The city of Kalamazoo became the first public employer in the state to strip health benefits from the domestic partners of its gay and lesbian employees.
City Manager Kenneth Collard cited a decision last month by the Michigan supreme Court.
The high court agreed to hear an appeal of a lower court ruling that said the state's constitutional ban on same-sex marriage blocks the state, local governments and public institutions from providing benefits to the same-sex partners of employees.
In granting leave to appeal the court said that the lower court's order cannot be held up.
Four Kalamazoo gay city workers have their families covered under the benefits plan.
Civil rights activists say they believe other cities and state funded universities that offer domestic partner benefits will follow suit.
The lawsuit involves 21 gay couples represented by the American Civil Liberties Union of Michigan.
Soon after the amendment banning gay marriage was passed in 2004 Gov.
Jennifer Granholm (D), acting on the advice of Attorney General Mike Cox (R), terminated domestic partner benefits that had been won by state unions.
The University of Michigan and Wayne State University and the city of Kalamazoo also were directed to shut down their benefits programs to same-sex couples.
The 21 couples filed suit against the state - one partner of each of the couples works for the state of Michigan.
Although Granholm removed the benefits from the contracts she disagreed with Cox's interpretation of the amendment and entered the case on the side of the gay couples.
In September 2005 Ingham County Circuit Judge Joyce Draganchuk said health care benefits are benefits of employment, not marriage and Cox's office appealed.
The three-judge Court of Appeal panel In February overturned Draganchuk's ruling saying the wording in the amendment barred domestic partner benefits for public employees.
The constitutional amendment defines marriage as the union between a man and a woman and is the only agreement that can be recognized as a marriage "or similar union for any purpose."
It was those six words that led to the legal battle.
"The marriage amendment's plain language prohibits public employers from recognizing same-sex unions for any purpose," the court said.