Tag Archives: Defense of Marriage Act

Retirement Plans Must be Amended to Recognize Same-Sex Marriages by December 31, 2014

Contributed by Kelly Haab-Tallitsch

The IRS released Notice 2014-19 earlier this month, answering many of the open questions on the application of the Supreme Court’s decision in U.S. v. Windsor to qualified retirement plans.  Although the IRS provided initial guidance on the impact on employee benefit plans shortly after the Court found the Defense of Marriage Act’s (DOMA) ban on same-sex marriage unconstitutional, many details specific to retirement plans were still outstanding.

Effective Date and Retroactivity

The recent release reaffirms that qualified retirement plans are required to recognize same-sex marriages as of the date of the Windsor decision (June 26, 2013), and confirms that plans will not be penalized for not recognizing them earlier. Plans are required to recognize same-sex marriages using the “state of celebration rule” beginning on September 16, 2013, the date of the prior IRS Notice 2013-17. Under this rule, a plan must recognize a same-sex marriage if the individuals were legally married in a state that recognizes such marriages, even if they are currently living in a state that does not. Plans that were relying on the laws of the state of residency, instead of the state of celebration of the marriage, prior to the September 16, 2013 notice will not be penalized.

Plans may choose to recognize same-sex marriages retroactively prior to June 26, 2013, and may choose to recognize them for some or all purposes, provided the plan is amended to specify the effective date and the specific rules that will be applied. For example, a plan may choose to apply Windsor to its joint and survivor annuity requirements and only with respect to participants with benefit commencement dates as of a certain date.

Plan Amendments

Retirement plans only need to be amended to comply with Windsor if the current plan terms are inconsistent with the decision or the IRS guidance. For example, a plan that specifies that a marriage is between two individuals of the opposite sex will need to be amended, but a plan that uses the term “spouse” or “legally married spouse” may not require an amendment. A clarifying amendment is permissible, however, and may be helpful to plan administrators.

The deadline to adopt a required Windsor plan amendment is December 31, 2014 for most plans. The notice provides that a plan amendment must be adopted to bring a plan into compliance with Windsor by the later of December 31, 2014 or the otherwise applicable deadline for plan amendments (i.e. the later of the end of the plan year in which the change is first effective or the due date of the employer’s tax return for the tax year that includes the date the change is first effective).

To ensure your retirement plan remains compliant, plan language should be reviewed in the next few months to determine if a December 31, 2014 amendment is needed.

More on DOMA’s Demise – The DOL Updates the FMLA

Contributed by Karuna Brunk

As we previously discussed here and here, on June 26, 2013, the U.S. Supreme Court struck down the federal Defense of Marriage Act (“DOMA”) in United States v. Windsor.  In August 2013, the U.S. Department of Labor issued new rules for the Family Medical Leave Act implementing Windsor.  The DOL has amended its definition of “spouse” to include “husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including ‘common law’ marriage and same-sex marriage.”

This new rule is referred to as “the state of residence rule” because it relies on where the employee lives, as opposed to where a marriage is celebrated.  Under the new rule, an employer is required to provide FMLA leave to an employee seeking leave in order to care for a same-sex spouse with a serious health condition if the employee resides in a state that recognizes same-sex marriage.  Currently only 13 states recognize same-sex marriage – California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, and Washington. 

In accordance with this new rule, employers should review and revise their leave policies.  If an employer has employees who live in multiple states, it may be tempting to apply a blanket policy that gives leave to care for same-sex partners in all cases, regardless of the employee’s state of residence.  However, remember that if an employer grants job-protected leave to an employee who resides in a state that does not recognize same-sex marriage, that leave cannot be counted as FMLA leave.  For example, if an employee wanted to take leave to take care of his sick, same-sex spouse and he resided in a state that did not recognize same-sex marriage, that employee would be entitled to take the full 12 weeks of FMLA leave for another purpose – to take care of his child, for example – in the same calendar year. 

Additionally, note that the DOL has not expanded the definition of “spouse” to include civil union or domestic partner relationships.  This is especially significant for Illinois employers because Illinois recognizes civil unions but does not recognize same-sex marriage.

DOMA is Dead – Implementation of the Supreme Court Ruling in U.S. Immigration

By Jacqueline Lentini McCullough

On June 26, 2013, the Supreme Court unequivocally affirmed there is no legitimate reason for the federal government to discriminate against married couples based on sexual orientation. The Defense of Marriage Act (DOMA) of 1996 defined marriage as a legal union between a man and a woman. The implication of the Supreme Court’s historic decision in the immigration context is that the U.S. must treat married gay and lesbian couples the same way it treats married heterosexual couples.

While many details of how the immigration process will be implemented are still uncertain, U.S. Citizenship and Immigration Services (USCIS) published Frequently Asked Questions (see www.uscis.gov) regarding same-sex marriage on July 2, 2013. A same-sex marriage can now be the basis for an immigrant visa for a spouse married to a U.S. citizen. In evaluating the petition, USCIS will look to the law of the location that the marriage took place to determine if it is a valid marriage for immigration purposes. The law of the state of residence must also be taken into account. Further fact specific circumstances may develop as federal immigration benefits are applied.

The Supreme Court Strikes Down DOMA – What Does It Mean For Employers?

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.

First Circuit Rules: Defense of Marriage Act is Unconstitutional

Contributed by Larry Smith

On May 31, 2012, the U.S. Courts of Appeals for the 1st Circuit upheld trial court rulings in both Massachusetts v. United States Department of Health and Human Services and Gill v. Office of Personnel Management affirming that the Defense of Marriage Act violates the Equal Protection Guarantees in the due process clause of the Fifth Amendment of the U.S. Constitution and violates the Tenth Amendment to the U.S. Constitution because it falls outside of Congress’ authority under the Spending Clause. 

The Defense of Marriage Act (DOMA) was passed by both houses of Congress in September of 1996 and was signed into law by President Bill Clinton. Section 3 of the act defines “marriage” as “only a legal union between one man and one woman.” The act does not prevent same-sex couples from getting married in states where such unions are legal, but does prevent same-sex married couples from filing joint federal tax returns, from collecting Social Security survivor benefits and prevents federal employees from sharing health-insurance and other benefits with a same-sex spouse.

In today’s mobile society, a same-sex couple that married in a state allowing same-sex marriages may move to a state that does not. Should the current state of residency honor the marriage? This is further complicated by the adoption of children, issues that emerge when filing for bankruptcy, issues involving immigration and social security benefits.

The 1st Circuit’s decision will be appealed to the U.S. Supreme Court and won’t be enforced until the court weighs in. If the court takes the position that this is a state’s rights issue, there is still a Full Faith and Credit Clause issue affecting individuals who are married in one state and move to another. The Full Faith and Credit Clause is the familiar name used to refer to Article IV, Section 1 of the U.S. Constitution, which addresses the duties that states within the U.S. have to respect the “public acts, records, and judicial proceedings of every other state.”

There are more questions here than there are answers, and it is doubtful that a U.S. Supreme Court opinion regarding DOMA will globally resolve all issues, although this may well be needed to establish consistency on this controversial issue.

What does this development mean for employers, exactly? Given the interaction of DOMA with FMLA leave, this ruling may mean that an employer – even in states that do not recognize same-sex marriage – must nonetheless grant FMLA leave to an otherwise-qualified same-sex spouse. Additionally, the decision may impact other benefits-related issues concerning same-sex spouses. Again, since this judgment will not be enforced until the United States Supreme Court weighs in, employers should stay tuned for the final impact of this decision.