Sept. 28 (Bloomberg) -- Exxon Mobil Corp. will extend benefits to same-sex spouses of U.S. employees after federal government agencies altered the definition of marriage, marking the conversion of one of the last major corporate holdouts on the issue.
Exxon’s decision follows a June ruling by the U.S. Supreme Court that struck down the federal Defense of Marriage Act, spurring changes by the Internal Revenue Service and other agencies on what constitutes legal marriages, Alan Jeffers, a spokesman for the Irving, Texas-based company, said in a phone interview yesterday.
Advocates of the lesbian, gay, bisexual and transgender community, known as LGBT, heralded the move as a victory.
Exxon’s announcement “shows the tide is continuing to turn in corporate America,” said New York State Comptroller Thomas DiNapoli, who for the past four years has failed to win approval of shareholder resolutions it sponsored urging Exxon to take this step. “This is a very positive step for the LGBT community and a vindication of years of efforts by shareholders and activists across the country.”
Exxon has long based its employee benefits programs on the government’s definition of marriage in nations where it operates. Accordingly, Exxon adapted its rules to the recent changes in the U.S., Jeffers said. The company already provided benefits to same-sex spouses in 30 other countries where local laws allow for the marriages, he said.
“Exxon Mobil will recognize all legal marriages for the purposes of eligibility in U.S. benefit plans to ensure consistency for employees across the country,” Jeffers said in a separately e-mailed statement yesterday.
U.S. companies expanded health coverage for same-sex couples and began adopting non-discrimination rules during the 1990s amid Congressional measures to move in the opposite direction. The Defense of Marriage Act passed in 1996 hamstrung the IRS and other federal agencies from recognizing gay or lesbian marriages as legitimate.
As of July this year, 88 percent of Fortune 500 companies included orientation in their nondiscrimination policies and more than 60 percent offered domestic partner health benefits, according to the Human Rights Campaign. Wal-Mart Stores Inc., the largest U.S. employer, announced plans to extend benefits to same-sex partners on Aug. 27.
“After years of stubbornly refusing, we commend Exxon for joining the majority of the Fortune 500 business leaders that already treat gay and lesbian married couples equally under employee benefit plans,” Tico Almeida, president of Freedom to Work, an advocacy group, said in a statement yesterday. Exxon shouldn’t have waited for federal definitions to change before altering its practices, Almeida said.
Almeida and other advocacy groups said the next step Exxon should take is to amend its employee handbook to explicitly prohibit discrimination based on sexual orientation. Resolutions to make that change have been defeated by shareholders’ votes at 16 consecutive annual meetings.
“There is no federal law protecting employees from discrimination against sexual orientation or gender identity and Exxon Mobil refuses to join the majority of their Fortune 500 colleagues in adopting their own such policies,” the Human Rights Campaign said in a statement following Exxon’s announcement. “One has to wonder, what good are benefits for your same-sex spouse if you risk being fired for disclosing your sexual orientation in order to access them?”
The Supreme Court struck down by a 5-4 decision the Defense of Marriage Act’s definition of marriage as a heterosexual union, a provision that had denied legally married gay couples federal benefits. The majority on the court said the law violated the constitutional right to liberty.
The ruling hinged on whether the federal government could treat gay married couples differently from heterosexual ones. Writing for the majority, Justice Anthony M. Kennedy said the law’s intent was unconstitutional discrimination.
The IRS said same-sex marriages from domestic or foreign jurisdictions that allow such unions were to be recognized as legitimate under the federal tax code regardless of the state in which they reside, according to an agency ruling that took effect on Sept. 16.
“We have made no change in the definition of eligibility for our U.S. benefit plans,” Jeffers said in the e-mailed statement. “Spousal eligibility in our U.S. benefit plans has been and continues to be governed by the federal definition of marriage and spouse. Our approach is consistent in all countries where we operate.”
Exxon’s 77,000 employees in the U.S. don’t rank it among the top 25 of the nation’s employers, according to data compiled by Bloomberg. The company’s workforce is less than 4 percent the size of top employer Wal-Mart’s 2.2 million staff.
“I’m not surprised by it,” Paul Fronstin, a director at the Employee Benefit Research Institute in Washington, said of Exxon’s change in benefits practices. “It’s the law of the land, and they’re recognizing it for the purposes of their benefits.”
As of July, 13 states had authorized same-sex marriage, up from none at the beginning of 2004. Of the states that bar gay unions, 29 have the prohibition written in their constitutions, including Texas and Michigan.
“When Wal-Mart made the move to do this it woke up a lot of companies who perhaps wouldn’t have historically thought to be a leader in this space,” said Kellie McElhaney, founding faculty director of the Center for Responsible Business at the University of California, Berkeley. Exxon’s decision may be a step toward “businesses realizing they have a role to play in some of these critical issues in society,” McElhaney said.
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