Case In Point

Employer Permitted to Define “Spouse” under Benefit Plan to Exclude Married but Separated Spouses

Case In Point

Employer Permitted to Define “Spouse” under Benefit Plan to Exclude Married but Separated Spouses

Date: May 1, 2014

In a recent decision of the Ontario Human Rights Tribunal (“Tribunal”) in VanderLinde v. Oshawa (City)  (“VanderLinde”), the Tribunal found that it is not discriminatory for an employer to require that an employee’s legally married spouse be living with the employee as a condition of eligibility as a spouse under its group benefit plan.

In the VanderLinde case, the City of Oshawa (“Employer”) offered eligible employees a group benefit plan that covered part of their medical and dental costs (“Benefit Plan”). Spousal coverage under the Benefit Plan required that a person be married and not living separate and apart from an employee, or be the common law spouse who has been continuously living in a conjugal relationship with an employee for at least one year.

In 2012, the Employer provided advance notice that, as a result of a change in service provider effective January 2013, eligible Benefit Plan employees were required to provide up-to-date information about themselves and their dependants.  Through this process, the Employer discovered that one employee, Ms. VanderLinde (“Employee”), had been erroneously claiming her husband as a spouse under the Benefit Plan since 2009, despite the fact that, although they were legally married, they were no longer living together. At this point, the Employer notified the Employee that her husband did not qualify for spousal coverage under the Benefit Plan, since he did not fall under the Benefit Plan’s definition of “spouse.”

In response, the Employee asserted that the Employer’s refusal to allow her to claim her husband as a dependant under the Benefit Plan was discrimination based on marital status, contrary to s. 5 of the Ontario Human Rights Code (“Code”). The Employee argued that she was being treated differently from other married and common law couples in terms of the scope of coverage of her dependants under the Benefit Plan.

The Tribunal, however, found that the Code permitted the Employer to provide its own definition of “spouse” under the Benefit Plan. Since the Employer chose to stipulate that legally married couples must live together in order to be considered “spouses,” the Benefit Plan definition removed the Employee’s husband from the scope of the Plan.

More specifically, s. 25 of the Code provides an exemption for differential treatment on the basis of marital status in group insurance contracts, as long as that differential treatment complies with the Ontario Employment Standards Act, 2000 (“ESA”), and the regulations made under the ESA:

25(2) The right under section 5 to equal treatment with respect to employment without discrimination because of sex, marital status or family status is not infringed by an employee superannuation or pension plan or fund or a contract of group insurance between an insurer and an employer that complies with the Employment Standards Act, 2000 and the regulations thereunder […]

(2.3) For greater certainty, subsections (2) and (2.1) apply whether or not “age”, “sex” or “marital status” in the Employment Standards Act, 2000 or the regulations under it have the same meaning as those terms have in this Act.

In turn, s. 44(1) of the ESA similarly sets out a general prohibition on differential treatment of employees and dependants in a benefit plan based on marital status; however, the provision allows for the ESA regulations to prescribe exceptions to this general prohibition. In this regard, ESA Regulation 286/01 (“ESA Regulation”), sets out when the general prohibition on differential treatment in s. 44(1) does not apply to benefit plans.

The Tribunal noted that the ESA Regulation does not define “marital status,” yet it does state that “marital status” includes unmarried single parents and common law spouses “as defined in a benefit plan.” Also, the ESA Regulation allows the terms “dependant,” “spouse” and “dependant spouse” to be defined by the plan itself. The relevant provisions of the ESA Regulation read as follows:

1. For the purposes of Part XIII of the Act [Section 44(1) of the ESA falls under Part XIII of that Act] and this Regulation […]

“dependant” means a dependant as defined in the relevant benefit plan, and “dependent child” and “dependent spouse” have corresponding meanings; […]

“marital status” includes,

(a) the condition of being an unmarried person who is supporting, in whole or in part, a dependent child or children, and

(b) common law status as defined in the relevant benefit plan; […]

“spouse” means a spouse as defined in the relevant benefit plan; [emphasis added]

The Tribunal concluded that the exemption found in s. 25 of the Code for group insurance contracts, when read in conjunction with the provisions of the ESA and its regulations, allowed the Employer to define “dependant,” “spouse” and “dependant spouse” in the Benefit Plan. In this case, the Employer decided to adopt a definition of “spouse” which required married spouses to be living together. As the Employee and her husband were no longer living together, he ceased to be her “spouse” within the meaning of the Benefit Plan.

This decision confirms an employer’s ability in Ontario to define a spouse or a dependant under a benefit plan. The decision also concludes that it would not be contrary to the Code or the ESA for a benefit plan definition of spouse to require that the spouse (including a married spouse) be living with the member in order to qualify for benefits.

The VanderLinde case can be found here.