by Mike Andrew - SGN Staff Writer

Google announced June 30 that it would cover the extra tax cost that its LGBT employees must pay when their domestic partners get company health benefits.

Called 'grossing up,' the extra pay to LGBT employees with domestic partners is designed to achieve parity with married straight employees. While it is not common, at least some other large employers currently gross up pay for partnered LGBT employees.

Under federal tax law, employer-provided health benefits for domestic partners are counted as taxable income, unless the partner can be claimed as a dependent.

The tax owed is based on the value of the partner's coverage paid by the employer.

According to a 2007 report by UCLA Law School's Williams Institute, LGBT employees with domestic partners will pay about $1,069 a year more in taxes than a married employee with the same coverage.

Google is now promising to cover those costs, putting same-sex couples on an even footing with straight employees whose spouses and families receive health benefits.

The additional pay will also cover the dependents of the employee's domestic partner.

According to Laszlo Bock, Google vice president for people operations (formerly known as HR), the extra compensation will only be available for same-sex domestic partners because straight partners can avoid extra taxes by marrying.

The changes will also only be available to workers inside the U.S.

Extra pay for eligible workers will be retroactive to January 1, 2010.

It is not known how many of Google's 20,600 employees will benefit from the changes, but the company's LGBT group - called "Gayglers" - has about 700 members.

Bock declined to provide details about total cost to the company, but said the decision was less about money and more about equalizing benefits.

"If you were to add it all up, it's not like we are talking hundreds of thousands per employee," he said. "It will cost some money, but it was more about doing the right thing."

"It's a fairly cutting-edge thing to do," said Todd A. Solomon, a partner in the employee benefits department of McDermott Will & Emery, a law firm in Chicago, and author of Domestic Partner Benefits: An Employer's Guide.

The Kaiser Family Foundation says that 36% of companies that offer health benefits provide coverage for same-sex domestic partners, and more than half of Fortune 500 companies provide domestic partner coverage, but only a few gross up LGBT employees' pay to cover extra tax bills.

According to Bock, Google began to look at the disparity after a Gay employee pointed it out.

"We said, 'You're right, that doesn't seem fair,' so we looked into it," Bock said. "From that initial suggestion, we said, let's take a look at all the benefits we offer and see if we are being truly fair across the board."

As a result of its investigation, Google also decided to make a few other changes that would help Gay employees, including eliminating a one-year waiting period before qualifying for infertility benefits and including domestic partners in its family leave policy.

Congress has also tried to address the disparity between what same-sex couples and straight married couples pay for health coverage.

The healthcare reform legislation passed by the House last November included an amendment introduced by Seattle's Rep. Jim McDermott (D-7) that would have eliminated the tax on employer-provided coverage.

That provision did not make it into the final legislation signed by President Obama in March, however.

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