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Thursday, January 13, 2011

How Yale University Is Financially Punishing Its Gay Employees

By Michael A. Jones -

For many gay employees at Yale University, 2010 ended with a bit of a thud. That's because due to a University payroll error, 61 gay employees found out that they had the wrong amount of income withdrawn from their paychecks to cover their 2010 tax bill. Now, because of the glitch, these gay employees will see extra deductions from their paychecks over the course of the next three months, to cover taxes that should have been withdrawn in 2010.
Talk about a real financial inconvenience. And the problem underscores why, until we have federal marriage equality, gay couples will continue to face financial inequities in the workplace, unless their employers step up and help level the playing field.
Here are the details on Yale's colossal mess-up. Stick with us, even if this gets a bit technical.
Yale, wonderfully, offers its LGBT employees the ability to cover their partners on the university's health insurance plan. It's called domestic partner coverage, and Yale has offered this to LGBT employees since 1994. Very cool.
The problem is that, because the federal government refuses to recognize same-sex relationships in any capacity, gay employees have to pay federal taxes on domestic partner health coverage. That's a huge bummer, especially since Yale resides in a state (Connecticut) that recognizes same-sex marriage. It can also be quite expensive for gay employees, costing them thousands of extra dollars that married heterosexual employees don't have to pay.
This disconnect between the state and federal level is what tripped up Yale's payroll system. On a state-level in Connecticut, where same-sex marriages are recognized, gay employees don't have to pay taxes on their domestic partner health coverage. But on a federal level, where same-sex relationships are given the evil eye, gay employees do have to pay taxes on their domestic partner health coverage. A programming error in Yale's payroll system didn't catch the difference, and as a result, 61 gay employees at Yale now find themselves having to pay a year's worth of 2010 taxes in the next three months. Yuck.
An email was sent out in late December to all gay employees with domestic partner health coverage, apologizing for the mistake.
"Unfortunately, the payroll system inadvertently treated those benefits as nontaxable for Connecticut and federal purposes for the entire calendar year of 2010," the email letter read. It went on to say that in January, February and March of 2011, these employees would see extra deductions taken from their paycheck to cover the cost of the deductions that should have been made in 2010. I don't know about you, but if I found out my paycheck for the next three months was going to be lighter, all because of a payroll mistake by my employer, I'd be pretty steaming mad.
One anonymous employee told the New York Times that the mistake is catastrophic for many gay employees.
"They’re making it about balancing the books, when there are real consequences for the human beings who depend on the paychecks they earn,” the employee said. “Rather than apologize for the cruel timing of the letters, we got a long explanation about how this all came about and how grateful we should feel, because it could have been even worse."
The situation totally stinks. But here's something Yale could do to make amends and help make sure something like this doesn't happen in the future. It's called "grossing up," and it's a policy that has been adopted by Syracuse University, Google, Facebook, Barclays and many others. It's a way of showing respect for your LGBT employees, by recognizing the fact that until there's marriage equality across the land, gay employees will be perpetually screwed when it comes to partner health insurance.
Here's how it works: because gay employees face a federal tax penalty on domestic partner health coverage, many employers (like the ones listed above) have agreed to pay their gay employees more in order to cover the unfair tax burden. So in Syracuse University's case (which has been a real trendsetter on this), gay employees are paid an extra $1,000 to offset the federal tax penalty they face. In Google's case, it's largely the same. And more and more companies are jumping on this bandwagon, as a means of showing some solidarity with LGBT employees.
It's not inexpensive for an employer to do this. As the New York Times noted in December, "roughly speaking, it would cost an employer about $2,000 to $2,500 to reimburse — or  'gross up' – an employee who incurred extra taxes" of over $1,000 for health care coverage. But, of course, Yale has an endowment of $16.7 billion, which is more than what some countries report for a GDP. So it doesn't seem like it would be that much of a financial burden for Yale (and other Ivies, for that matter) to "gross up" and help their gay employees get on a level playing field ... at least when it comes to health care taxes.
But so far, Yale has not done so. The closing paragraph from the New York Times: "An increasing number of companies are beginning to reimburse employees for these taxes in an effort to put them on a level playing field with opposite-sex married employees, who are not subject to the extra costs.  But for now, Yale employees are responsible for covering these additional taxes."
Send a message to Yale that they should take the opportunity raised by this colossal payroll mess up to take a stand, and "gross up" their gay employees who utilize the university's domestic partner health care plan. Syracuse does it. Google does it. Kimpton Hotels does it. Cisco does it.
Yale should too.

petition text -

Yale should "gross up" to cover the benefits tax for gay employees

Dear Mr. Peel, Mr. Conroy, Mr. Penney, and Yale Human Resources,

I recently saw a story in the New York Times ( detailing how 61 gay employees of Yale University experienced a payroll error that will likely cause them some financial strain and stress during the first three months of 2011. This payroll error came about because Yale's system failed to deduct federal taxes for domestic partner health insurance -- taxes that the federal government levies on gay employees, yet taxes that heterosexual married employees do not face.

This whole situation is quite upsetting and unfair, and underscores one of the problems of having different laws between states and the federal government when it comes to same-sex relationships.

That said, Yale University could help make amends for this payroll error -- and take a stand for LGBT equality in the workplace -- by adopting a policy of "grossing up". Under this policy, gay employees who utilize an employer's domestic health care plan are compensated extra for any unfair tax burdens they face by the federal government. Already, Syracuse University has a policy that compensates gay employees (see here:, and a number of companies have started to adopt this policy, too, from Google to Facebook to Barclays and more.

Yale should follow suit. It's upsetting to see gay employees punished by the federal government with higher taxes. Yale could help level the playing field for gay employees by "grossing up." It would also go a long way toward alleviating the frustration that many gay employees at Yale now feel, as their paychecks are docked over the course of the next few months to make amends for your University's recent payroll error.

Many thanks for your time.

[Your name here]


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