Contributed by Rebecca Dobbs Bush
On June 26, 2013, the U.S. Supreme Court, in United States v. Windsor, issued a landmark decision striking down the federal Defense of Marriage Act (DOMA) as unconstitutional. Now the federal government must acknowledge marriages between same-sex couples. What does this mean for employers? Well, it depends on what states you operate in….
If you live in a state like Illinois that DOES NOT recognize same-sex marriage:
The short answer is, no one knows. While Illinois does allow same-sex couples to enter into a civil union, being in a civil union is essentially the same as being unmarried for purposes of federal law. The decision of the Supreme Court now arguably makes civil unions even more unequal to marriage.
While civil unions are not affected by the decision, it is unclear whether employers will be required or permitted to recognize same-sex spouses of employees living in states that do not recognize same-sex marriages for purposes of federal employment laws such as ERISA, COBRA, FMLA, etc. In other words, what are an employer’s obligations if they operate in Illinois and have an employee who entered into a same-sex marriage in Massachusetts?
The decision references the fact that over 1,000 federal laws contain provisions specifically applicable to spouses that may be affected and should be coordinated. Until we receive additional guidance from the relevant agencies, employers in states such as Illinois are in a state of uncertainty. For example, the IRS generally defers to state of residence and not state of celebration for purposes of determining tax filing status and whether employer provided benefits should be considered imputed income. However, some federal laws, such as ERISA, do not specifically reference which state law should be given deference. In light of the stated views of the Obama administration, many are anticipating an Executive Order directing federal agencies to defer to the state of celebration for purposes of determining whether couples are married. In the meantime, employers operating in states that do not recognize same-sex marriage will need to wait for further clarification.
If you operate in a state that DOES recognize same-sex marriage:
Currently 13 states and the District of Columbia recognize same-sex marriage, including: Massachusetts, Connecticut, Iowa, California, Vermont, New Hampshire, Washington D.C., New York, Rhode Island, Delaware, Minnesota, Maine, Maryland, and Washington State.
For employers operating in states where same-sex marriage is recognized:
- Same-sex and opposite-sex spouses will need to be treated the same for purposes of benefits extended to spouses.
- Employees will not have to pay federal taxes for imputed income tied to an employer’s contribution to the same-sex spouse’s welfare benefit coverage. And, these same employees should be permitted to make their contributions towards these spousal benefits on a pre-tax basis under a Section 125 plan.
- COBRA continuation will need to be offered to same-sex spouses.
- Same-sex spouses will need to be treated the same as an opposite-sex spouse for purposes of an employer’s pension or 401(k) plan.
- Employees will be able to access FMLA leave to care for an ill same-sex spouse the same as they would for an opposite-sex spouse.
Regardless of the state you operate in:
Every employer should review their existing benefit plan documents to verify how “spouse” is defined and to determine whether amendments need to be made to existing documents to accurately reflect the employer’s intent and actual administration of the plan.