was introduced in the Senate in April. Her group is about to celebrate the 100th company announcing support of the bill, she said.

“The remarkable fact that in 2013 you can still be fired for being gay in 29 states is so stunning and so unpalatable to most businesses that you will continue to see many more lend their name in support of legislation to fix those issues,” Fidas said.

To contact the reporters on this story: Thomas Black in Dallas at tblack@bloomberg.net; Leslie Picker in New York at lpicker2@bloomberg.net; Callie Bost in New York at cbost2@bloomberg.net

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net

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