New York City Equal Benefits Law Requires Contractors to Provide Domestic Partner Benefits

Effective October 26, 2004, employers that enter into or renew contracts with the City of New York for work, labor, services, supplies, equipment, or materials valued at over $100,000 must provide employees with domestic partners the same benefits as they provide to employees with spouses. There are a few narrow exceptions to this requirement as discussed below. Covered benefits include (but are not limited to) health benefits, retirement, bereavement leave, membership discounts and travel benefits. Such benefits must be provided both to employees who work at any of the city contractor's operations that are located within the city and to employees who work at any of the city contractor's operations located outside the city but who work directly on fulfilling the requirements of a city contract. To qualify as a domestic partner relationship, couples must be registered or recognized as domestic partners under city law, or have registered with the employer as domestic partners if the employer maintains such a registry.

An employer is exempt from the law only if the actual cost of providing benefits to domestic partners exceeds that of providing the equivalent benefits to spouses, or if the employer is a qualifying religious organization, in which case the employer can comply with the law by offering benefits coverage to household members, without requiring the employees to disclose the nature of their relationships with such household members. In addition, there are provisions for the contracting city agency to waive the compliance in limited circumstances, such as emergencies.

Each contractor much certify that it complies with the law before it can enter into a contract with the city. The City Comptroller must conduct annual random audits of contracts to ensure compliance. Each contract must contain a provision stating that the contractor will comply with the law, and the contractors are required to provide the city with documentation related to the provision of the benefits to monitor compliance.

A violation of the Equal Benefits Law is deemed a material breach of the employer's contract with the city. The city is directed to take appropriate action for such violations, including the imposition of sanctions, seeking compliance, recovering damages, declaring the contract in default and seeking a finding that the employer is not a "responsible contractor" pursuant to the New York City Charter.

The law was enacted on June 28, 2004, after the New York City Council overrode the veto of New York City Mayor Michael Bloomberg. Earlier this October, Mayor Bloomberg filed suit to enjoin the law from going into effect based on his belief that the law creates an advantage for companies located outside the city and creates an undue burden on employers due to its compliance requirements. However, the court did not grant an injunction. The litigation challenging the law is still pending. Furthermore, the court has not granted Mayor Bloomberg's attempts to stay the law's effectiveness pending the outcome of this challenge.

It is unclear whether ERISA would preempt the city ordinance. In Catholic Charities of Me., Inc. v. City of Portland, 204 WL 231778 (D. Me. 2004), the court held that a Portland ordinance that conditioned receipt of certain city funds on providing domestic partner coverage was preempted because it required ERISA-covered plans to provide certain benefits. On the other hand, in Air Transport Ass'n of Am. v. City & Co. of San Francisco, 992 F. Supp. 1149 (N.D. Cal. 1998), the court held a San Francisco ordinance was preempted with respect to airlines contracting to use terminals at the San Francisco airport, because the city held a monopoly over airport operations and in those operations the city was acting as a governmental "regulator." However, the court also held that the ordinance was not preempted with respect other city contractors, because there the city acted as an ordinary consumer or "market participant."